FEDERAL COMMUNICATIONS COMMISSION

1998

64^TH^ ANNUAL REPORT

**Commissioners**

*Members of the Federal Communications Commission*

*during fiscal year 1998*

William Kennard, Chairman

(Sworn in Nov. 3, 1997, term ends June 30, 2001)

Susan Ness

(Sworn in May 23, 1994, term ends June 30, 1999)

Harold Furchtgott‑Roth

(Sworn in Nov. 3, 1997, term ends June 30, 2000)

Michael Powell

(Sworn in Nov. 3, 1997, term ends June 30, 2002)

Gloria Tristani

(Sworn in Nov. 3, 1997, term ends June 30, 2003

Reed E. Hundt, Chairman

(Resigned Nov. 3, 1997)

James H. Quello

(Resigned Nov. 3, 1997

Rachelle B. Chong

(Resigned Nov. 3, 1997)

**Letter of Transmittal**

**Federal Communications Commission**

### Washington, DC 20554

*To the Congress of the United States*

We submit for your consideration the 64rd Annual Report of the Federal
Communications

Commission for fiscal year 1998. It includes information required by the
Communications Act of 1934, as amended, and the Communications Satellite
Act of 1962.

The report contains a comprehensive review of key events in the
Commission\'s areas

of regulatory concern: broadcasting, cable television, common carrier,
international

communications, wireless telecommunications, spectrum management, and
frequency

allocations.

It also covers major administrative matters, engineering, legal and
legislative activities.

Respectfully,

William E. Kennard

Chairman

**Commissioners**

**William E. Kennard (Democrat)**

**Chairman**

Nominated to the Commission and designated to serve as Chairman by
President Clinton; confirmed October 29, 1997; sworn in November 3,
1997; term ends June 30, 2001. Chairman Kennard had been General Counsel
of the Federal Communications Commission since December 8, 1993.
Previously, he was a partner and member of the board of directors of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Hand. At Verner, Liipfert, specialized in communications law, with an
emphasis on regulatory and transactional matters for communications
companies, including broadcasters, cable television operators,
programmers and cellular telephone providers. Served as Assistant
General Counsel and as Legal Fellow for the National Association of
Broadcasters. Born in Los Angeles, CA. Graduated Phi Beta Kappa from
Stanford University and received J.D. from Yale Law School. Member of
the California and District of Columbia Bars.

**Susan Ness (Democrat)**

Nominated to the Commission by President Clinton; confirmed May 19,
1994; sworn in May 23, 1994; term ends June 30, 1999. Previously,
Commissioner Ness served as Vice President and Group Head of the
Communications Industries Division of American Security Bank. Her
portfolio included companies providing cable television, radio and
television broadcast, satellite telecommunications, cable programming,
rural telephone, and wireless communications. Earlier, she founded and
directed the Judicial Appointments Project of the National Women\'s
Political Caucus to increase the representation of women on the federal
bench. She also served as Assistant Counsel to the Committee on Banking,
Currency and Housing of the U.S. House of Representatives. Her prior
civic activities include chair of the Montgomery County Charter Review
Commission, vice chair of the Montgomery County Task Force on Community
Access Television, and president of the Montgomery County Commission for
Women and a member of Leadership Washington. Born in Elizabeth, N.J, she
holds a B.A. from Douglass College (Rutgers University), an MBA from the
Wharton School (University of Pennsylvania) and a J.D., cum laude from
Boston College Law School. Member of the District of Columbia Bar.

**Harold W. Furchtgott-Roth (Republican)**

Nominated to the Commission by President Clinton; confirmed October 28,
1997; sworn in November 3, 1997; term ends June 30, 2000. Prior to
joining Commission, he was the Chief Economist for the U.S. House
Committee on Commerce. He was a Senior Economist for Economists
Incorporated from 1988‑1995 and, before that, he served as a Research
Analyst for the Center for Naval Analyses. Born in Knoxville, TN,
Commissioner Furchtgott‑Roth holds an S.B. in Economics from the
Massachusetts Institute of Technology and a Ph.D. in Economics from
Stanford University. He is a member of the American Economics
Association and the Econometrics Society.

**Michael K. Powell (Republican)**

Nominated to the Commission by President Clinton; confirmed October 28,
1997; sworn in November 3, 1997; term ends June 30, 2002. Was the Chief
of Staff of the Antitrust Division in the Department of Justice since
December 1996. Served as an Associate with the law office of O\'Melveny
& Myers, LLP, where he practiced in the areas of telecommunications,
antitrust, and employment law. Served as a judicial clerk to the
Honorable Harry T.Edwards, Chief Judge of the U.S. Court of Appeals for
the District of Columbia Circuit. Was a policy advisor to the Secretary
of Defense for matters involving the United States‑Japan security
relationship. Served as a cavalry officer in the U.S. Army from 1985 to
1988. Born in Birmingham, AL. Graduated from the College of William and
Mary with a degree in Government. Received his J.D. from Georgetown
University Law Center.

**Gloria Tristani (Democrat)**

Nominated to the Commission by President Clinton; confirmed October 28,
1997; sworn in November 3, 1997; term ends June 30, 2003. Served on New
Mexico State Corporation Commission since 1994,where she was the first
woman elected to that office. Served as Commission Chair in 1996. Served
on the National Association of Regulatory Utility Commissioners\'
communications committee. Was an attorney in private practice in
Albuquerque. Named one of the Nation\'s 100 most influential Hispanics
by Hispanic Business Magazine in 1996. Born in San Juan, P. R. Received
undergraduate degree from Barnard College of Columbia University and law
degree from the University of New Mexico School of Law. Board member of
the Dennis Chavez Foundation. Member of the New Mexico and Colorado Bars
and the American Bar Association.

**Commissioners from 1934 to Present**

**Commissioner Party Affiliation State Term of Service**

Eugene O. Sykes Democrat Mississippi July 11,1934 to Apr. 5, 1939

Chairman July 11, 1934 to Mar. 8, 1935

Thad H. Brown Republican Ohio July 11, 1934 to June 30, 1940

Paul A. Walker Democrat Oklahoma July 11, 1934 to June 30, 1953

Acting Chairman Nov.3, 1947 to Dec. 28, 1947

Chairman Feb. 28, 1952 to Apr. 17, 1953

Norman Case Republican Rhode Island July 11, 1934 to June 30, 1945

Irvin Stewart Democrat Texas July 11, 1934 to June 30, 1937

George Henry Payne Republican New York July 11, 1934 to June 30, 1943

Hampson Gary Democrat Texas July 11, 1934 to Jan. 1, 1935

Anning S. Prall Democrat New York Jan. 17, 1935 to July 23, 1937

Chairman Mar. 9, 1935 to July 23, 1937

T. A. M. Craven Democrat DC Aug. 25, 1937 to June 30, 1944

Virginia July 2, 1956 to Mar. 25, 1963

Frank McNinch Democrat North Carolina Oct. 1, 1937 to Aug. 31, 1939

Chairman Oct. 1, 1937 to Aug. 31, 1939

Frederic I. Thompson Democrat Alabama Apr. 13, 1939 to June 30, 1941

James Lawrence Fly Democrat Texas Sept. 1, 1939 to Nov. 13, 1944

Chairman Sept. 1,1939 to Nov. 13, 1944

Ray C. Wakefield Republican California Mar.22, 1941 to June 30, 1947

Clifford J. Durr Democrat Alabama Nov. 1, 1941 to June 30, 1948

Ewell K. Jett Independent Maryland Feb. 15, 1944 to Dec. 31, 1947

Interim Chairman Nov.16, 1944 to Dec. 20, 1944

Paul A. Porter Democrat Kentucky Dec. 21, 1944 to Feb. 25, 1946

Chairman Dec. 21, 1944 to Feb. 25, 1946

Charles R. Denny Democrat DC Mar.30,1945 to Oct.31,1947

Acting Chairman Feb.26, 1946 to Dec. 3, 1946

Chairman Dec. 4, 1946 to Oct. 31, 1947

William H. Willis Republican Vermont July 23, 1945 to Mar. 6, 1946

Rosel H. Hyde Republican Idaho Apr. 17, 1946 to Oct. 31, 1969

Chairman Apr. 18, 1953 to Apr. 18, 1954

Acting Chairman Apr.19, 1954 to Oct. 3, 1954

Acting Chairman May 1, 1966 to June 26, 1966

Chairman June 27, 1966 to Oct. 31, 1969

Edward M. Webster Independent DC Apr. 10, 1947 to June 30, 1956

Robert F. Jones Republican Ohio Sept. 5, 1947 to Sept. 19, 1952

Wayne Coy Democrat Indiana Dec. 29, 1947 to Feb. 21, 1952

Chairman Dec. 29, 1947 to Feb. 21, 1952

George E. Sterling Republican Maine Jan. 2,1948 to Sept. 30,1954

Frieda B. Hennock Democrat New York July 6, 1948 to June 30, 1955

Robert T. Bartley Democrat Texas Mar. 6, 1952 to June 30, 1972

Eugene H. Merrill Democrat Utah Oct. 6, 1952 to Apr. 15, 1953

John C. Doerfer Republican Wisconsin Apr. 15, 1953 to Mar. 10, 1960

Chairman July 1, 1957 to Mar. 10, 1960

Robert E. Lee Republican Illinois Oct. 6, 1953 to June 30, 1981

Interim Chairman Feb. 5, 1981 to Apr. 12, 1981

Chairman Apr. 13, 1981 to May 18,1981

George McConnaughey Republican Ohio Oct. 4, 1954 to June 30, 1957

Frederick W. Ford Republican West Virginia Aug.29,1957 to Dec.31, 1964

Chairman Mar. 15, 1960 to Mar. 1, 1961

John S. Cross Democrat Arkansas May 23, 1958 to Sept. 30, 1962

Charles H. King Republican Michigan July 19, 1960 to Mar. 2, 1961

Newton N. Minow Democrat Illinois Mar. 2, 1961 to June 1, 1963

Chairman Mar. 2, 1961 to June 1, 1963

E. William Henry Democrat Tennessee Oct. 2,1962 to May 1, 1966

Chairman June 2, 1963 to May 1, 1966

Kenneth A. Cox Democrat Washington Mar. 26, 1963 to Aug. 31, 1970

Lee Loevinger Democrat Minnesota June 11, 1963 to June 30, 1968

James J. Wadsworth Republican New York May 5,1965 to Oct.31,1969

Nicholas Johnson Democrat Iowa July 1, 1966 to Dec. 5, 1973

H. Rex Lee Democrat DC Oct. 28, 1968 to Dec.31, 1973

Dean Burch Republican Arizona Oct. 31, 1969 to Mar. 8, 1974

Chairman Oct. 31, 1969 to Mar. 8, 1974

Robert Wells Republican Kansas Nov. 6, 1969 to Nov. 1, 1971

Thomas J. Houser Republican Illinois Jan. 6, 1971 to Oct. 5, 1971

Charlotte T. Reid Republican Illinois Oct. 8, 1971 to July 1, 1976

Richard E. Wiley Republican Illinois Jan. 5, 1972 to Oct. 13, 1977

Chairman Mar. 8, 1974 to Oct. 13, 1977

Benjamin L. Hooks Democrat Tennessee July 5, 1972 to July 25, 1977

James H. Quello Democrat Michigan Apr. 30, 1974 to Nov. 1, 1997

Chairman Feb. 5, 1993 to Nov 28, 1993

Glen O. Robinson Democrat Minnesota July 10, 1974 to Aug. 30, 1976

Abbott M. Washburn Republican Minnesota July 10,1974 to Oct. 1, 1982

Joseph R. Fogarty Democrat Rhode Island Sept.17, 1976 to June 30, 1983

Margita E. White Republican Sweden Sept. 23, 1976 to Feb. 28, 1979

Charles D. Ferris Democrat Massachusetts Oct.17, 1977 to Apr. 10, 1981

Chairman Oct. 17, 1977 to Feb. 4, 1981

Tyrone Brown Democrat Virginia Nov. 15, 1977 to Jan. 31, 1981

Anne P. Jones Republican Massachusetts Apr. 7, 1979 to May 31, 1983

Mark S. Fowler Republican Canada May 18, 1981 to Apr. 17, 1987

Chairman May 18, 1981 to Apr. 17, 1987

Mimi Weyforth Dawson Republican Missouri July 6, 1981 to Dec. 3, 1987

Henry M. Rivera Democrat New Mexico Aug. 10, 1981 to Sept. 15, 1985

Stephen A. Sharp Republican Ohio Oct. 4, 1982 to June 30, 1983

Dennis R. Patrick Republican California Dec. 2,1983 to Apr. 17, 1987

Chairman Apr. 18, 1987 to Aug. 7, 1989

Patricia Diaz Dennis Democrat New Mexico June 25, 1986 to Sept.29, 1989

Alfred C. Sikes Republican Missouri Aug. 8, 1989 to Jan. 19, 1993

Chairman Aug. 8, 1989 to Jan. 19, 199

Sherrie P. Marshall Republican Florida Aug. 21,1989 to April 30, 1993

Andrew C. Barrett Republican Il Illinois Sept. 8, 1989 to March 30, 1996

Ervin S. Duggan Democrat Georgia Feb. 28, 1990 to Jan. 30, 1994

Reed E. Hundt Democrat Maryland Nov. 29, 1993 to Nov.3, 1997

Chairman Nov. 29, 1993 to Nov. 3, 1997

Susan Ness Democrat New Jersey May 19, 1994 to

Rachelle B. Chong Republican California May 23, 1994 to Nov. 3, 1997

William E. Kennard Democrat California Nov. 3, 1997 to

Chairman Nov. 3, 1997 to

Harold W. Furchtgott-Roth Republican Tennessee Nov. 3, 1997 to

Michael K. Powell Republican Virginia Nov. 3, 1997 to

Gloria Tristani Democrat New Mexico Nov. 3, 1997 to

**Overview**

The Federal Communications Commission (FCC) is an independent federal
regulatory agency responsible directly to Congress. Established by the
Communications Act of l934, it is charged with establishing policies to
govern interstate and international communications by radio, television,
wire, satellite, and cable. Its jurisdiction covers the 50 states and
territories, the District of Columbia and U.S. possessions.

The FCC is directed by five Commissioners appointed by the President and
confirmed by the Senate for staggered five‑year terms. No more than
three can be members of the same political party. The President
designates one of the Commissioners to serve as Chairman.

The Chairman presides over all FCC meetings. The Chairman coordinates
and organizes the work of the Commission and represents the agency in
legislative matters and in relations with other government departments
and agencies.

The Commission is committed to the use of emerging technologies to serve
its customers ‑‑ the American public and regulated industries ‑‑ more
efficiently.

The Commission continues to expand its use of the Internet, which has
become an increasingly popular way for the public to access information.
Extensive information is available through the FCC\'s Internet homepage
(http://www.fcc.gov). The Commission uses a fax‑on‑demand system to
allow quick access to forms,

press releases and other information (202‑418‑4830).

**BUREAUS AND OFFICES**

In FY98 the Commission had six operating Bureaus and 10 offices which
provide support services.

**Office of the Managing Director (OMD)**

Under the supervision and direction of the Chairman, the Managing
Director serves as the FCC\'s chief operating and executive official.
The Managing Director provides managerial leadership to, and exercises
supervision and direction over, the FCC\'s Bureaus and staff offices in
management and administrative matters; formulates and administers all
management and administrative policy programs and directives for the
Commission; assists the Chairman in carrying out administrative
responsibilities; advises the Chairman, Commissioners and management on
administrative and related matters; administers the FCC\'s management
systems and directs agency efforts in improving management
effectiveness, operational efficiency and employee productivity.

**Office of Public Affairs (OPA)**

The Office of Public Affairs is responsible for informing the press and
public of the FCC\'s actions, facilitating public participation in the
FCC\'s decision‑making processes and operating many of the FCC\'s public
reference rooms and library. OPA issues daily news releases, public
notices and other informational material; prepares the Annual Report and
other publications; handles telephone, written, and walk‑in requests for
information. OPA maintains the FCC\'s Internet homepage.

**Office of the Inspector General (OIG)**

The Inspector General conducts and supervises audits and investigations
relating to the programs and operations of the agency. The Inspector
General recommends policies for activities designed to promote economy,
efficiency and effectiveness, as well as to prevent and detect fraud and
abuse in agency programs. The Inspector General also provides a means
for keeping the Chairman, Commissioners, and the Congress fully informed
about problems and deficiencies at the agency. Incidents of waste,
fraud, abuse or mismanagement within the FCC may be reported to the
Office of Inspector General by dialing (202) 418‑0473 or the toll free
Hotline‑ 1‑888‑TO‑FCCIG (1‑888‑863‑2244).

**Office of Administrative Law Judges**

Administrative Law Judges preside over hearings and issue Initial
Decisions. Review of initial decisions is done by the full Commission.

**Office of the General Counsel (OGC)**

The General Counsel serves as the chief legal advisor to the Commission
and its various Bureaus and Offices. The General Counsel also represents
the Commission before the federal courts of appeals, recommends
decisions in adjudicatory matters before the Commission, assists the
Commission in its decisionmaking capacity, performs a variety of legal
functions regarding internal administrative matters and advises the
Commission on fostering competition and promoting deregulation in a
competitive environment. (A more extensive profile of the Office is
included later in this report.)

**Office of Workplace Diversity (OWD)**

This Office serves as the principal advisor to the Chairman and
Commission on all issues relating to workforce diversity, affirmative
recruitment, and equal employment opportunity (EEO) within the
Commission. The Office enforces EEO and civil rights laws that apply to
employees and applicants for employment, trains employees on subjects
such as race relations and preventing sexual harassment in the
workplace, counsels employees, and develops and implements policies and
programs that encourage fair and equal treatment of Commission
employees, affirmative recruitment, and that foster understanding and
acceptance of the diversity that employees of the Commission bring to
the workplace.

**Office of Communication Business Opportunities (OCBO)**

OCBO is responsible for providing advice to the Commission on issues and
policies concerning opportunities for ownership and contracting by
small, minority and women‑owned communications businesses. The Office
also advises the Commission on policies to foster equal employment
opportunity in the communications industries for minorities, women, and
people with disabilities. The Office works with entrepreneurs, industry
and public interest organizations and individuals to provide information
about policies to promote ownership and employment opportunities in the
communications industry.

**Office of Plans and Policy (OPP)**

The Office of Plans and Policy serves as principal economic and
technical policy adviser to the Commission, analyzing agenda items and
developing long‑term policy. The Office also produces working papers on
major policy issues. (A more extensive profile of the Office is included
later in this report.)

**Office of Legislative and Intergovernmental Affairs (OLIA)**

The Office of Legislative and Intergovernmental Affairs serves as the
Commission\'s principle point of contact with Congress and other
governmental entities. (A more extensive profile of the Office is
included later in this report.)

**Office of Engineering and Technology (OET)**

The Office of Engineering and Technology is responsible for managing the
non‑Government use of the spectrum. OET makes recommendations to the
Commission on how the radio spectrum should be allocated and establishes
the technical standards to be followed by users. (A more extensive
profile of the Office is included later in this report.)

**The Operating Bureaus**

The Commission is divided into six operating Bureaus reflecting six
broad divisions of Commission responsibility. These are: the Mass Media,
Common Carrier, Wireless Telecommunications, Compliance and Information,
International, and Cable Services Bureaus. The FY98 work of each Bureau
is discussed in the following chapters of this report.

**Mass Media Bureau**

**Overview**

The Mass Media Bureau is the part of the FCC that deals with
broadcasting \-- television and radio \-- as well as Multipoint
Distribution Service (MDS) (sometimes called wireless cable) and
Instructional Television Fixed Service (ITFS), a service used mainly by
educational entities to provide classroom instruction to multiple
locations. The Bureau issues licenses (authorization of service),
performs policy and rulemaking functions and administers the enforcement
program for all mass media services.

**Bureau Organization**

The Bureau consists of four Divisions.

The **AUDIO SERVICES DIVISION** (ASD) is responsible for reviewing and
taking action on all applications filed by the nation\'s 13,424 FM and
AM stations and 3,862 FM translator and booster stations. As a result of
the substantially relaxed broadcast station ownership limitations
included in the Telecommunications Act of 1996, ASD has continued to
receive an unprecedented level of applications seeking consent for
proposed radio mergers and acquisitions. Specifically, the number of
sales application filings in FY98 matched FY97\'s record-level of over
4,000. Many of these transactions continue to reach new levels of
complexity and have resulted in large media conglomerates. For example,
the transfer of control of SFX Broadcasting\'s stations to an entity
controlled by Hicks, Muse, Tate & Furst brought the number of radio
stations under Hick\'s control to over 350 and the transfer of control
of American Radio Systems to CBS Corporation resulted in the common
ownership of 172 radio stations. ASD maintained an impressive speed of
disposal rate in processing over 13,000 applications in FY98 despite an
attrition rate of approximately 15% among ASD\'s professional and
para-professional staff during the fiscal year.

The **VIDEO SERVICES DIVISION** (VSD) is responsible for reviewing and
taking action on all applications filed by the nation\'s 1,770
commercial and non-commercial educational television and 8,002 TV
translator and low power television broadcast stations (LPTV). VSD is
also responsible for the disposition of applications and other requests
regarding the development and licensing of facilities in the Multipoint
and/or Multichannel Distribution Service (MDS) and the Instructional
Television Fixed Service (ITFS). In FY98, VSD increased its disposals of
TV, LPTV, and ITFS new and major, license and other, sales and renewal
applications by more than 12% (from 7,938 to 8,940), with nearly 4% of
these disposals being non-routine actions. VSD also disposed of nearly
1,100 MDS applications and nearly 850 petitions to deny and other legal
challenges and waiver requests, thereby reducing the number of such
pending matters by one-third.

The **POLICY AND RULES DIVISION** (PRD) conducts rulemaking proceedings
which affect the mass media services and provides legal and technical
analyses of these rules. The Policy and Rules Division also conducts
economic studies to formulate and evaluate Commission policies in terms
of their economic effects on the mass media or on other Commission
regulated industries or society, and evaluates economics and other
studies submitted to the Commission in connection with various
proceedings.

In FY98, PRD continued to enhance its web pages on the Internet, making
them more user-friendly and expanding the information available by
adding both text and numerous links to related sites on particular
topics of potential use to the public. Designed for broadcasters, the
bar, and the general public, the PRD web pages provide on-line advice on
how to participate in rulemaking activities, access to rulemaking
documents (such as Notices of Proposed Rule Making and Reports and
Orders) concerning broadcast matters, including weekly updates of access
to all allocations decisions, and links to numerous related-topic sites.

The **ENFORCEMENT DIVISION** responds to complaints, conducts
investigations of broadcast stations, handles matters concerning
political broadcasting, enforces the cable television equal employment
opportunity laws and rules, and participates in formal adjudicative
proceedings involving broadcast stations.

**Major Proceedings**

**MAIN STUDIO AND PUBLIC FILE REQUIREMENTS**

**(MM Docket No. 97-138)**

On August 11, 1998, the Commission released a *Report and Order* that
relaxed the main studio rule to allow a station more flexibility in the
location of its main studio and public file. This relaxation of the
rules was more in line with modern communications and mobility by
listeners and viewers. It also afforded stations better opportunities to
take advantage of the business consolidation opportunities presented by
the recent relaxation of the multiple ownership limitations. The new
rules also permitted the public file be located outside the community of
license as long as it was at the main studio. This location should
increase accessibilty of the file for members of the public by placing
the file in a logical, easily discernable location, while significantly
reducing the burden for those licensees who had to keep off-premises
public files due to their studio location. The new public file rules
also clarified and updated the retention periods of certain documents
and eliminated the retention of documents that had proven of little
interest to the public or were obsolete. The new rules effectively serve
the public\'s interest in having reasonable access to the main studio
facilities and also to the material in each station\'s public file that
is relevant to the public\'s interest in station performance.

**LOW POWER RADIO**

**(RM Nos. 9208, 9242)**

The Commission initiated an Inquiry into the feasibility of establishing
a new class of low power radio service. In February and March of 1998,
the Commission sought public comment on petitions for rulemaking to
initiate such a service or services in order to provide opportunity for
new entrants in the broadcasting field and to provide for highly
localized and special interest programming.

**FEE ALTERNATIVES FOR ANCILLARY SERVICES OFFERED BY DTV BROADCASTERS**

**(MM Docket No. 97-247)**

On December 18, 1997, the Commission issued a *Notice of Proposed
Rulemaking* requesting comment on various fee alternatives for
broadcasters\' use of excess digital capacity to offer certain services
that would be \"ancillary or supplementary\" to their over-the-air
digital broadcast (DTV) signals. The *Notice* was issued pursuant to a
Congressional requirement that the FCC establish a program to assess and
collect fees from broadcast licensees for ancillary or supplementary
uses of their DTV spectrum. These services could include subscription
television services, computer software distribution, data transmissions,
audio signals, and other uses for which the DTV licensee receives
subscription fees or compensation other than from commercial advertising
from third parties. As required by Congress, these fees would \"recover
for the public a portion of the value of the public spectrum,\" \"avoid
unjust enrichment\" of broadcast licensees using the DTV spectrum for
fee-based services, and recover for the public an amount that, to the
extent feasible, equals but does not exceed the amount that would have
been recovered had such service been licensed pursuant to an auction.

**TWO-WAY DIGITAL ITFS AND MDS COMMUNICATIONS**

**(MM Docket No. 97-217)**

On September 17, 1998, the Commission adopted a *Report and Order*
clearing the way for Mulitpoint Distribution Service (MDS) and
Instructional Television Fixed Service (ITFS) licensees to offer two-way
digital services. The changes further the mandate of Section 257 of the
Telecommunications Act of 1996, which requires the Commission to
identify and eliminate market entry barriers for entrepreneurs and other
small businesses to promote diversity of media voices, vigorous economic
competition, technological advancement and promotion of the public
interest.

**BROADCAST EEO**

The Commission adopted an *Order* on September 29, 1998, suspending
until further notice the requirement that television and radio broadcast
licensees and permitees submit Broadcast Station Annual Employment
Reports (FCC Form 395-B), Broadcast Equal Employment Opportunity Program
Reports (FCC Form 396), and Broadcast EEO Model Program Reports (FCC
Form 396-A). The Commission stated that, in view of the denial by the
U.S. Court of Appeals for the D.C. Circuit of the Commission\'s request
for rehearing of [Lutheran Church - Missouri Synod v. FCC]{.underline},
this action was advisable while the Commission considers adoption of new
EEO rules that address concerns of the Court. Because the [Lutheran
Church]{.underline} decision involves broadcasters only, all other
services remain unaffected and must continue to file their reports with
the Commission.

**Biennial Review**

Section 11 of the Communications Act, as amended, requires the
Commission to review all of its regulations applicable to providers of
telecommunications service in every even-numbered year, beginning in
1998, to determine whether the regulations are no longer in the public
interest due to meaningful economic competition between providers of the
service and whether such regulations should be repealed or modified. The
first biennial regulatory review presented an excellent opportunity for
a serious top-to-bottom examination of all of the Commission\'s
regulations, not just those statutorily required to be reviewed.

As part of the 1998 Biennial Regulatory Review, each of the operating
Bureaus, together with the Office of General Counsel, hosted a series of
public forums and participated in brown-bag practice group lunches with
the Federal Communications Bar Association to solicit informal input
from the public. Beginning in January 1998, the Commission initiated a
series of rulemaking proceedings as part of the 1998 Biennial Regulatory
Review. FCC staff released a list of 31 proceedings which it has
proposed that the Commission initiate as part of the review. In August
1998, the FCC announced Significant Progress on 1998 Biennial Review.

The following actions were taken as part of the Mass Media Bureau\'s
Biennial Review:

**Broadcast Streamlining**. On April 2, 1998, the Commission adopted a
*Notice of Proposed Rulemaking* (MM Docket 98-43) which proposed
fundamental changes in the broadcast application and licensing
procedures. The goals of the proceeding were to reduce applicant and
licensee burdens, realize fully the benefits of the Mass Media Bureau\'s
current electronic filing initiative and preserve the public\'s ability
to participate fully in the broadcast licensing processes. The *Notice*
was part of the Mass Media Bureau\'s streamlining initiative.
Specifically, the *NPRM* proposed to streamline application processing
by reducing form length and disclosure requirements, and to recast
questions into a format compatible with electronic filing. The *NPRM*
also proposed the elimination of the \"no profit\" rule, Section
73.3597(c), which restricts payments upon assignment or transfers of
construction permits for unbuilt stations to reimbursement of the
seller\'s expenses. In order to ensure that enforcement policies remain
adequate in light of FCC streamlining efforts, the *Notice* sought
comment as to whether existing enforcement measures remain sufficient,
or whether new measures should be implemented. The *Notice* also sought
comment on whether to adopt mandatory electronic filing of 16 key Mass
Media Bureau broadcast application and reporting forms, including sales
forms and applications for new commercial stations, modifications to
licensed facilities, and the children\'s programming report. The
*Notice* sought comment on whether to phase in mandatory filing, and
whether small businesses or other qualified entities should be exempt
from the mandatory filing requirement.

In addition, this proceeding proposed to revise extension of
construction permit procedures by (a) issuing all construction permits
for a uniform three-year term; (b) extending permits only in
circumstances where the permit itself is subject to administrative or
judicial appeal or where construction delays are caused by an \"act of
God;\" (c) prohibiting extra time for construction after a permit has
been subject to a modification or assignment or transfer of control; and
(d) making expired construction permits subject to automatic forfeiture.
The Commission also invited comment on whether prior consent
requirements for *pro forma* transfers and assignments, which are
virtually always granted by the Commission, could or should be
eliminated or modified. Finally, the *Notice* proposed to replace the
current commercial broadcast station annual ownership report filing
requirement with filings when license renewal applications are due and
at the four-year mid-point of the license term. Licensees would still be
required, however, to file an ownership report within 30 days of the
consummation of an approved transfer or assignment.

**Streamlining of Radio Technical Rules**. On June 15, 1998, the
Commission released a *Notice of Proposed Rulemaking and Order* (MM
Docket No. 98-93) in a continuation of its broad-based initiative to
streamline Mass Media Bureau rules, policies and licensing procedures.
This radio technical rules initiative is designed to provide
broadcasters with substantially greater flexibility in improving service
and to create opportunities for coordinated facility improvements among
stations. The *Notice* (a) invited comment on whether to permit
\"negotiated interference\" proposals that would cause new or increased
interference in the FM band where service gains would substantially
outweigh newly created interference; (b) proposed to modify the
contingent application rule to permit coordinated facility modifications
among broadcasters; (c) proposed a signal propagation methodology that
more accurately takes into account terrain effects to better predict
where interference would [not]{.underline} occur; and (d) proposed other
changes to promote greater technical flexibility in the FM service and
to streamline and expedite the processing of applications to modify
existing facilities in several services.

**Broadcast Auctions.** On August 18, 1998, following a rulemaking
proceeding to implement provisions of the Balanced Budget Act of 1997,
the Commission released a *Report and Order* (MM Docket No. 97-234)
applying its expanded competitive bidding authority to award commercial
broadcast station construction permits when there are mutually exclusive
applications for analog frequencies. The new auction procedures will be
used in all future licensing proceedings, as well as those involving
pending commercial radio and television competing applications that were
held in abeyance following the Court of Appeals decision in [Bechtel v.
FCC]{.underline}, which invalidate certain elements of the Commission\'s
comparative selection criteria. Auctions will result in a more
expeditious resolution of these proceedings, thereby better serving the
public interest through the prompt initiative of new broadcast service.
To this end, questions as to an applicant\'s qualifications will only be
entertained with respect to those pending and future applicants who
ultimately become the winning bidder. It was also concluded that
Congress intended that all mutually exclusive applications for secondary
broadcast stations, such as low power television and FM and TV
translators, should also be awarded by the use of auctions.

To fulfill its duty to promote dissemination of licenses among a whole
variety of applicants and to ensure that certain designated entities
have an opportunity to participate in the auctions, the Commission
adopted a \"new entrant\" bidding credit for applicants with no, or a
very few, media interests. The Commission reasoned that this bidding
credit would help to ensure that small businesses and businesses owned
by minority groups and women are given the opportunity to participate in
the provision of spectrum-based services pursuant to Section 309(j) of
the Communications Act, without raising any constitutional questions.

In accordance with the exemptions set forth in the statute, the
Commission\'s expanded competitive bidding authority did not allow the
use of auctions to choose among mutually exclusive applicants to operate
on frequencies reserved for noncommercial educational broadcast service.
In addition, the Commission stated that it lacked sufficiently focused
comment to enable it to resolve the question of how to proceed in
situations involving unreserved or \"commercial\" frequencies where one
or more of the competing applicants is a noncommercial entity.
Accordingly, the Commission announced that it would seek additional
comments with respect to these matters in its ongoing rulemaking
proceeding reexamining the comparative selection standards for competing
noncommercial educational applicants.

Since the statute lacked an expressed exemption for the Instructional
Television Fixed Service, the Commission concluded that auctions would
also be used to resolve pending and future cases involving competing
ITFS applications. Given the instructional nature of the service and the
long-standing reservation of ITFS spectrum for noncommercial educational
use, the Commission was concerned that Congress may not have intended
its expansion of the Commission\'s competitive bidding authority to
include ITFS. Accordingly, the Commission stated that it would not
commence ITFS auctions immediately in order to allow it to request and
obtain Congressional guidance.

**Broadcast Ownership Rules.** On March 12, 1998, the Commission adopted
a *Notice of Inquiry* (MM Docket No. 98-35) that reviews four rules that
were not modified by the 1996 Telecom Act: UHF Television Discount;
Daily Newspaper/Broadcast Cross-Ownership Rule; Cable/Television
Cross-Ownership Rule; and Experimental Broadcast Station Multiple
Ownership Rule. Also, the *Notice of Inquiry* reviews three rules that
were recently modified by the FCC in accordance with provisions of the
1996 Telecom Act: National Television Ownership Rule; Local Radio
Ownership Rules; and Dual Network Rule.

The Commission also reviewed and restated its approach to granting
conditional waivers of broadcast ownership rules that are under active
consideration by the Commission in a rulemaking or inquiry proceeding.

**BROADCAST LICENSE AND PERMIT REVOCATION**

The following are licenses and construction permits revoked by the
Commission.

**Date of**

**revocation**

**Call letters Location order**

KUMA Yuma, AZ 02-20-39

WSAL Salisbury, MD 10-24-39

WWPN Middlesboro, KY 10-16-47

KGAR, KGAR-FM Garden City, KS 02-27-48

WPBP Mayaguez, PR 12-22-48

KCRO Englewood, CO 10-14-49

KWIK Burbank, CA 12-14-49

KPAB Laredo, TX 01-26-50

WXLT Ely, MN 05-23-50

KFMA Davenport, IA 06-21-50

KALA Sitka, AK 05-21-52

WSHA(TV) Sharon, PA 10-27-54

KOTO Albuquerque, NM 06-22-55

WGAV Amsterdam, NY 09-25-57

KHCD Clifton, AZ 07-23-58

KAJK(TV) Reno, NV 06-03-59

KBOM Bismarck-Mandan, ND 11-30-60

KLFT Golden Meadow, LA 01-19-61

WIOS Tawas City-East Tawas, MI 12-20-61

KPSR(FM) Palm Springs, CA 07-19-61

WLOV(FM) Cranston, RI 11-01-61

KCPA(FM) Dallas, TX 02-12-62

WGRC Green Cove Springs, FL 02-20-62

KWK St. Louis, MO 05-27-63

WBMT Black Mountain, NC 06-26-63

WELF-FM Glen Ellyn, IL 03-11-64

WELG-FM Elgin, IL 03-11-64

WCLM(FM) Chicago, IL 09-27-64

WHHL Holly Hill, SC 06-22-66

WPFA Pensacola, FL 05-11-66

WSRA Milton, FL 08-01-67

WEKY Richmond, KY 05-03-68

KDFR(FM) Tulare, CA 07-03-68

KLSU White Castle, LA 03-26-73

WFAN-TV Washington, DC 04-16-74

WMET(TV) Baltimore, MD 04-16-74

WVGB Beaufort, SC 06-24-76

WCLY Columbia, PA 05-19-77

WLLE Raleigh, NC 07-21-77

KKUZ-AM Terrance Lake, WA 01-13-89

KRGL-AM Myrtle Creek,OR 05-05-89

WRPZ-AM Paris, KY 08-22-90

WBBY(FM) Westerville, OH 02-21-90

WKSP-AM Kingstree, SC 08-01-91

WPSC-AM Pageland, SC 02-07-92

WDAT-AM Amory, MS 08-03-92

WAST(AM) Ashtabula, OH 08-19-92

WORI-AM Oak Ridge, TN 06-24-92

KOKY-AM Jacksonville, AR 07-13-92

WKU(AM) Parrish, AL 11-11-92

WFRK(AM) Coleman, FL 01-07-93

KBRS(AM) Springdale, AK 08-03-93

WKLO(AM) Danville, KY 08-26-93

KUCB(FM) Des Moines, IA 02-02-96

KLEH(AM) Anamosa, IA 11-05-96

WSJR(AM) Madawaska, ME 11-05-96

WKZF(FM) Bayboro, NC 11-14-96

KZOT(AM) Marianna, AR 11-20-96

WLVC Fort Kent, ME 12-10-96

KRBG(FM) Canadian, TX 02-01-97

WAYB(AM) Waynesboro, VA 02-09-97

KRKE Aspen, CO 02-24-97

KFCC(AM) Bay City, TX 04-22-98

KUHD(AM) Port Neches, TX 05-19-98

WBOW(AM), WBFX(AM), WZZQ(FM) Terre Haute, IN 06-25-98

**MASS MEDIA STATISTICS**

**Current Broadcast Authorizations**

Outstanding broadcast authorizations for major services at the close of
FY98 totaled 27,058, an increase of 185 over FY97.

Increase

Class Sept. 30, Sept. 30, or

1997 1998 (decrease)

Standard (AM) 4,970 4,979 9

Frequency Modulation (FM) 6,107 6,168 61

Educational FM 2,240 2,277 37

UHF Commercial TV 763 792 29

VHF Commercial TV 575 587 12

UHF Educational TV 259 263 4

VHF Educational TV 128 128 \-\--

LPTV/TV Translators (UHF-VHF) 8,230 8,002 (228)

FM Translator and Booster [3,601]{.underline} [3,862]{.underline}
[261]{.underline}

Totals 26,873 27,058 185

There were 15,194 AM, FM and TV broadcast stations authorized at the
close of FY98. A total of 13,956 had operating authorizations, and 1,238
were under construction.

Outstanding Outstanding

Licensed Construction Licensed Construction

Class Stations Permits for Stations Permits for

Sept. 30, New Stations Sept. 30, New Stations

1997 Sept. 30, 1998 Sept. 30,

1997 1998

Standard (AM) 4,811 159 4,734 245

Frequency Modulation (FM) 5,510 597 5,639 529

Educational FM 1,906 334 2,000 277

UHF Commercial 639 124 656 136

VHF Commercial TV 558 17 559 28

UHF Educational TV 242 17 243 20

VHF Educational TV [124]{.underline} [4]{.underline} [125]{.underline}
[3]{.underline}

Totals 13,790 1,252 13,956 1,238

**NONHEARING APPLICATIONS STATISTICS**

**Standard Broadcast (AM)**, **Frequency Modulation (FM) - Commercial
and Educational, and FM Translators and Boosters**

Class On hand Dismissed Designated On hand

Oct. 1, Denied for Oct. 1,

1997 New Granted Returned hearing 1998

AM/FM New stations

and major changes 2,145 822 650 329 0 1,988

FM Translators and Boosters

New stations and major changes 540 503 406 180 0 457

Assignments and transfers 673 4,032 3,887 157 2 659

Renewals 2,507 2,969 4,222 34 0 1,220

Licenses 935 1,555 1,404 48 0 1,038

Modifications and Extensions 676 1,811 1,608 217 0 662

**Television (TV) (Commercial and Educational)**

New stations and major changes 771 3 88 105 0 581

Assignments and transfers 93 543 500 22 0 114

Renewals 147 556 529 0 0 174

Licenses and other 451 248 243 43 0 413

**LPTV/TV Translators and Boosters**

New stations and major changes 645 14 326 142 0 191

Assignments and transfers 56 307 275 18 0 70

Renewals 386 3,603 3,392 0 0 597

Licenses and other 151 2,471 1,255 140 0 1227

**Instructional TV Fixed**

New stations and major changes 1,135 70 484 150 0 571

Assignments and transfers 8 8 11 0 0 5

Renewals 67 111 118 8 0 53

Licenses and other 632 1,098 1,082 9 0 639

**Common Carrier Bureau**

## Overview

The FCC has jurisdiction over interstate communications services such as
telephone calls between states. These services also include the
connections to local customers that local exchange carriers (LECs)
provide to long distance telephone companies. Under the Communications
Act of 1934, as amended by the 1996 Act, the FCC is charged with
ensuring that common carriers provide services at just, reasonable, and
affordable prices and in a nondiscriminatory manner. Over the past three
years, the FCC's work has been dominated by its efforts to implement the
1996 Act's "pro-competitive, deregulatory national policy framework" to
bring greater competition to all communications markets and to ensure
that universal service and other public interest provisions of the Act
are fully implemented in a manner that yields the best results for the
American people.

The Common Carrier Bureau implements FCC regulations and programs
designed to meet these objectives. The FCC\'s Common Carrier Bureau has
responsibility for FCC policies concerning telephone companies that
provide interstate telecommunications services to the public through the
use of wire-based transmission facilities. These companies, called
common carriers, provide voice, data, and other transmission services.
The Common Carrier Bureau seeks to encourage competition in various
telephone markets and to ensure that the FCC's regulations do not impede
the development of competition. Where competition does not yet exist, or
where it fails to protect consumers, the Bureau enforces Commission
rules and policies that are designed to ensure that the Communications
Act mandate of just, reasonable and non-discriminatory rates for
interstate services is fulfilled. As the industry has evolved from an
integrated monopoly to an intensely competitive industry, the FCC and
the Common Carrier Bureau have worked to adapt the Communications Act to
a rapidly changing industry.

The Common Carrier Bureau works closely with the other operating
Bureaus, especially the International Bureau, the Wireless
Telecommunications Bureau, and the Cable Services Bureau, to coordinate
related matters. The Common Carrier Bureau also works closely with state
regulators on the many issues that affect both jurisdictions. On issues
such as universal service, the FCC and the states work together through
the formation of a Federal-State Joint Board, whose members are drawn
from the FCC and from state regulatory bodies.

## Bureau Organization

In 1998, the Common Carrier Bureau had a staff of approximately 350. The
Common Carrier Bureau is organized into seven divisions:

The **ACCOUNTING SAFEGUARDS DIVISION** develops and administers
accounting and reporting programs to provide the Commission with
information about communications common carriers with which to measure
the impact of Commission policies on carriers and the network and to
serve as a foundation for regulatory decision‑making. The Division also
conducts a comprehensive program of field audits and investigations of
carriers\' financial and operating practices, procedures, and records to
verify that carriers are complying with the Commission\'s rules.

The **ACCOUNTING POLICY DIVISION** is responsible for implementing and
administering the provisions of section 254 of the Communications Act of
1934, which are designed to enssure universal availability of affordable
telecommunications services and to extend the availability of advanced
telecommunications to schools and rural health care providers. The
Division is also responsible for administering jurisdictional
separations under Part 36 of the Commission\'s rules.

The **COMPETITIVE PRICING DIVISION** is responsible for administering
the tariffing provisions of sections 201 - 205 of the Communications Act
of 1934, as amended, including the review of all domestic and
international common carrier tariffs, and conducting tariff
investigations. The Division is also responsible for implementing
various sections of the 1996 Act, including the development of federal
regulations relating to pricing of the various forms of interconnection,
the administration of regulatory reform provisions relating to the
review of local telephone company tariffs on a streamlined basis, and
the development and implementation of forbearance as it relates to the
tariffing and pricing of common carrier telecommunications services.

The **ENFORCEMENT DIVISION** is charged with addressing complaints filed
pursuant to section 208 of the Act. All carriers, even those that the
Commission has chosen not to regulate directly because of increased
competition in the market place, are subject to certain consumer
protection requirements. All users of telecommunications services retain
the right to bring their formal or informal complaints directly to the
Commission. The Division receives, processes, and assists in the
resolution of tens of thousands of consumer complaints each year,
providing an inexpensive, easily accessible, user friendly process for
consumers to address a variety of grievances against common carriers,
including complaints relating to billing issues, slamming, and cramming.
The Division also adjudicates formal complaints filed against common
carriers. These complaints frequently involve disputes between competing
carriers or disagreements between carriers and their customers over the
terms and conditions of service. The Division also monitors complaint
data to identify trends in carrier practices and provide information for
use by consumers and other enforcement organizations.

The **INDUSTRY ANALYSIS DIVISION** (IAD) gathers and publishes data
about the telecommunications industry. It administers the Commission\'s
programs for assisting low-income telephone subscribers. Pursuant to its
data gathering activities, IAD undertakes to advise the Commission,
other Divisions of the Common Carrier Bureau and the public about data
and trends in the telecommunications industry. Throughout the fiscal
year IAD prepares numerous statistical reports that are published by the
Commission and the Federal-State Joint Board, and answers thousands of
inquiries from the public about telephone industry-related data and
trends. IAD also conducts rulemakings and other public proceedings
related to the Communications Act of 1934 and implementation of the
Telecommunications Act of 1996.

The **NETWORK SERVICES DIVISION** (NSD) is responsible for the
day-to-day coordination, planning, and execution of ongoing
telecommunications numbering plan challenges and improvements to ensure
the efficient utilization of current resources and to prevent number
exhaust of the public switched telephone network. The Division is
responsible for the technical standardization of communications
equipment compatibility to protect network operation. NSD oversees the
Telecommunications Service Priority System that allows and ensures the
protection and restoration of vital communications based on established
service requirement priorities. NSD serves as the Common Carrier
Bureau\'s proponent to facilitate Year 2000 compliance within the
telecommunications industry.

The **POLICY AND PROGRAM PLANNING DIVISION** is involved in most
rulemaking and policy making proceedings that concern major issues of
wireline telecommunications policy, other than access pricing. The
Division has primary responsibility for implementing the interconnection
requirements of the Telecommunications Act of 1996 and reviewing Bell
Operating Company (BOC) applications to provide in-region interLATA
service. The Division also has responsibility for reviewing most
petitions for preemption of state and local telecommunications
regulations filed by wireline carriers pursuant to the 1996 Act. The
Division recommends rules and regulatory programs that are designed to
promote competition in the provision of telecommunications services and
promote unbundling of network services and features useful to consumers,
other carriers, and information service providers as well as ensuring
that consumers benefit from competition in the interexchange market. The
Division develops rules and policies in such areas as interconnection,
number portability, and the interexchange market.

## Major Proceedings 

**ACCESS CHARGE REFORM**

**(CC Docket Nos. 96-262 and 97-250)**

In December 1997, incumbent LECs filed tariffs implementing most of the
changes introduced by the Access Charge Reform *First Report and Order*.
On June 1, 1998, the Commission released a *Memorandum Opinion and
Order*, completing its investigation of the tariffs. These changes
modified the interstate access rate structure rules by requiring
incumbent price cap LECs to move recovery of their costs to a manner
that is more reflective of the way those costs are incurred. To the
extent possible, costs that do not vary with the amount of usage are now
recovered through flat-rated charges, and costs that do vary with the
amount of usage are recovered through traffic-sensitive, per-minute
charges. On August 19, 1998, the United States Court of Appeals for the
8th Circuit affirmed the Access Charge Reform *First Report and Order*
in all respects.

ADVANCED SERVICES

(CC Docket Nos. 98-146 and 98-147)

On August 7, 1998, the Commission released a *Memorandum Opinion and
Order (Order)* and *Notice of Proposed Rulemaking (NPRM)* proposing
actions to encourage all wireline providers, both incumbent local
telephone companies and their competitors, to provide advanced
telecommunications services.

In the *Order*, the Commission found that an incumbent local telephone
company must interconnect its data network with the data networks of
competitive providers of telecommunications services. The Commission
also clarified that the facilities and equipment used by an incumbent to
provide advanced services are network elements and subject to the 1996
Act\'s unbundling obligations. In addition, the Commission clarified
that incumbent local telephone companies are required to offer for
resale at a wholesale discount all advanced services provided to retail
customers. The Commission also concluded that it did not have statutory
authority to forbear from the market-opening requirements placed on
incumbents in sections 251 and 271 of the Act until those requirements
have been fully implemented.

In the *NPRM*, the Commission proposed an optional alternative pathway
for an incumbent local telephone company willing to offer advanced
services on the same footing as other competitors. Specifically, the
Commission proposed that, under certain circumstances, a separate
affiliate of the incumbent offering advanced services would not be
regulated as an incumbent local exchange carrier, and would not be
subject to certain statutory requirements as an incumbent. The
Commission proposed certain safeguards that would apply to such an
affiliate, and sought comment on those safeguards. In addition, the
Commission proposed and sought comment on several rules regarding the
provision of collocation space and unbundled network elements by
incumbent local exchange carriers.

Also on August 7, 1998, the Commission released a *Notice of Inquiry*,
pursuant to the mandate of Section 706(b) of the Communications Act of
1996. The Commission\'s *Notice of Inquiry* was designed to compile a
record about the status of broadband capabilities of existing and
planned networks by asking commenters to describe the assets, abilities
and incentives of companies that own the networks. The *Notice* also
sought comment about how the Commission could determine whether advanced
telecommunications capability is being deployed in a \"reasonable and
timely fashion,\" by asking questions about current supply of and demand
for such services. Finally, the *Notice* invited proposals for
Commission action if the Commission determined that advanced
telecommunications capability is not being deployed in a reasonable and
timely fashion.

# AT&T ET AL. V. AMERITECH, US WEST, AND 

(File No. E-98- 41-43)

On September 28, 1998, the Commission issued a decision in AT&T
Corporation, et al. v. Ameritech Corporation, Qwest Communications Corp.
and U S WEST Communications, Inc. resolving several formal complaints
concerning the lawfulness of two separate business agreements between
Ameritech and Qwest and between U S WEST and Qwest. The agreements
resulted in both Ameritech and U S WEST providing, under the brand names
CompleteAccess and Buyer\'s Addvantage, respectively, a package of
services that included Qwest\'s long distance service. The Commission
concluded that Ameritech\'s and U S WEST\'s business agreements with
Qwest resulted in their provision of long distance service, in violation
of section 271 of the Act. The Commission, in determining that Ameritech
and U S WEST unlawfully were providing long distance service through
these business agreements, found that the companies\' involvement in the
long distance market enabled them to obtain competitive advantages,
thereby reducing their incentive to cooperate in opening their local
markets to competition. The Commission outlined factors relevant to
making such a determination, including whether the company obtains
material benefits uniquely associated with the ability to include a long
distance component in a combined service offering; whether the company
is effectively holding itself out as a provider of long distance
service; and whether the company is performing activities and functions
that are typically performed by those who furnish long distance service.

**CUSTOMER PROPRIETARY NETWORK INFORMATION (CPNI)**

**(CC Docket No. 96-115).**

On February 26, 1998, the Commission issued a *Second Report and Order
and Further Notice of Proposed Rulemaking* implementing the statutory
obligations of section 222 of the Telecommunications Act of 1996. In
addition, the Commission undertook a review of the current regulatory
customer proprietary network information (CPNI) framework and addressed
issues deferred to this proceeding from other Commission proceedings.
Specifically, the *Order* modified previous rules and procedures as
follows. First, the Commission permitted carriers to use CPNI without
customer approval, to market offerings that are related to, but limited
by, the customer\'s existing service relationship with their carrier.
Second, before carriers may use CPNI to market service outside the
customer\'s existing service relationship, the Commission required that
carriers obtain express customer approval. The Commission further
required carriers to provide a one-time notification of customers\' CPNI
rights prior to any solicitation for approval. Finally, the Commission
eliminated the *Computer III* CPNI framework in light of the
comprehensive regulatory scheme Congress established in section 222.

FORMAL COMPLAINTS -- IMPLEMENTATION OF THE 1996 ACT, AMENDMENT OF RULES
GOVERNING PROCEDURES TO BE FOLLOWED WHEN FORMAL COMPLAINTS ARE FIELD
AGAINST COMMON CARRIERS

(CC Docket No. 96-238)

On November 25, 1997, the Commission released a *Report and Order*
adopting new and revised rules establishing the procedures governing
formal complaints filed against common carriers pursuant to section 208
of the Act. Revised rules were necessitated by the Telecommunications
Act of 1996, which imposed 90‑day to 5‑month deadlines on the Commission
to resolve certain categories of formal complaints. The new rules and
procedures are designed to satisfy these deadlines and to speed the
resolution of all formal complaints. Generally, the revised rules are
intended to promote settlement efforts, improve the utility and content
of pleadings, and eliminate or curtail certain pleading and discovery
practices.

On July 14, 1998, the Commission released a *Second Report and Order*
establishing rules for an Accelerated Docket. Under the Accelerated
Docket rules, parties to a dispute are required to participate in
settlement discussions supervised by Commission personnel. Only if these
discussions fail to resolve a dispute (and the dispute is otherwise
appropriate for handling on a fast-track basis) are matters accepted
onto the Accelerated Docket. Once accepted onto the docket, cases are
subject to accelerated discovery, which may include depositions and
extensive document discovery. The docket\'s rules also allow parties to
present their arguments in a live, hearing-type proceeding, rather than
merely submitting briefs. The rules for the Accelerated Docket call for
issuance of an order disposing of cases within 60 days of the filing of
the complaint.

# MERGER APPLICATIONS 

Several companies filed with the Commission during 1998 applications for
transfer of control of certain wireless licenses and section 214
authorizations. The transfers of control of these licenses and
authorizations are necessary to effectuate the mergers between these
companies. Several of these applications have been granted
(WorldCom/MCI, AT&T/TCG, SBC/SNET), while two others are pending,
(SBC/Ameritech, Bell Atlantic/GTE).

On July 23, 1998, in CC Docket No. 98-24, the Commission released an
*Order* approving the transfer of licenses associated with the merger
between AT&T Corp. and Teleport Corporation Group. The Commission found,
in brief, that the merger will have no anti‑competitive effects and that
the merger likely will create an entity that will enter local markets
more quickly than would either of the merging parties on its own.

On September 14, 1998, in CC Docket No. 97-121, the Commission approved
the transfer of communications licenses and authorizations from MCI
Communications Corporation to WorldCom, Inc., subject to two conditions:
(1) MCI must complete divestiture of its Internet assets prior to the
close of its merger with WorldCom; and (2) the transfer of MCI\'s direct
broadcast satellite license to WorldCom is subject to the outcome of
pending applications for review of the initial license grant to MCI. The
Commission found that, with these conditions, the merger would serve the
public interest.

On July 24, 1998, SBC and Ameritech filed joint applications under
sections 214 and 310(d) of the Communications Act, requesting Commission
approval of the transfer of control to SBC of licenses and
authorizations controlled or requested by Ameritech or its affiliates or
subsidiaries (CC Docket No. 98-141). That merger was pending at the end
of Fiscal Year 1998.

# OSS NPRM 

# (CC Docket No. 98-56, RM 9101)

In the *Local Competition First Report and Order*, the Commission
concluded that, pursuant to sections 251(c)(3) and (c)(4) of the
Communications Act, an incumbent LEC must provide nondiscriminatory
access to its operations support systems (OSS) for five functions:
pre-ordering, ordering, provisioning, maintenance and repair, and
billing. With respect to interconnection, the Commission concluded that,
pursuant to section 251(c)(2)(C), an incumbent LEC is required to
provide interconnection between its network and that of a requesting
carrier at a level of quality that is at least indistinguishable from
that which the incumbent provides itself, a subsidiary, an affiliate, or
any other party. Congress required incumbent LECs to make network
elements available to competing carriers on an unbundled basis. Pursuant
to its statutory authority, the Commission identified operator services
and directory assistance as network elements that must be provided on an
unbundled basis in a nondiscriminatory manner.

On May 30, 1997, LCI and CompTel jointly filed a petition asking the
Commission to initiate a rulemaking proceeding to address, among other
things, performance measurements and reporting requirements for the
provision of OSS functions. On April 17, 1998, the Commission released a
*Notice of Proposed Rulemaking* seeking comment on a set of model
performance measurements and reporting requirements for OSS,
interconnection, and access to operator services and directory
assistance.

# 

# 

# Section 271 Applications

On December 24, 1997, the Commission denied BellSouth\'s application for
authorization to provide in-region, interLATA service in South Carolina.
The Commission concluded that BellSouth was not eligible to proceed
under Track B, and that it had not yet demonstrated that it generally
offers each of the terms of the competitive checklist. Specifically, the
Commission found that BellSouth had failed to demonstrate that it: (1)
offers nondiscriminatory access to its operations support systems; (2)
offers nondiscriminatory access to unbundled network elements in a
manner that permits competing carriers to combine them; and (3) offers
certain retail services at discounted rates as required by the 1996 Act.
The Commission found, however, that BellSouth had demonstrated that it
offers nondiscriminatory access to 911 and E911 services, and that
BellSouth\'s proposed inbound telemarketing script is acceptable under
section 272 of the 1996 Act.

On February 3, 1998, the Commission denied BellSouth\'s application to
provide in-region, interLATA service in Louisiana. The Commission found
that, in several respects, BellSouth\'s application for Louisiana was
materially indistinguishable from its application to provide long
distance service in South Carolina, which the Commission had recently
denied. The Commission concluded that BellSouth\'s Louisiana application
failed to meet two aspects of the competitive checklist that it also
failed to meet in its South Carolina application. First, BellSouth
failed to demonstrate that it provides competing carriers with
nondiscriminatory access to its operations support systems. Second,
BellSouth did not satisfy the competitive checklist because it refused
to offer certain individually-tailored customer contracts, or contract
service arrangements, to competing carriers at a wholesale discount.

On July 9, 1998, BellSouth filed a second section 271 application to
provide in-region, interLATA service in Louisiana. Action on this was
pending at the close of the fiscal year.

# Slamming

On April 21, 1998, the Commission revoked the operating authority of the
Fletcher Companies for engaging in the unauthorized change of
consumers\' preferred interexchange carriers (slamming), and numerous
other violations of the Communications Act and the Commission\'s rules
(CC Docket No. 97-144). The Fletcher Companies, a group of long distance
telephone companies, were barred from providing interstate common
carrier services without obtaining the prior consent of the Commission.
In addition, the Commission assessed forfeitures against the Fletcher
Companies totalling \$5,681,500. The action represented the first
revocation order and largest total forfeiture assessed by the Commission
for slamming.

On July 6, 1998, the Commission issued a *Notice of Apparent Liability
for Forfeiture (NAL)* against All American totaling 1.04 million
dollars, which, at the time, was the third largest proposed forfeiture
amount in the Commission\'s history. The *NAL* alleged that All American
had engaged in the unauthorized change of 13 consumers\' preferred
interexchange carriers (slamming) through the use of forged Letters of
Authorization. The *NAL* was unique in its application of the
Commission\'s Forfeiture Policy Statement and Guidelines to propose a
forfeiture amount of \$80,000 per slamming violation.

**Tariff Streamlining**

**(CC Docket No. 96-187)**

In the *Tariff Streamlining Report and Order*, CC Docket No. 96-187, the
Commission adopted regulations implementing tariff streamlining
provisions of the Telecommunications Act of 1996. The Commission
determined that it would establish a program of mandatory electronic
filing of tariffs and associated documents, via the Internet, by
incumbent local exchange carriers. On July 1, 1998, the Commission
inaugurated the Electronic Tariff Filing System (ETFS). ETFS is an
Internet based system through which incumbent local exchange carriers
submit official tariffs and associated documents to the Commission in
lieu of filing paper copies with the Secretary\'s Office. Mandatory
filing by incumbent local exchange carriers via ETFS began on July 1,
1998. In addition, the public may also use ETFS, via the Internet, to
view these electronically filed tariffs and associated documents.

**Telecommunications Relay Services (TRS) and Speech-to-Speech Services
for Individuals with Hearing and Speech Disabilities**

**(CC Docket No. 98-67)**

On May 14, 1998, the Commission adopted a *Notice of Proposed
Rulemaking*, released May 20, 1998, proposing rule amendments that will
enhance the quality of TRS, and broaden the potential universe of TRS
users. The proposals further promote access to telecommunications for
the millions of persons with disabilities who might otherwise be
foreclosed from participation in the increasingly telecommunications and
information-oriented society. First, the Commission proposed to require
that common carriers providing voice transmission service must ensure
that nationwide speech-to-speech (STS) relay services are available to
users with speech disabilities throughout their service areas. Second,
the Commission proposed a number of amendments to its current TRS
minimum standards that will improve the overall effectiveness of the TRS
program. For example, the Commission proposed to amend the
speed-of-answer rules to make the experience of persons using TRS in
placing a telephone call through a TRS center more functionally
equivalent to the experience of voice callers using the voice telephone
network. Third, the Commission proposed amendments to its enforcement
rules to improve its oversight of certified state TRS programs and its
ability to compel compliance with federal mandatory minimum standards
for TRS. One of those proposals would require TRS programs to notify the
Commission of substantive changes to their program within 60 days of the
effective date of the change, and to file documentation demonstrating
the state program remains in compliance with all the Commission\'s
mandatory minimum standards.

# Telephone Number Portability 

**(CC Docket No. 95-116)**

Telephone number portability refers to the ability of residential and
business consumers to retain their telephone numbers when switching from
one local telephone service provider to another. To remove the barrier
to local competition caused by the inability of customers to retain
their telephone numbers when changing local service providers, section
251(b)(2) of the amended 1934 Communications Act requires all LECs, both
incumbents and new entrants, \"to provide, to the extent technically
feasible, number portability in accordance with requirements prescribed
by the Commission.\" To prevent the cost of providing number portability
from itself becoming a barrier to local competition, section 251(e)(2)
requires that \"\[t\]he cost of establishing telecommunications
numbering administration arrangements and number portability shall be
borne by all telecommunications carriers on a competitively neutral
basis as determined by the Commission.\"

The Commission released a combined *Order* *and* *Further Notice of
Proposed Rulemaking* in July 1996 to begin implementing number
portability. In the *First Report and Order*, the Commission directed
LECs to use currently available techniques such as call forwarding to
offer an interim form of number portability. On August 18, 1997, in its
*Second Report and Order*, the Commission adopted a number of
recommendations made by the North American Numbering Council regarding,
among other things, the technical and operational standards for the
provision of long-term number portability by wireline carriers.

In a *Third Report and Order*, adopted on May 12, 1998, the Commission
addressed issues associated with the costs of providing long-term number
portability. Specifically, the Commission addressed the categorization
of costs; the funding of the regional databases necessary to provide
long-term number portability; and standards for recovery of the
carrier-specific costs directly related to the implementation and
provision of telephone number portability. With respect to
carrier-specific costs, the Commission adopted a narrow view of the
costs permitted to be recovered. Essentially, recoverable costs are only
those that would not have been incurred \"but for\" portability, and
that were incurred \"for the provision of\" number portability. Pursuant
to that definition, costs that carriers incur \"as an incidental
consequence of number portability\" cannot be recovered as number
portability costs. The *Third Report and Order* also prohibited the use
of general overheads in determining number portability costs. Finally,
the Commission permitted, but did not require, incumbent LECs subject to
rate-of-return or price-cap regulation to recover their carrier-specific
costs directly relating to providing number portability through a
federal charge assessed on end-users, to begin no earlier than February
1, 1999, and last no longer than 5 years. Carriers not subject to rate
regulation \-- CLECs, CMRS providers and non-dominant IXCs \-- may
recover their carrier-specific costs in any lawful manner consistent
with their obligations under the Communications Act.

**Toll Free Service Access Codes**

**(CC Docket No. 96-254)**

On March 31, 1998, the Commission released a *Fourth Report and Order
and Memorandum Opinion and Order* that concluded that vanity numbers in
the 877 toll free code, and in toll free codes beyond 877, shall be
released and made available on a first-come, first-served basis as each
toll free code is deployed. The *Order* further concluded that a right
of first refusal shall be offered to current 800 subscribers holding 800
vanity numbers that correspond to the 888 vanity numbers that were
initially set aside. If the 800 subscriber refrains from exercising its
option to reserve the corresponding 888 vanity number, that number shall
be released and made available on a first-come, first-served basis.

**Universal Service**

(CC Docket Nos. 96-45, 96-262, 94-1, 91-213, 95-72)

The Commission has continued to issue rulemaking and other orders that
are necessary to implement the universal service provisions of the 1996.
The *Commission's First Report and Order* in this docket was issued in
May 1997. Included among the issues were: the principles of universal
service, including competitive neutrality; services to be included
within the definition of universal service; the influence of
affordability on subscribership; the criteria for designating
telecommunications carriers eligible for universal service support;
service areas and unserved areas; support for both rural and non-rural
high cost local exchange carriers; universal service support for low
income consumers; issues unique to insular areas; methods of supporting
and enhancing deployment of telecommunications services to schools and
libraries and rural health care providers; interstate subscriber line
charges and carrier common line charges; and administration of universal
service programs. In FY 1998, the following actions were taken:

On December 30, 1997, the Commission issued the *Fourth Order on
Reconsideration*, in which it clarified or made further findings
regarding: (1) the rules governing the eligibility of carriers and other
providers of supported services; (2) methods for determining levels of
universal service support for carriers in rural, insular, and high cost
areas; (3) support for low-income consumers; (4) the rules governing the
receipt of universal service support under the schools and libraries and
rural health care programs; (5) the determinations of who must
contribute to the new universal service support mechanisms; and (6)
administration of the support mechanisms.

On April 10, 1998, the Commission issued a *Report to Congress*,
addressing issues relating to universal service implementation and the
regulatory status of the Internet, including IP telephony.

On May 8, 1998, the Commission issued a *Report to Congress* proposing
that the Universal Service Administrative Company, the current
Administrator of the high cost and low income support mechanisms, also
administer the universal service support mechanisms for schools and
libraries and rural health care providers. The *Report* also supplied
information concerning funding and disbursements for the schools and
libraries support mechanism.

# Biennial Review

Section 11 of the Communications Act, as amended, requires the
Commission to review all of its regulations applicable to providers of
telecommunications service in every even-numbered year, beginning in
1998, to determine whether the regulations are no longer in the public
interest due to meaningful economic competition between providers of the
service and whether such regulations should be repealed or modified. The
first biennial regulatory review presented an excellent opportunity for
a serious top-to-bottom examination of all of the Commission\'s
regulations, not just those statutorily required to be reviewed.

As part of the 1998 Biennial Regulatory Review, each of the operating
Bureaus, together with the Office of General Counsel, hosted a series of
public forums and participated in brown-bag practice group lunches with
the Federal Communications Bar Association to solicit informal input
from the public. Beginning in January 1998, the Commission initiated a
series of rulemaking proceedings as part of the 1998 Biennial Regulatory
Review. FCC staff released a list of 31 proceedings which it has
proposed that the Commission initiate as part of the review. In August
1998, the FCC announced significant progress on 1998 Biennial Review.
Highlights are as follows:

**Computer III**. On January 28, 1998, the Commission adopted a *Further
Notice of Proposed Rulemaking (FNPRM)* (CC Docket No. 95-20) proposing
to streamline the safeguards under which the BOCs provide information
(*i.e.*, enhanced) services, such as data processing and electronic
messaging. The safeguards exist to encourage BOC provision of new
technologies and innovative information services, while ensuring that
the BOCs make their networks available for use by competitive providers
of such services. The FNPRM aims to strike a balance between the
Commission\'s goal of deregulating where competition has developed, and
its recognition that until full competition is realized in the local
exchange market, certain safeguards may still be necessary. The
proposals are also designed to harmonize the Commission\'s existing
safeguards established in the Computer III proceeding with the
Telecommunications Act of 1996.

**Testing New Technology**. On June 11, 1998, the Commission released a
*Notice of Inquiry* (CC Docket No. 98-94) which solicited public comment
about the effects of existing Title II regulation on experiments
involving advanced telecommunications technology conducted by regulated
firms and others.

**Accounting and Cost Allocation Requirements**. On June 17, 1998, the
Commission released a *Notice of Proposed Rulemaking* (CC Docket No.
98-81) proposing rule changes that would modify its accounting and cost
allocation to reduce the administrative burden on mid‑sized incumbent
local exchange carriers while maintaining the necessary degree of
oversight and monitoring on such carriers.

**Signal Power Limitations.** On September 16, 1998, the Commission
issued a *Notice of Proposed Rulemaking*, (CC Docket No. 98-163)
proposing to relax the signal power limitations contained in Part 68 of
the Commission's rules and seeking comment on the benefits and harms, if
any, that may result from this change. This change would allow Pulse
Code Modulation modems, which are used by Internet Service Providers and
other online information service providers to transmit data to
consumers, to operate at higher signal powers and to transmit data at
moderately higher speeds to end-users.

**Streamlined Reporting Requirements**[.]{.underline} On September 25,
1998, the Commission released a *Notice of Proposed Rulemaking and
Notice of Inquiry* (CC Docket No. 98-171) that proposed to simplify four
reporting requirements associated with the administration of
Telecommunications Relay Services, North American Numbering Plan, Local
Number Portability and Universal Service Support mechanisms so that
carriers may satisfy filing requirements by filing a single worksheet.
The Commission\'s goal is to eliminate the burdens on regulated carriers
and reduce the public costs of regulation by conserving Commission staff
resources associated with auditing and cross-checking data submissions.

**Cable Services Bureau**

**Overview**

The Cable Services Bureau provides a single point-of-contact for
consumers, community officials and the industry for cable related issues
pending before the Commission. Other duties include policy and
rulemaking in cable television and enforcement of the cable television
related provisions of the 1996 Telecommunications Act and the 1992 Cable
Act.

Increasing competition in the markets for the delivery of multi-channel
video programming and providing more consumer choice in the selection of
a video provider continue to be the major goals of the Cable Services
Bureau. During the past fiscal year, the Cable Services Bureau moved
forward a number of pro-competition proceedings arising from the 1996
Telecommunications Act. In addition to promoting competition, other
important policy areas include promoting the availability to the public
of cable television service and ensuring growth and development in the
cable industry. The past year was also the final full year of federal
cable rate regulation on the cable programming service tier (CPST). In
the 1996 Telecommunications Act, Congress included a sunset of March 31,
1999, as the date rate regulation on the CPST would end. The Bureau will
continue to receive and act upon local rate appeals of basic service
tier rates.

The Cable Services Bureau is organized into four divisions: **Policy and
Rules**, **Financial Analysis and Competition**, **Consumer Protection
and Competition**, and **Engineering and Technical Services**. The
Bureau also handles public inquiries and inquiries from other
governmental offices through the **Office of Government and Public
Outreach**.

**Major Proceedings**

**MANDATORY CARRIAGE OF DIGITAL TELEVISION SIGNALS**

**(CS Docket No. 98-120)**

The Communications Act of 1934, as amended by the 1992 Cable Act,
instructs the Commission to commence a proceeding to determine whether
changes in the mandatory carriage rules are necessary to accommodate
digital broadcast television signals on cable television systems. In
1995 and 1996 the Commission received comments on digital television
signal carriage issues from broadcasters, cable operators, cable
programmers, equipment manufacturers, public interest groups, and other
interested parties in response to questions posed in the *Fourth Further
Notice of Proposed Rule Making in MM Docket 87-268*. While these
comments have been helpful in framing the issues, additional information
was necessary to refresh the record and reflect recent changes in
technology, policy, and law. A new *Notice of Proposed Rulemaking* was
adopted by the Commission on July 9, 1998, asking for new and updated
information and arguments. Nearly 90 comments have been received. This
*NPRM* officially renews the examination of issues involved in the cable
carriage of digital television stations.

**COMMERCIAL AVAILABILITY OF COMPETITIVE NAVIGATION DEVICES**

**(CS Docket No. 97-80)**

Section 629 of the Communications Act requires the Commission to ensure
the commercial availability of navigation devices, the equipment used to
access video programming and other services from multichannel video
programming services. On June 11, 1998, the Commission adopted rules
intended to create a consumer market for this equipment. The rules
require multichannel video programming distributors to separate security
function from non-security functions by July 1, 2000. An exception is
made for navigation devices that operate throughout the continental
United States and are commercially available from unaffiliated sources.
The rules also prohibit multichannel video programming distributors from
selling or leasing new integrated boxes as of January 1, 2005.

**PROGRAM ACCESS**

**(CS Docket No. 97-248)**

On August 6, 1998, the Commission adopted an *Orde*r amending its
program access rules (Section 628 of the Communications Act). The
Commission found that its existing statutory forfeiture authority can be
used in appropriate circumstances as an enforcement mechanism for
program access violations. The Commission also affirmed its statutory
authority to impose damages for program access violations. Where a
program access defendant knew, or should have known, that it was
engaging in conduct violative of Section 628, damages may be
appropriate. The Commission found that the adoption of time limits for
program access disputes served the public interest. The *Order* found
that denial of programming cases (unreasonable refusal to sell,
petitions for exclusivity, and exclusivity complaints) should be
resolved within five months of the submission of the complaint to the
Commission. All other program access complaints, including price
discrimination cases, should be resolved within nine months of the
submission of the complaint to the Commission. In the *Order*, the
Commission also adopted a streamlined pleading cycle. Program access
defendants now must file an answer within 20 days of service of the
complaint and program access complainants must file a reply within 15
days of service of the answer. The *Order* retained the current system
of Commission-controlled discovery.

**ENTERTAINMENT CONNECTIONS INC.**

**(CS Docket No. 98-111)**

ECI is a satellite master antenna television (SMATV) provider that
serves multiple dwelling units (MDUs) in Michigan. ECI subscribes to a
tariffed video service provided by Ameritech, the local telephone
provider to distribute its programming to various MDUs. ECI owns and
controls the headend and interior wiring facilities and exercises
editorial control over the content of its programming. Ameritech owns
and controls the transmission facilities that use public rights-of-way.
The City of East Lansing sought to have ECI obtain a franchise agreement
as a cable operator. In response, ECI filed with the Commission a
petition for a declaratory ruling that it is not a cable operator.

The Commission determined that ECI\'s facilities and Ameritech\'s
facilities do not constitute a single, integrated cable system. The
Commission also determined that, because Ameritech, and not ECI,
\"uses\" the public rights-of-way as contemplated by the Communications
Act, ECI also satisfies the private cable exemption of Section
602(7)(B). In granting ECI\'s motion for a declaratory ruling, the
Commission noted that: (1) there is an absolute separation of ownership
between ECI and Ameritech and there is nothing more than the
carrier-user relationship between them; (2) ECI\'s facilities are
located entirely on private property; (3) Ameritech provides service to
ECI pursuant to a tariffed common carrier service; (4) Ameritech has no
editorial control over the content of ECI\'s programming; (5) the
facilities primarily used by Ameritech to provide service to ECI were
not constructed at ECI\'s request; (6) there is capacity to serve
several other programming providers; and (7) ECI has committed to make
its drops available to other programming providers. The Commission notes
that while other multichannel video programming providers have advocated
a similar interpretation as ECI, its decision was expressly limited to
the facts before the Commission as presented by ECI.

**CLOSED CAPTIONING OF VIDEO PROGRAMMING**

**(MM Docket No. 95-176)**

On September 17, 1998, the Commission adopted an *Order on
Reconsideration* revising the video programming closed captioning rules.
The 1996 Act generally directed the Commission to adopt rules and
implementation schedules for captioning of video programming, regardless
of distribution technology, to ensure access to video programming by
people with hearing disabilities. The 1996 Act also authorized the
Commission to exempt classes of programming for which the provision of
closed captioning would be economically burdensome. The Commission had
previously adopted an order that included rules and implementation
schedules for captioning of video programming ensuring access to video
programming by persons with hearing disabilities. On reconsideration,
the Commission was able to refine these rules further to make them more
consistent with Congressional intent. The revised rules adopted by the
Commission will increase the amount of closed captioned programming
available to the more than 22 million Americans with hearing
disabilities.

**AT&T‑TCI MERGER**

**(CS Docket No. 98‑178)**

The Commission initiated review of license transfer applications filed
by AT&T Corp. and Tele-Communications, Inc., on September 14, 1998, in
connection with the applicants\' planned merger. In their application,
AT&T and TCI stated that the merger would enable the merged company to
provide facilities‑based competition to the incumbent local exchange
carriers in the residential and business markets, as well as
long‑distance telephone service, high‑speed internet service, and
traditional cable television service. On September 29, the Commission
issued a *Public Notice* establishing dates for the filing of comments
and reply comments. Working toward a first-quarter 1999 projected
issuance date for the Commission\'s R*eport and Order* on the merger,
the Bureau began the process of evaluating the competitive impacts of
the planned merger, as well as other issues affecting the public
interest. Among the issues raised in the comments and *ex parte*
presentations are arguments in favor of open access to the merged
company\'s broadband facilities, with particular emphasis on access by
competing internet service providers; program access conditions; digital
must‑carry requirements; and application of common carrier regulation to
some or all of the services that the merged company will offer. The
Bureau also participated in the planning of two en banc hearings to be
convened by the Commission in October and December to consider the
issues raised by this and other pending mergers.

**CABLE OWNERSHIP ATTRIBUTION RULES**

**(CS Docket No. 98-82)**

On June 4, 1998, the Commission adopted a *Notice of Proposed
Rulemaking* (FCC 98-112) regarding the cable television ownership
attribution rules. The *Notice* sought comment on possible changes to
these rules in light of recent developments in the cable industry,
various Commission proceedings related to the issue of cable ownership,
and the Commission\'s review, in a separate proceeding, of the broadcast
attribution rules on which many of the cable attribution rules were
based. Among other issues, the *Notice* sought comment on (1) whether
any relevant differences exist between the cable and broadcasting
industries that would support a distinct cable attribution standard; (2)
whether certain debt/equity, business, contractual, or common purchasing
relationships may allow an otherwise nonattributable interest holder to
influence or control a cable system; and (3) whether to retain, modify,
or eliminate the single majority shareholder exemption. The *Notice*
also sought specific information as to the structure of the business
arrangements involved in recent cable system partnerships, joint
ventures, swaps, transfers, mergers and acquisitions.

The Commission\'s cable attribution rules define what constitutes a
\"cognizable interest\" that triggers application of various Commission
rules relating to the provision of cable television services. The
attribution rules seek to identify those corporate, financial,
partnership, ownership and other business relationships that confer on
their holders a degree of ownership or other economic interest, or
influence or control over an entity engaged in the provision of
communications services such that the holders should be subject to the
Commission\'s ownership regulations. Comments were due by August 14,
1998; the reply comment period closed on September 3, 1998.

**HORIZONTAL OWNERSHIP RULES**

**(CS Docket No. 98-264**)

On June 23, 1998, the Commission adopted an *Order and Further Notice of
Proposed Rulemaking* (FCC 98-138) regarding the cable television
horizontal ownership rules. Section 613 of the Communications Act
requires the Commission to \"prescribe rules and regulations
establishing reasonable limits on the number of cable subscribers a
person is authorized to reach through cable systems owned by such a
person, or in which such a person has an attributable interest.\"

The *Order* on the cable horizontal ownership limits addressed the
pending reconsideration petitions and maintained the current rule which
provides that no person may hold attributable interests in cable systems
reaching more than 30% of all homes passed nationwide by cable. The
*Order* generally denied a motion to lift the Commission\'s voluntary
stay on enforcement of the 30% limit, but did lift the stay as to the
rules\' information reporting requirements.

The *Further Notice* sought to reexamine the cable television horizontal
ownership rules to ensure consistency with the statutory objectives of
these rules in the context of evolving market conditions. The *Notice*
sought comment on whether, in light of evolving market conditions, 30%
should remain the appropriate horizontal ownership limit. It also sought
comment on whether the Commission should revise the rules to consider
the presence in the market of all multichannel video programming
providers rather than cable operators alone, and whether to base the
limit on actual subscribers rather than on homes passed. It also asked
for on the 35% minority-control allowance. Comments were due by August
14, 1998. The reply comment period closed on September 3, 1998.

**TELEVISION RATING SYSTEM (THE \"V-CHIP\")**

**(CS Docket No. 97-55, CS Docket No. 97-321, ET Docket No. 97-206)**

In March of 1998 the Commission adopted an *Order* finding acceptable
the video programming rating system currently in voluntary use and
established technical requirements for consumer electronic equipment to
enable blocking of video programming. These two actions continued the
process of providing parents with the information and ability to make
informed viewing decisions for their families.

These actions fulfilled the requirements of Section 551 of the 1996
Telecommunications Act which required the Commission to determine
whether video programming distributors (1) have established acceptable
voluntary rules for rating video programming that contains sexual,
violent or other indecent material about which parents should be
informed before it is displayed to children and; (2) have agreed
voluntarily to broadcast signals that contain such ratings. Under
section 551, the Commission was also required to adopt rules to require
television receivers to block such programming that contains such
material by decoding rating information transmitted via line 21 of the
vertical blanking interval.

The National Association of Broadcasters (NAB), the National Cable
Television Association (NCTA) and the Motion Picture Association of
America (MPAA) (the Industry) jointly created the *TV Parental
Guidelines*. The *TV Parental Guidelines* were subsequently revised on
August 1, 1997, following discussions between the Industry and certain
advocacy groups that had expressed concerns about the original Industry
proposal. The Commission found that the Industry\'s *TV Parental
Guidelines* established acceptable voluntary rating rules and that the
near unanimous agreement to voluntarily broadcast signals containing the
*TV Parental Guidelines* complied with the requirements of Section
551(e).

In a companion item the Commission adopted technical rules that require
television receivers with picture screens 33 centimeters (13 inches) or
greater to be equipped with features to block the display of television
programming with a common rating, commonly referred to as \"v-chip\"
technology. The v-chip will be phased in with half of television
receiver models with picture screens 33 cm or greater required to have
the v-chip by July 1, 1999, and all such models required to have the
v-chip by January 1, 2000.

**CABLE RATE COMPLAINTS**

The Bureau continued its efforts at resolving cable programming services
tier (CPST) rate complaints this past year. The Telecommunications Act
of 1996 and FCC rules require that complaints against the CPST rate be
filed with the Commission by a local franchising authority (LFA) that
has received subscriber complaints. An LFA may not file a CPST rate
complaint unless, within 90 days after such increase becomes effective,
it receives more than one subscriber complaint. The filing of a valid
complaint triggers an obligation on behalf of the cable operator to file
a justification of its CPST rate. The 1996 Act requires that the
Commission issue a final order resolving the complaint within 90 days of
its receipt. If the Commission finds the rate to be unreasonable, it
determines the correct rate and any refund liability.

During this past year the Bureau received 679 complaints filed by local
franchise authorities. In 54% of these cases, the operator\'s rates were
found to be reasonable. In the remaining 46% of cases, the Bureau
ordered a rate reduction and refund. The Bureau also continues to
process complaints filed prior to the passage of the 1996 Act. In this
past year, the Bureau reviewed over 957 rate complaints resulting in 188
rate decisions being issued. The Bureau also resolved additional
complaints through negotiated settlement of rate complaints with major
cable operators. The Bureau\'s efforts in this regard continued to
reduce administrative burdens on all parties and also provided
subscribers with immediate refunds in many instances. The Commission,
through the use of social contracts and rate resolutions, has resolved
or proposed to resolve rate complaints affecting 26.7 million
subscribers. To date, subscriber refunds ordered or proposed to be paid
as a result of social contracts and resolutions total approximately
\$56.3 million.

Consistent with the Commission\'s adoption of social contracts and rate
resolutions with major cable operators, the Commission this year
approved four additional rate resolutions with Century, TCI and
Cablevision Systems. The Commission currently has one additional
resolution pending which if adopted, will result in \$383,000 in refunds
to 80,000 subscribers. These resolutions provide for a non-adjudicatory
solution to rate complaints, providing certainty to operators and speedy
refunds to consumers.

Highlights of the resolutions adopted during this fiscal year include:

-   Century, which covered 155,700 subscribers, provided for \$4.6
    million in refunds and resolved 280 rate complaints.

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-   TCI, which covered 1.1 million subscribers, provided for \$4.9
    million in refunds and resolved 329 rate complaints.

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-   Cablevision Systems, which covered 1.2 million subscribers, provided
    for \$1.2 million in refunds and resolved 288 rate complaints.

**ENGINEERING REPORT**

The Engineering & Technical Services Division processed the following
during FY1998: 791 Cable Television Relay Service (CARS) microwave
license applications, 8,528 Cable System Registrations and System Record
Changes, 1,005 Aeronautical Frequency Notifications, and approximately
33,700 (annually) Basic Signal Leakage Criteria (CLI) Reports.
Additionally, the Division initiated forfeitures totaling \$130,000 for
CARS and cable signal leakage violations.

**Compliance and Information Bureau**

**Overview**

The Compliance and Information Bureau (CIB) is one of the FCC\'s primary
points of contact with the public. CIB informs and educates licensees
and permittees of important or new regulations and ensures compliance
with FCC rules. It advises consumers about measures they can take to
combat fraud and other illegal practices in the provision of
communication services. It informs the Commissioners and other Bureaus
about telecommunications problems and the needs of users, and it uses
its technical expertise to solve problems in the communications
environment.

The Bureau carries out its programs through 16 district offices, nine
resident agent facilities, a toll-free National Call Center, and 14
remotely controlled monitoring and radio direction-finding sites located
throughout the United States. Three regional offices, along with
headquarters divisions and offices, develop and coordinate the Bureau
programs and policies.

The **COMPLIANCE DIVISION** administers the compliance program. The
Compliance Division staff in Washington is composed of the
Investigations Group, the Legal Services Group, and Special Enforcement
Teams. The compliance program involves field office and division staff
activities such as inspecting radio stations for compliance with the
Communications Act and the Commission\'s Rules, investigating the
unlicensed or unauthorized operation of radio stations, resolving radio
frequency interference problems not suitable for private sector
resolution, and providing assistance to public safety and law
enforcement agencies experiencing radio communications problems. CIB
pursues administrative sanctions as well as civil and criminal court
actions against persons and entities that violate the Communications Act
or the Commission\'s Rules. During FY98 the Division, with the
assistance of CIB\'s field offices, conducted a number of significant
compliance and fact gathering inquiries, as well as investigative
initiatives for other Commission Bureaus and Offices.

During FY98 the **EMERGENCY ALERT SYSTEM (EAS) STAFF** completed its
work in assisting the Working Group on Natural Disaster Information
Systems for the Office of Science and Technology Policy. It also
assisted the Vice President\'s National Partnership for Reinventing
Government office with development of a report titled. \"Saving Lives
With an All-Hazard Warning Network.\" EAS headquarters and district
office staff participated in over 80 EAS workshops and seminars in FY98.
Workshop participants included broadcasters, cable operators, federal,
state and local officials. Many of the workshops were hosted by FCC
appointed State EAS Chairs who work voluntarily in developing EAS plans
for their states and communities. In FY98, the staff reviewed 10 State
or Territory and 30 local EAS plans. The staff conducted a meeting of
the National Advisory Committee (NAC). The NAC provides the FCC with
recommendations on EAS operations, policy, and rule makings. The staff
developed a Cable EAS Handbook and assisted the cable industry in
developing an EAS video training tape as training tools for cable
operators who will become EAS participants in 1999.

The **NATIONAL CALL CENTER** **(NCC)** is the agency's primary source
for consumer information. Staffed by consumer and communications
industry specialists who are knowledgeable in all areas of FCC related
issues, and using state-of-the-art technological tools, the NCC handled
over 700,000 calls in FY98. Although an in-bound call center, the NCC
also responded to 2,833 e-mails in FY98. The NCC provided statistical
data for use in reports to Congress and other areas where such
statistics were needed. High volume calls in FY98 were requests for
information concerning potential violations of telephone consumer
protection laws, including the unauthorized switching of residential
long distance telephone service, or "slamming," and telephone access
charges. The NCC also handled a large volume of calls requesting
information concerning the Satellite Home Viewers Act (SHVA).

The **TECHNOLOGY DIVISION** supports the Bureau\'s compliance and public
information functions through the Equipment and Standards Group (ESG) in
Washington, DC, the Equipment Development Group (EDG) in Powder Springs,
GA, and the High Frequency Direction Finding Center at Columbia, MD. The
Technology Division also maintains a Communications and Crisis
Management Center at its Washington, DC, headquarters. ESG establishes
and reviews technical measurement procedures to determine compliance
with FCC regulations and to provide regulatory feedback. It also
develops the technical specifications for equipment used by FCC field
offices, provides equipment and facilities used by those offices, and
analyzes and interprets data collected by the field offices to improve
CIB\'s operational effectiveness. EDG designs and constructs specialized
equipment for field use that cannot be purchased \"off the shelf\" or
economically contracted for in small quantities. It also has a patent
program to protect the Commission\'s investment in unique devices that
have been developed and patented by EDG. The High Frequency Direction
Finding Center controls the direction finding network.

In FY98 the Technology Division completed construction and
implementation of a new remotely controlled Interferometric Radio
Direction Finding System at monitoring stations that were formerly
staffed by Bureau personnel. The Division then filed for patents for
some aspects of the technical design of this system. The Technology
Division produced project instructions to be used when investigating
pirate radio broadcasters, and modified and vetted a field-generated
spreadsheet to be used for calculations of pirate radio field strength.

The EDG designed, installed, and tested a fixed automatic direction
finding system for the Washington, DC, metropolitan area. This system
will allow the Bureau to locate interference and resolve problems in the
VHF and UHF frequency range that threaten important communications
channels. EDG also constructed and installed a fixed direction finding
element in Duluth, GA, for use by the Atlanta FCC office in its
enforcement mission. Additionally EDG designed, constructed, and
delivered six new mobile investigative units with direction finding
capability for use by the field staff.

The ESG conducted studies regarding potential interference to the
Bureau\'s direction-finding network on over 100 license applications
from the Mass Media Bureau and other Bureaus impacting on CIB\'s radio
signal analysis capabilities. ESG also participated in a study to
determine the effects of the radio noise floor on radio systems.

**Major Proceedings**

**SHIP INSPECTION PRIVATIZATION**

**(CI Docket 95-55)**

The Commission adopted a *Report and Order* on April 20, 1998, which
allows the private sector to conduct all required inspections of ship
radio communications equipment to ensure that it meets U.S. Government
safety standards for functioning during emergency conditions. Previously
only FCC inspectors checked the communications equipment. The FCC had
two goals in mind when it changed its rules to allow the use of private
sector inspectors. One was to reduce the economic burdens on the public
and the FCC. The other was to make it more convenient for the maritime
industry by increasing the supply and availability of competent, private
sector inspectors to conduct radio equipment inspections. The FCC
established safeguards to ensure that the use of private sector
inspectors does not compromise safety.

**IMPORTATION OF RADIO FREQUENCY DEVICES CAPABLE OF CAUSING HARMFUL
INTERFERENCE**

**(CI Docket 98-69)**

The Commission adopted an *Order and Notice of Proposed Rule Making* on
May 18, 1998, that sought comment on two proposals involving the
importation of radio frequency devices. The first proposal was that
entities submit FCC Form 740 only to the U.S. Customs Service (Customs)
rather than be required to file duplicate declarations with both the FCC
and Customs. There are a few remaining entities that do not file the
Form 740 electronically with Customs that will be affected. With the
elimination of the requirement to file duplicative information with the
FCC, the administrative burden on filers is reduced, especially for
small businesses. This will eliminate an FCC record process that is no
longer necessary. Any compliance information needed by the FCC will be
readily available from Customs.

The next proposal was to modify the marketing rules affecting devices
imported solely for export. This proposed modification will improve the
Commission\'s ability to enforce the equipment authorization rules by
eliminating a loophole that has resulted in the marketing and selling of
devices that could not be authorized in the U.S.

**UNLICENSED FM BROADCAST STATIONS**

Broadcasters and others began reporting to the FCC that there were over
1,000 unlicensed broadcast stations operating in the FM band. Known as
\"pirates,\" these stations not only operated without licenses, but they
interfered with licensed broadcast stations and critical aircraft
frequencies, and had the potential to cause harmful interference that
could endanger the safety of life.

The FCC began to take steps to reduce the number of illegal stations.
During the year the FCC investigated 282 pirate stations. Most of these
went off the air voluntarily. The FCC noticed that a few areas of the
country had a high concentration of pirates, and it adjusted its
enforcement approach accordingly. Two such high concentration areas were
Miami and Cleveland, which received special attention from the FCC. The
FCC, in conjunction with the Department of Justice, initiated court
action in over 40 cases.

Though the FCC has not eradicated the pirate problem, there has been a
dramatic decrease in the number of active pirate stations. Recent
surveys show fewer than 80 pirate stations operating around the country.

**SLAMMING**

CIB established two teams to assist the Common Carrier Bureau in its
effort to curtail the illegal practice of slamming. Slamming occurs when
a company changes a subscriber\'s long distance service without the
subscriber\'s knowledge or authorization. CIB teams conducted
investigations of subscribers\' complaints. The teams interviewed the
subscribers, obtained evidence of slamming, and presented investigative
reports to the Common Carrier Bureau. This led to the Commission\'s
issuing multi-million dollar forfeitures against businesses which
engaged in illegal slamming.

**PRIVATIZING LAND MOBILE INTERFERENCE RESOLUTION**

Land mobile stations frequently ask the FCC for help in eliminating
interference experienced by the stations. There are many reasons why
interference occurs. Faulty transmitters, a poorly chosen frequency, a
licensee\'s unawareness that the channels are shared with others, and
unlicensed operators intruding on the frequency are some of the reasons
which lead to an interference complaint.

The FCC and four industry frequency coordinators have signed agreements
to work together to streamline the Commission\'s compliance and
enforcement process in the resolution of interference complaints in the
land mobile communications industry. This will not only relieve the FCC
of this task, but it will give the industry a greater role in improving
land mobile communications.

**INTERFERENCE TO PUBLIC SAFETY STATIONS**

CIB resolved numerous complaints of interference which disrupted the
communications of public safety agencies. These calls for assistance
came from police and fire departments, hospitals, railroads, Coast
Guard, Federal Aviation Administration, search and rescue satellite
operators, and a host of other public safety agencies. At times faulty
transmitters used by other radio stations generated unwanted signals
which interfered with the public safety agency\'s frequency. For
instance, some unknown signal was crippling the FAA\'s air traffic
control system at an airport, and the FAA needed the FCC\'s help.
Another time an emergency beacon transmitter mysteriously began sending
out a distress signal, and those operating the search and rescue
satellite asked the FCC to locate the signal which was tying up the
distress system.

Sometimes the interference was deliberate. Police departments have found
intruders on their frequencies masquerading as dispatchers and sending
units on errant missions. At times the Coast Guard asked the FCC to use
its direction finding expertise to locate individuals who broadcast hoax
distress calls and caused the Coast Guard to launch aircraft and vessels
in a frustrating search for non-existent vessels.

**ENFORCEMENT AUDITS**

CIB audits found there was a need for broadcasters to improve their
compliance with the Emergency Alert System requirements. The audits
indicated that owners of tall communications towers must do a better job
of registering their towers with the FCC but private sector ship radio
inspectors appeared to be performing their safety checks satisfactorily.

**International Bureau**

**Overview**

The mission of the International Bureau is to promote innovative,
efficient, reasonably priced, widely available, reliable, timely and
high quality domestic and global communications services.

In pursuit of this mission, the Bureau develops, recommends and
administers policies, standards, procedures and programs for the
authorization and regulation of international telecommunications
facilities and services and the licensing of domestic and international
satellite systems. The Bureau advises and recommends to the Commission,
or acts for the Commission under delegated authority, in the development
and administration of international telecommunications policies and
programs.

The Bureau consists of three Divisions.

The **PLANNING AND NEGOTIATIONS DIVISION** directs and coordinates, in
consultation with other Bureaus and Offices as appropriate, Commission
negotiations with foreign countries regarding international agreements.
The Division represents the Commission in international conferences and
meetings involving telecommunications matters such as spectrum planning,
terrestrial and satellite issues, standards, and broadcasting, in the
International Telecommunication Union (ITU) and other international
forums, and ensures that Commission regulations, procedures and
frequency allocations comply with international and bilateral
agreements. The Division is also responsible for implementation of all
notification and coordination provisions adopted as a result of these
international conferences. The Division is responsible for conference
preparatory activities related to World Radiocommunication Conferences
(WRCs), rulemakings involving spectrum issues, and the reconciliation of
domestic and international spectrum policies. The Planning and
Negotiations Division consists of three branches: Negotiations Branch,
Notifications Branch, and International Spectrum Branch.

The **SATELLITE AND RADIOCOMMUNICATION DIVISION** deals with policies,
rules, procedures and standards for licensing and regulating satellite
space and earth station facilities, both domestic and international. It
undertakes Commission responsibilities under the Communications
Satellite Act for the oversight of Comsat as the U.S. signatory to
INTELSAT and Inmarsat. The Division represents the Commission in
international conferences and meetings involving radio-related
telecommunications matters such as satellites, spectrum allocation,
standards, broadcasting, aviation, maritime and safety of life at sea in
the International Telecommunication Union (ITU) and other international
forums. The Satellite and Radiocommunication Division consists of three
branches: Radiocommunication Policy Branch, Satellite Policy Branch and
Satellite Engineering Branch.

The **TELECOMMUNICATIONS DIVISION** deals with the authorization and
regulation of international telecommunications facilities and services.
It represents the Commission at international conferences and meetings
involving non-radio related telecommunications matters. The Division
directs and coordinates Commission participation in bilateral
telecommunications discussions and provides assistance in
telecommunications trade negotiations. The Telecommunications Division
consists of two branches: Policy and Facilities Branch and Multilateral
and Development Branch.

**Major Proceedings**

**COMSAT NON-DOMINANT**

**(IB Docket No. 98-60)**

Comsat filed a petition seeking: (1) reclassification as a non-dominant
carrier in the provision of its INTELSAT services; (2) pursuant to
Section 10 of the Communications Act of 1934, forbearance from dominant
carrier regulation of its INTELSAT tariffs; and (3) elimination or
forbearance from structural separation and rate of return regulation of
Comsat\'s INTELSAT services. The Commission adopted an *Order* April 24,
1998, before the expiration of the one-year statutory deadline for
acting on Comsat\'s forbearance request. The Commission also initiated a
*Notice of Proposed Rulemaking* inviting comments with respect to
replacing rate of return regulation with a form of incentive based
regulation similar to a price cap for Comsat\'s services in markets
where the company remains dominant

**DIRECT BROADCAST SATELLITE (DBS) PART 100**

**(IB Docket No. 98-21)**

The Commission adopted a *Notice of Proposed Rulemaking* on February 19,
1998, which proposed eliminating the Commission\'s separate Part 100
rules for the Direct Broadcast Satellite (DBS) service and incorporating
the rules in Part 25, which includes all other satellite service rules.
The *Notice* proposed to harmonize the DBS licensing process with the
rules and procedures applicable to other satellite services, including
the direct-to-home fixed-satellite service (DTH-FSS). It also sought
comment on whether the Commission should modify the DBS foreign
ownership rules for subscription DBS and DTH-FSS in light of the
International Bureau\'s decision in the MCI DBS authorization. In the
*MCI Authorization Order*, the Bureau determined that the foreign
ownership rules do not apply to DBS offered on a subscription basis. The
*Notice* also sought comment on ways the Commission can speed delivery
of DBS service to Alaska and Hawaii, Puerto Rico, and other U.S.
territories and possessions. Finally, the *Notice* asked whether the
Commission should consider adopting rules to address the issues of
horizontal concentration in the MVPD market.

**DOMESTIC AND INTERNATIONAL SATELLITE CONSOLIDATION ORDER (DISCO
II)/WORLD TRADE ORGANIZATION (WTO)**

On February 5, 1998, the WTO Agreement on Basic Telecommunications
Services went into effect. The Commission adopted the *Foreign
Participation Order* in November 1997 implementing the U.S.\' WTO
commitments. The *Order* establishes a framework to facilitate access by
foreign-licensed satellite systems to the U.S. market. Increased market
access benefits the U.S. consumer by increasing the number of satellite
service suppliers. This, in turn, lowers prices to consumers, leads to
additional services being provided and spurs technological innovation.
It also helps U.S. industry by increasing market access opportunities
for U.S. service suppliers around the world.

**FOREIGN CARRIER PARTICIPATION**

**(IB Docket Nos. 97-142, 95-22)**

On February 9, 1998, the *Foreign Participation Order* governing foreign
participation in the U.S. market for basic telecommunications services
became effective. The *Order* replaces the effective competitive
opportunities (ECO) test with an open entry standard for applicants from
WTO Members. These applicants will no longer be required to demonstrate
that their markets offer effective competitive opportunities in order
to: (1) obtain section 214 authority to provide international
facilities-based, resold switched and resold non-interconnected private
line services; (2) receive authorization to exceed the 25 percent
indirect foreign ownership benchmark in section 310(b)(4) of the
Communications Act for wireless licenses; or (3) receive submarine cable
landing licenses. The Commission also removed the equivalency test, a
standard similar to the ECO test, for carriers seeking to provide
switched services over private lines between the United States and World
Trade Organization (WTO) Members. In lieu of the ECO test, the *Order*
presumes that entry is procompetitive and therefore adopts streamlined
procedures for granting most applications. The Commission recognized,
however, that in some cases safeguards may not adequately constrain the
potential for anticompetitive harm. In such instances, the Commission
reserved the right to attach additional conditions to an authorization
and, in the exceptional case in which an application poses a very high
risk to competition that cannot be addressed by safeguards, it reserved
the right to deny the authorization.

**GLOBAL MOBILE PERSONAL COMMUNICATIONS BY SATELLITE (GMPCS)**

**(GEN Docket No. 98-68)**

On May 14, 1998, the Commission took an important step toward
implementing the international arrangements governing Global Mobile
Personal Communications by Satellite (GMPCS) systems by adopting an
interim procedure for the type approval of GMPCS terminals. This measure
will facilitate transport of GMPCS terminals, many of which are a part
of U.S.-based systems, across national borders. In addition, the
Commission modified its equipment approval process and implemented the
*Mutual Recognition Agreement (MRA)* that was completed between the
United States and the European Community (EC) last year. These exciting
new global satellite systems hold great promise for international
consumers, especially those living in or traveling to underpopulated and
rural areas. The interim equipment certification proposal will pave the
way for these GMPCS companies as they continue or begin to roll-out
their global voice, data, and broadband services.

**KA-BAND NOTICE**

**(IB Docket No. 98-172)**

On September 17, 1998, the Commission adopted a *Notice of Proposed
Rulemaking (NPRM)* proposing to redesignate portions of the 17.7-20.2
GHz (18 GHz) band to provide separate spectrum for terrestrial fixed
service and Fixed Satellite Service (FSS) operations. In addition, the
Commission proposed a blanket licensing procedure that would allow FSS
satellite earth stations in the Ka-band (18 GHz downlink band and 28 GHz
uplink band) to operate under a single system license. Blanket licensing
would provide a fast and efficient means for licensing the large number
of small antenna FSS earth stations expected to be deployed. Finally,
the Commission proposed additional spectrum allocations for the
Broadcast Satellite Service (BSS) at 17.3-17.8 GHz, and to FSS for BSS
feeder link use at 17.3-17.8 GHz, to be effective April 1, 2007. These
proposed allocations would align the U.S. Table of Allocations with the
International Telecommunication Union\'s Region 2 Table of Allocations
and would also provide additional spectrum for direct-to-home video
services.

**LITTLE LEO SYSTEMS**

**(IB Docket No. 96-220)**

Little LEO (Low Earth Orbit) systems provide non-voice, data messaging
services (e.g., paging, e-mail, remote meter reading) in frequency bands
below 1 GHz. The Commission, on October 15, 1997, issued a *Report and
Order* in which it concluded that use of appropriate transmission
techniques, proper system coordination, time-sharing of frequencies and
the adoption of a spectrum sharing plan jointly proposed by current
applicants resulting in sufficient spectrum to accommodate all. As a
result, the applicants filed conforming amendments, and the Commission
issued licenses to Leo One (February 13, 1998), VITA (March 31, 1998),
Orbcomm (March 31, 1998), Final Analysis (April 1, 1998) and E-SAT\'s
(April 1, 1998).

**U.S. - ARGENTINA FSS PROTOCOL**

On June 5, 1998, the United States and Argentina signed an Agreement and
Protocol on satellite services, in which both countries agreed to open
their markets to each other\'s satellites for the provision of direct
broadcast satellite (DBS), direct-to-home fixed satellite service
(DTH-FSS) and other forms of fixed satellite service (FSS). The
Agreement and Protocol, which are closely modeled on a similar series of
accords reached with Mexico over the last two years, mark a significant
market-opening breakthrough and will allow U.S. satellite operators full
access to the Argentine market. Under the Agreement and Protocol,
Argentina will open its market for U.S.-licensed satellite operators to
provide DBS, DTH-FSS and FSS. U.S. satellites will have the same rights
to provide service in Argentina as Argentine satellites. The United
States made similar commitments with regard to access to the United
States market by Argentine-licensed satellites. The Agreement and
Protocol will open a significant market to U.S. satellite providers.
Pan-Latin American direct-to-home services, such as Galaxy Latin America
and Sky Latin America, will now be able to provide their programming
services to Argentina. Significantly, the Protocol limits domestic
content restrictions either side can place on satellite programming to
only a \"modicum\" of total programming, thereby increasing
opportunities for U.S. program content producers. The Agreement and
Protocol also ensure that FSS providers will be able to provide both
current services and next generation broadband systems.

**U.S. - CANADA SPECIAL COORDINATION PROCEDURES**

During the past year the FCC and Industry Canada entered into two
special coordination procedure (SCP) arrangements, one involving paging
frequencies and the other involving Specialized Mobile Radio (SMR)
operations. SCP arrangements permit individual U.S. and Canadian
licensees to operate in a manner not ordinarily permitted by the terms
of existing agreements, if a mutual understanding is reached by the
licensees on both sides of the border. SCP arrangements provide
additional flexibility for U.S. licensees and allow for more efficient
spectrum use.

**U.S. - CANADA UNDERSTANDINGS ON DARS/T-DRB**

In August 1998 the U.S. and Canada agreed on technical conditions for
implementation of satellite Digital Audio Radio Service (DARS) in the
United States in the 2320-2345 MHz band and Terrestrial Digital Radio
Broadcasting (T-DRB) services in Canada in the 1452-1492 MHz band. These
agreed-upon conditions are the result of negotiations that took place
over several years and involved complex inter-service frequency sharing
considerations. Letters were exchanged that allowed both countries to
begin to implement by September 1, 1998, the technical conditions for
the introduction of these new digital sound broadcasting services on
either side of the border. This successful negotiation will provide U.S.
consumers with access to innovative CD quality audio programming and
will promote new communications services using innovative
satellite‑delivered digital technologies.

**U.S. - CANADA UNDERSTANDING ON DIGITAL MDS**

On December 5, 1997, the FCC and Industry Canada finalized an
Understanding that permits the use of digital technology by Multipoint
Distribution Service (MDS) and Instructional Television Fixed Service
(ITFS) systems in the U.S.-Canada border area. The agreement maintains
the requirements contained in a previous agreement regarding analog MDS
systems, but extends the scope of the earlier agreement by establishing
parameters for digital systems. The new agreement will allow MDS
operators, educational institutions and the public to benefit from new
digital technologies.

**U.S. - MEXICO MEMORANDUM OF UNDERSTANDING ON DTV**

On July 22, 1998, a *Memorandum of Understanding (MOU)* was signed which
established procedures for implementing digital television (DTV) service
in the U.S.-Mexico border area. The *MOU* contains a list of mutually
acceptable second channel DTV allotments for each country. The *MOU*
also provides an expedited notification process through which most
authorized DTV stations can begin operation within 15 days of
notification to the other country. In addition, the *MOU* includes
approval of all five DTV stations in the U.S.-Mexico border area slated
to begin service in November 1998 and May 1999. This *MOU* represents a
major step forward in the cooperative efforts of Mexico and the U.S. to
bring the benefits of DTV to consumers quickly and clears the way for
the early roll-out of DTV in the top 10 U.S. markets.

**INTERNATIONAL BUREAU\'S BIENNIAL REVIEW**

Section 11 of the Communications Act, as amended, requires the
Commission to review all of its regulations applicable to providers of
telecommunications service in every even-numbered year, beginning in
1998, to determine whether the regulations are no longer in the public
interest due to meaningful economic competition between providers of the
service and whether such regulations should be repealed or modified. The
first biennial regulatory review presented an excellent opportunity for
a serious top-to-bottom examination of all of the Commission\'s
regulations, not just those statutorily required to be reviewed.

As part of the 1998 Biennial Regulatory Review, each of the operating
Bureaus, together with the Office of General Counsel, hosted a series of
public forums and participated in brown-bag practice group lunches with
the Federal Communications Bar Association to solicit informal input
from the public. Beginning in January 1998 the Commission initiated a
series of rulemaking proceedings as part of the 1998 Biennial Regulatory
Review. FCC staff released a list of 31 proceedings which it has
proposed that the Commission initiate as part of the review. In August
1998 the FCC announced significant progress on 1998 Biennial Review.

The following actions were taken as part of the International Bureau\'s
Biennial Review:

**International Common Carrier Regulations**. On July 14, 1998, the
Commission released a *Notice of Proposed Rulemaking* in the Matter of
Review of International Common Carrier Regulations (IB Docket No.
98-118). Specifically, the *Notice* proposed to: (1) grant a blanket
international section 214 authorization for telecommunications services
to unaffiliated international points; (2) eliminate the requirement for
prior approval of *pro forma* assignments and transfers of control of
international section 214 authorizations; (3) allow any carrier with
global section 214 authorization to use any non-U.S.-licensed submarine
cable system without specific approval, and clarify the exclusion list
for international section 214 authorizations; (4) eliminate the need to
apply for a separate section 214 authorization when applying for a
common carrier cable landing license; (5) reorganize and simplify the
rule on contents of international section 214 applications and list the
obligations of each category of carrier in a separate rule section; (6)
authorize the provision of switched services over private lines by
declaratory ruling instead of requiring a section 214 application; and
(7) eliminate the requirement that applicants inform the Commission of
every 10 percent or greater shareholder, and require only that
applicants provide a list of every greater-than-25-percent shareholder.
The comment period closed on August 28, 1998.

**Maritime Mobile Services**. On July 17, 1998, the Commission released
a *Notice of Proposed Rulemaking* in the Matter of Review of Accounts
Settlement in the Maritime Mobile and Maritime Mobile-Satellite Radio
Services and Withdrawal of the Commission as an Accounting Authority in
the Maritime Mobile and the Maritime Mobile-Satellite Radio Services
Except for Distress and Safety Communications (IB Docket No. 98-96). In
the *Notice*, the Commission proposed to withdraw the Commission from
its role as a nationwide clearinghouse for settling maritime mobile and
maritime satellite accounts for non-government entities. The comment
period closed on September 17, 1998.

**International Settlements**. On August 6, 1998, the Commission
released a *Notice of Proposed Rulemaking* in the Matter of Reform of
the International Settlements Policy and Associated Filing Requirements
(IB Docket No. 98-190). In the *Notice*, the Commission proposed a
review of the international settlements policy to consider granting
substantially more flexibility to carriers\' methods of carrying
international switched traffic outside the traditional international
settlements process. The Commission\'s International Settlements Policy
imposes certain constraints on U.S. carriers\' relations with foreign
carriers. The policy was originally designed to prevent monopoly foreign
carriers from taking advantage of the competitive marketplace in the
United States by playing one carrier off against another --- a practice
known as \"whipsawing\" --- in order to extract higher rates for the
completion of international calls originating in the United States.
Today, there is more competition in foreign telecommunications markets,
and less international traffic is being carried in the traditional
manner. The *Notice*\'s proposed changes would recognize these changes
and let the market, rather than government regulation, govern settlement
arrangements between carriers in competitive markets.

**Wireless Telecommunications Bureau**

**Overview**

The Wireless Telecommunications Bureau oversees the use of radio
spectrum to fulfill the communications needs of businesses, local and
state governments, public safety service providers, aircraft and ship
operators, and individuals. In addition to licensing commercial
providers of wireless services, WTB monitors the more than two and a
half million licensees that use private wireless radio for personal
convenience, to promote safety of life and property, to increase
commercial productivity, and to advance the science of
telecommunications.

WTB is organized into six Divisions: **Auctions and Industry Analysis**;
**Commercial Wireless**; **Enforcement and Consumer Information**;
**Information Technology**; **Policy**; and **Public Safety and Private
Wireless**.

The principal functions of WTB include assessing utilization levels of
the spectrum and the competitiveness of markets, identifying and
allocating spectrum appropriate for licensing, developing through
rulemaking the operating rules for wireless services, developing
methodologies for and assigning licenses through competitive bidding
(auctions), evaluating new technologies (with the Office of Engineering
and Technology), maintaining an antenna structure registration program,
licensing commercial and private radio operators, and enforcing the
Commission\'s rules for wireless services.

WTB coordinates closely with the Office of Engineering and Technology on
spectrum allocations and rules governing equipment used in the provision
of wireless services, and with the International Bureau on international
spectrum allocations for wireless services and coordination between
terrestrial and space-based services. WTB also works with
representatives of the public safety community to foster a partnership
to address communications issues.

In the past year WTB has undertaken various industry and consumer
initiatives to promote an efficient and competitive communications
environment. For example, WTB has participated in and organized several
public forums to discuss with the wireless industry the ways in which
Y2K computer issues may disrupt wireless communications. The Bureau
organized several public forums on upcoming Commission auctions as well
as forums on the Commission\'s new Universal Licensing System (ULS). The
Bureau also provided consumer assistance on wireless issues to members
of the public and other interested parties by responding to telephone
and written inquiries, and speaking to industry associations and
consumer groups throughout the nation.

In FY98, WTB also undertook initiatives to improve access to electronic
information. The Bureau is moving to web-based technology to improve
access to electronic information. Such an approach makes data available
in easy-to-use formats for WTB\'s customers. Approximately 50 percent of
all WTB application filings are received via such electronic methods.

The Bureau also made improvements to its web site
([www.fcc.gov/wtb/)]{.underline}. The site continues to make available
information concerning wireless telecommunications services, FCC rules
and regulations, Commission orders and public notices, forms and
licensing databases. Importantly, the Bureau recently restructured its
web site to be accessible to the disability community. The Bureau has
been working with the Disabilities Issues Task Force, the Office of
Workplace Diversity and the General Services Administration's Center on
Information Technology Accommodation to ensure that its web site is as
accessible as possible to all people. Through the continuing efforts of
the Bureau staff, the Bureau web site is now \"BOBBY\" approved. BOBBY
is a computer application that analyzes web sites for their
accessibility to people with disabilities as well as their compatibility
with various browsers. The BOBBY analysis is widely accepted by industry
and is based on the World Wide Consortium's Web Accessibility
Initiatives.

Also, prior to September 30, 1998, the FCC provided Members of Congress
with detailed information regarding the expenditure of auction revenues
per Section 309(j)(8)(b) of the Communications Act.

**Major Proceedings**

**AUCTION AND LICENSING INITIATIVES**:

**220 MHz Auction.** On September 15, 1998, the 220 MHz auction opened.

**800 MHz SMR (Specialized Mobile Radio) Service Auction.** On December
8, 1997, the 800 MHz SMR auction closed. This auction, which opened on
October 28, 1997, offered 525 licenses and raised \$96.2 million for the
U.S. Treasury. The Bureau also completed the licensing of these licenses
in FY 98.

**LMDS Auction.** On March 25, 1998, the Local Multipoint Distribution
Service (LMDS) auction closed. This auction, which opened on February
18, 1998, offered 986 licenses and raised \$578.7 million for the U.S.
Treasury. The Bureau also completed the licensing of these licenses in
FY98.

**Universal Licensing System**. In December 1997 the Bureau began the
phased deployment of ULS for all wireless services. In FY98 the Bureau
began using ULS for all post-auction licensing following the 800 MHz
SMR, LMDS, and 220 MHz auctions, and to handle all licensing activity in
the Part 22 Paging and Radiotelephone Service, Offshore Radiotelephone
Service, Personal Communications Services and Wireless Communications
Services. Deployment of ULS in the remaining wireless services will
occur in FY99.

**Wireless Facilities (Tower) Siting** **Agreement.** On August 5, 1998,
an agreement was reached between the Commission\'s Local and State
Government Advisory Committee (LSGAC), the Cellular Telecommunications
Industry Association (CTIA), the Personal Communications Industry
Association (PCIA), and the American Mobile Telecommunications
Association (AMTA). The groups reached a joint agreement involving
appropriate guidelines for tower and antenna siting, as well as an
informal dispute resolution process for siting issues. As part of the
agreement, CTIA also agreed to withdraw its petition seeking preemption
of certain moratoria on facilities siting. A copy of the agreement can
be found on the LSGAC section of the FCC\'s homepage at
www.fcc.gov/statelocal.

**10 GHZ ORDER**

**(WT Docket No. 94-148; CC Docket No. 93-2)**

On February 24, 1998, the Wireless Telecommunications Bureau and the
Office of Engineering and Technology released an *Order* modifying
Section 101.31 of the Commission\'s rules to provide for conditional
authorization authority in the 10.6-10.68 GHz band (10 GHz band) under
certain circumstances. As a direct result of this action, microwave
licensees will be able to provide service in the 10 GHz band in an
expedited manner.

**39 GHZ PROCEEDING**

**(ET Docket No. 95-183, PP Docket No. 93-253)**

On October 24, 1997, the Commission adopted a *Report and Order and
Second Notice of Proposed Rule Making* establishing new service and
auction rules for use of the 38.4-40.0 GHz frequency band (39 GHz band)
and seeking comment on additional licensing issues pertaining to the 39
GHz band.

**47 GHZ SERVICE AND AUCTION RULES**

**(ET Docket No. 94-124, WT Docket No. 98-136)**

On July 29, 1998, the Commission released a *Memorandum Opinion and
Order and Notice of Proposed Rulemaking* representing the next step in
the commercial utilization of the 47.2-48.2 GHz frequency band (47 GHz
band). The 47 GHz band is one of several "millimeter wave" bands above
30 GHz for which technology initially developed for military use now
holds the potential for commercial use. The development of this band is
expected to foster the introduction of new services and open up a
variety of commercial opportunities.

**220 MHZ** **SERVICE AND AUCTION RULES**

**(PR Docket No. 89-552; GN Docket No. 93-252)**

On May 14, 1998, the Commission adopted a *Memorandum Opinion and Order
on Reconsideration* addressing various petitions for reconsideration of
Commission actions revising the rules for the 220-222 MHz radio service
(220 MHz service). On August 6, 1998, the Commission adopted a *Fifth
Report and Order* amending Part 90 of the Commission\'s Rules to adopt
geographic partitioning and spectrum disaggregation rules for the
220-222 MHz service.

**911 EMERGENCY CALLS**

**(CC Docket 94-102)**

On December 1, 1997, the Commission adopted a *Memorandum Opinion and
Order* reaffirming its commitment to the rapid implementation of
technologies needed to bring emergency assistance to wireless callers
throughout the Nation. Under the Commission\'s revised rules, covered
wireless carriers are required to transmit all wireless 911 calls, from
both subscribers and non-subscribers, to emergency assistance providers
operating Public Safety Answering Points, and are also required (subject
to certain conditions) to develop service enhancements that will enable
caller location information to be transmitted automatically to emergency
assistance providers.

**BROADCAST AUCTION RULES**

**(MM Docket No. 97-234, GC Docket No. 92-52, GEN Docket No. 90-264)**

On August 6, 1998, the Commission adopted a *First Report and Order*
establishing general competitive bidding procedures for auctionable
broadcast services. In addition, the Commission concluded that
competitive bidding procedures should be used to resolve competing
applications filed before July 1, 1997, for new commercial radio and
television broadcast stations. The Commission also adopted a \"new
entrant\" bidding credit to further the goals of the designated entity
provisions of section 309(j) of the Communications Act. The Commission
rendered its decisions after seeking public comment in a *Notice of
Proposed Rulemaking*, which was adopted by the Commission on November
25, 1997.

**CMRS REPORT TO CONGRESS ON COMPETITION**

On May 14, 1998, the Commission adopted its *Third Annual Commercial
Mobile Radio Service (CMRS) Competition Report.* Citing to various
industry reports, the *Third Report* evaluated various CMRS product
categories and concluded that progress has been made toward competition
over the past year, particularly in the mobile telephony market. More
competition, the *Report* observes, has meant lower prices, more choices
and new cutting edge technologies for American consumers.

**COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT (CALEA)**

On September 11, 1998, the Commission adopted a *Memorandum Opinion and
Order* extending the compliance date for meeting the assistance
capability requirements of the Communications Assistance for Law
Enforcement Act (CALEA). This extension was necessary because compliance
with the original date of October 25, 1998, was not reasonably
achievable for telecommunications carriers due to the lack of equipment
for meeting the requirements. The Commission extended the compliance
date to June 30, 2000.

**C BLOCK LICENSING**

**(WT Docket No. 97-82)**

On August 19, 1998, the Commission adopted a *Fourth Report and Order*
setting forth rules governing the reauction of broadband Personal
Communications Services (PCS) C block spectrum. The Wireless
Telecommunications Bureau also established a C block reauction date of
March 23, 1999.

On March 24, 1998, the Commission released an *Order on Reconsideration
of the Second Report and Order (Reconsideration Order)* addressing
installment payment financing issues for C block licensees. The
*Reconsideration Order* largely affirmed the framework of the September
25, 1997, *Second Report and Order and Further Notice of Proposed
Rulemaking* that provided limited debt relief as an alternative to
continuing under the existing installment payment plan; however, the
*Reconsideration Order* provided greater flexibility for licensees by
permitting elections on a Major Trading Area (MTA) basis (rather than
requiring licensees to make one all-inclusive election) and by
increasing the amount of credit available for disaggregated spectrum.

**COMMERCIAL MOBILE RADIO SERVICES (CMRS) SAFEGUARDS**

**(WT Docket No. 96-162)**

On October 3, 1997, the FCC established regulatory safeguards for the
provision of in-region broadband commercial mobile radio services (CMRS)
by incumbent local exchange carriers and their affiliates. These
safeguards, for the first time, apply uniformly to provision of all
broadband CMRS by all incumbent LECs (except for rural telephone
companies). Consistent with the pro-competitive, deregulatory objectives
of the Telecommunications Act of 1996, these safeguards will help to
ensure fair rules of competition in the least burdensome manner
possible.

**FINDER\'S PREFERENCE RULES**

**(WT Docket No. 96-199)**

On July 29, 1998, the Commission adopted a *Report and Order* amending
Part 90 of its rules to eliminate the finder\'s preference program in
the 220-222 MHz band and in the 470-512 MHz, 800 MHz, and 900 MHz
private land mobile radio bands.

**INTERACTIVE VIDEO AND DATA SERVICE (IVDS)**

**(WT Docket No. 95-47)**

On September 15, 1998, the Commission adopted an *Order, Memorandum
Opinion and Order and Notice of Proposed Rulemaking* that initiated a
comprehensive examination of the Commission\'s regulations governing the
licensing and use of frequencies in the 218-219 MHz band.

**LOCAL MULTIPOINT DISTRIBUTION SERVICE (LMDS) RULES**

**(CC Docket 92-297)**

On April 27, 1998, the Commission adopted a *Fourth Report and Order*
regarding partitioning and disaggregation rules for LMDS licenses. These
rules will bring to LMDS the competitive benefits that are at the core
of the Commission\'s partitioning and disaggregation policy - more
efficient use of spectrum, increased opportunities for a variety of
entities, including small businesses, to participate in the provision of
LMDS, and expedited delivery of service to unserved areas.

On February 3, 1998, the Commission adopted a *Third Order on
Reconsideration* that generally affirmed key provisions of the LMDS
service rules that it adopted in March 1997. This action paved the way
for the auctioning and licensing of LMDS services.

**LOCATION AND MONITORING SERVICE RULES**

**(PR Docket No. 93-61)**

On July 9, 1998, the Commission adopted rules and procedures for the
future auction of Location and Monitoring Service (LMS) licenses. LMS
refers to advanced radio technologies designed to support the nation\'s
transportation infrastructure and facilitate growth of Intelligent
Transportation Systems. These systems are intended to improve the
efficiency and safety of U.S. highways.

**LOCAL NUMBER PORTABILITY**

**(CC Docket No. 95-116)**

On September 1, 1998, the Bureau issued a *Memorandum Opinion and Order*
granting a petition filed by the Cellular Telecommunications Industry
Association (CTIA) requesting a nine-month stay of the requirement that
all cellular, broadband PCS, and covered SMR carriers provide service
provider number portability by June 30, 1999, while supporting
nationwide roaming. The Bureau found that extending the deadline from
June 30, 1999, to March 31, 2000, was necessary to ensure the efficient
development of wireless number portability.

**MULTIPLE ADDRESS SYSTEMS (MAS)**

**(WT Docket No. 97-81)**

On September 17, 1998, the Bureau adopted an *Order* dismissing all
pending MAS applications for use of the 932-932.5/941-941.5 MHz bands,
which were filed in anticipation of the Commission awarding licenses for
these channels through random selection or lottery.

**PART 1 STREAMLINED AUCTION RULES**

**(WT Docket No. 97-82)**

On December 18, 1997, the Commission adopted a *Third Report and Order
and Second Further Notice of Proposed Rulemaking* adopting comprehensive
and streamlined rules for all auctionable services, replacing rules
adopted in 1994 which required the Commission to adopt separate rules
for each auction. The Commission also sought further comment on the use
of installment payments and other financial incentives for small
businesses, women, minorities, and rural telephone companies.

**PUBLIC SAFETY** **LICENSING**

**(WT Docket No. 96-86)**

On October 9, 1997, the Commission adopted a *Notice of Proposed
Rulemaking* seeking comment on how to license 24 MHz of spectrum in the
700 MHz band recently reallocated from over-the-air television
broadcasting use to public safety radio communications. On August 6,
1998, the Commission adopted service rules for licensing this spectrum.
In a *First Report and Order and Third Notice of Proposed Rulemaking*
the Commission established a band plan for use of the 24 Mhz of spectrum
in the 764-806 MHz band, established rules and procedures for licensing
of 12.6 MHz of the spectrum, and sought comment on how to license the
remaining portion of the spectrum (with 2.6 MHz designated as
interoperability spectrum and 8.8 MHz designated as reserved spectrum)
and on additional proposals to implement effective public safety
nationwide interoperability.

**ACCESS TO PERSONS WITH DISABILITIES**

**(WT Docket No. 96-198)**

On April 2, 1998, the Commission adopted a *Notice of Proposed
Rulemaking* to implement section 255 of the Telecommunications Act of
1996. The Commission adopted a broad range of proposals intended to
ensure that telecommunications service providers and equipment
manufacturers who are subject to the terms of section 255 will take the
actions necessary to make their services and products accessible to
persons with disabilities.

**SHIP/AIRCRAFT STATION LICENSE ELIMINATION**

**(WT Docket No. 96-82)**

On October 18, 1997, the Commission adopted a *Report and Order* that
eliminated the need for tens of thousands of individuals to obtain ship
or aircraft radio station licenses. In response to the Commission\'s
request, Congress in the Telecommunications Act of 1996 gave the
Commission authority to remove this individual radio licensing
requirement upon a determination that the public interest, convenience
and necessity would be served thereby. This action will eliminate
approximately 125,000 license applications filed each year for
recreational ship and aircraft stations and will save scarce Commission
resources to improve service to the public in other areas.

**UNITED STATES COAST GUARD VESSEL TRAFFIC SERVICES**

On September 22, 1998, the Bureau modified section 80.838(a) of the
Commission\'s rules to reinstate New Orleans, LA, to the list of the
United States Coast Guard designated radio protection areas for
mandatory Vessel Traffic Services (VTS) systems and to re-establish
marine VHF Channels 11 (156.550 MHz), 12 (156.600 MHz), and 14 (156.700
MHz) as the VTS frequencies for New Orleans. VTS systems are used by the
Coast Guard as an advisory communications service to coordinate vessel
movement and prevent collisions in large, busy port areas.

**PUBLIC COAST SERVICE AND AUCTION RULES**

**(PR Docket No. 92-257)**

On July 9, 1998, the Commission released a *Third Report and Order and
Memorandum Opinion and Order* aimed at streamlining the licensing
process for VHF public coast stations. The Commission concluded that the
public interest would best be served by providing licensees more
flexibility in the use of maritime spectrum, while preserving this
internationally-allocated radio service\'s core purpose of promoting the
safety of life and property at sea. The decisions adopted further the
Commission\'s goal to improve maritime communications.

**WIRELESS TELECOMMUNICATIONS BUREAU\'S BIENNIAL REVIEW**

Section 11 of the Communications Act, as amended, requires the
Commission to review all of its regulations applicable to providers of
telecommunications service in every even-numbered year, beginning in
1998, to determine whether the regulations are no longer in the public
interest due to meaningful economic competition between providers of the
service and whether such regulations should be repealed or modified. The
first biennial regulatory review presented an excellent opportunity for
a serious top-to-bottom examination of all of the Commission\'s
regulations, not just those statutorily required to be reviewed.

As part of the 1998 Biennial Regulatory Review, each of the operating
Bureaus, together with the Office of General Counsel, hosted a series of
public forums and participated in brown-bag practice group lunches with
the Federal Communications Bar Association to solicit informal input
from the public. Beginning in January 1998 the Commission initiated a
series of rulemaking proceedings as part of the 1998 Biennial Regulatory
Review. FCC staff released a list of 31 proceedings which it has
proposed that the Commission initiate as part of the review. In August
1998 the FCC announced significant progress on 1998 Biennial Review.

The following actions were taken as part of the Wireless
Telecommunications Bureau\'s Biennial Review:

**Amateur Service Rules.** On July 29, 1998, the Commission adopted a
*Notice of Proposed Rulemaking* (WT Docket No. 98-143) commencing a
proceeding to examine its rules for the Amateur Radio Service in an
effort to eliminate unnecessary and duplicative rules, as well as to
streamline the amateur licensing process.

**Part 90 Private Land Mobile Radio Services.** On September 30, 1998,
the Commission adopted a *Notice of Proposed Rulemaking* (WT Docket No.
98-182, PR Docket No. 92-235) to begin a comprehensive review of the
Part 90 rules applicable to the Private Land Mobile Radio Services in
order to determine which regulations are not in the public interest,
obsolete, overly complex, require editorial change, or are redundant.

**CMRS Forbearance.** On June 23, 1998, the Commission granted in part
and denied in part a *Petition for Forbearance* (WT Docket No. 98-100,
GN Docket No. 94-33) filed by the Broadband Personal Communications
Services Alliance of the Personal Communications Industry Association
(PCIA). The Commission granted in part PCIA\'s requests to forbear from
requiring CMRS providers to file tariffs for their international
services and from applying section 226 of the Communications Act. The
Commission also initiated a *Notice of Proposed Rulemaking* seeking
comment on further forbearance from applying section 226 and other
regulations or provisions of the Act to wireless telecommunications
carriers.

**Universal Licensing System (ULS)**. On March 18, 1998, the Commission
released a *Notice of Proposed Rulemaking* (WT Docket No. 98-20) that
proposed rules that consolidate, revise, and streamline its license
application procedures for radio services licensed by the Bureau. The
rule changes would implement ULS, an integrated database and automated
processing system developed by the Bureau to facilitate electronic
filing of, and access to, wireless applications and licensing
information for all wireless radio services.

**Office of Engineering and Technology**

**Overview**

With approximately 85 full time employees, the Office of Engineering and
Technology (OET) is one of the smaller units of the Commission. In 1998,
however, the Office contributed significantly to the Commission\'s
goals, particularly in the area of streamlining regulation and in
providing unbiased technical support to the other bureaus and offices
and to the Commission itself.

Traditionally, OET has been responsible for administering Parts 2, 5,
15, and 18 of the Commission\'s Rules. In 1998, however, the Office
undertook to expand its responsibilities by adding new staff to increase
its technical expertise in the areas of wireline and Internet
telecommunications.

OET\'s wide-ranging obligation as technical advisor to the Commission as
a whole entails various activities, including rulemaking, research and
testing, technical evaluation, and education.

OET is organized into four divisions, each one dedicated to a particular
aspect of spectrum use:

The **Policy and Rules Division** has two functional units: the Spectrum
Policy Branch (SPB), which handles petitions for rulemaking and other
matters pertaining to the use of the electromagnetic spectrum (Part 2),
and the Technical Rules Branch (TRB), which handles petitions and waiver
requests relating to unlicensed (Part 15) and Industrial, Scientific,
and Medical Devices (Part 18).

The particular responsibility of **Allocations and Standards Division**
is to conduct studies and analyses relating to spectrum management and
to plan for future uses of the spectrum in relation to developing
telecommunications requirements. The Division includes two branches
which share these obligations, the Standards Development Branch and the
Spectrum Utilization and Economics Branch. Because the use of 40% of the
spectrum is shared between the Federal Government and the private
sector, the Division also co-ordinates frequency allocation policy and
assignment activities with the National Telecommunications and
Information Administration (NTIA), the agency within the Department of
Commerce responsible for government use of the spectrum. ASD also
participates in national and international standards-setting activities
with other federal agencies.

The **New Technology Development Division** conducts laboratory analyses
and special tests to evaluate the performance, spectrum efficiency, and
interference potential of new technologies and services. The
Experimental Licensing Branch administers Part 5 of the Commission\'s
rules, thus providing a basic and important service in helping to
facilitate the development of new ideas in telecommunications by
permitting and monitoring limited operation of innovative devices and
services. The Technical Research Branch conducts studies of radio wave
propagation and communications systems which enable the Commission to
improve spectrum efficiency. In addition, staff provide a liaison with
government agencies, non-government organizations, and industries
concerned with the development of new technologies. The Division also is
the locus for the Office\'s expansion into providing technological
advice to the other Bureaus, Offices and Commissioners on wireline and
Internet technology matters.

The **Equipment Authorization Division**, which includes the Customer
Service Branch and the Applications Processing Branch, operates largely
out of the OET laboratory in Columbia, MD. EAD\'s main responsibility is
for administering Subparts I and J of the Commission\'s rules, which
deal with ensuring that only electronic devices which operate without
causing harmful interference are permitted to be imported, marketed, and
operated in the United States. It also provides public assistance and
information concerning the authorization process and serves as liaison
to foreign and domestic organizations concerned with equipment
authorization. The Division designs test procedures for equipment
subject to Commission regulation and supports industry standards
activities concerning measurement procedures.

During FY98, significant OET activities included:

***Chairman\'s Year 2000 Initiative (Y2K)***

The Office spearheaded the establishment of the Y2K task Force to work
on solutions that minimize the potential threats posed by the millennium
change. The task force coordinates its efforts with the industry,
federal and state governments and the international community. The Y2K
task force advocates readiness among all industry participants, promotes
information sharing and helps to build partnerships for effective
contingency planning. The Task Force has crafted a basic operating model
and Y2K‑readiness plan which involves three core components: (1)
Advocacy and Outreach; (2) Monitoring and Assessment; and (3)
Contingency Planning.

The Task Force relies heavily on Network Reliability and
Interoperability Council, a federal advisory council, which advises the
Commission on technical issues, monitors industry progress, and promotes
industry cooperation on Year 2000 compliance testing and other related
problems.

***Technical Leadership***

• Providing technical leadership and analysis for the *Notice of
Inquiry* and *Order and Notice of Proposed Rulemaking* (August 1998)
relating to deployment of Advanced Telecommunications Capabilities
(section 706). One of the most important provisions of the 1996
Telecommunications Act, section 706 envisions the deployment of such
capabilities to all Americans, and especially to schools at all levels.

• Analyzing the impact of the Internet and other leading edge
technologies on Commission regulations, including Universal Service, the
Communications Assistance for Law Enforcement Act (CALEA), section 256
of the 1996 Telecommunications Act (Interoperability), and Part 68
Regulations.

• Providing technical analysis for merger evaluation teams, including
the Worldcom/MCI merger and the proposed AT&T/TCI merger.

• Conducting technical seminars to educate the Commission and the
general public on leading edge technical issues, such as ASDL
Technology, Third Generation Mobile, and Internet Telephony.

***Radiofrequency Hazards***

• Responding to approximately 50,000 calls for information on the FCC\'s
technical standards for RF devices and equipment authorization
requirements. In addition, approximately 600 information packets on the
equipment authorization program were mailed to the public.

• Settling several disputes with respect to compliance with the RF
guidelines and making recommendations to the Commission and broadcasters
for mitigating problems. OET has also been involved with settling
disputes between local governments and licensees regarding international
broadcast, wireless towers, DTV placement and other broadcasting.

• Maintaining the RF safety Web site, which has registered over 100,000
hits this year.

• Publishing Supplement C, Additional Information of Evaluating
Compliance of Mobile and Portable Devices with FCC Limits for Human
Exposure to Radiofrequency Emissions.

***Streamlining Regulations/Improving Public Access***

*•* Issuing 3,989 equipment authorizations and 631 changes to existing
equipment.

• Implementing a new equipment authorization processing system (EAS)
that allows an applicant to file for an equipment authorization
electronically over the Internet. The proportion of electronically filed
applications is expected to continue to increase from the present 25%
until October 5, 1999, when paper applications will no longer be
accepted. Staff also provides information and training for the EAS
electronic filing.

• Based on coordination with the affected industries, developing
Internet access to pending applications which will enable an applicant
to determine the status of a pending application and respond to
inquiries through the EAS Web page.

• Providing a new Web based module to allow firms that test equipment
for equipment authorization applicants to electronically file a
description of their site, or request renewal of their test site
registration.

• Developing a new Web-based experimental licensing processing system
(ELS) that provides for electronic filing of requests for an
experimental license or Special Temporary Authority in the licensed
services. The system is expected to be implemented in the first quarter
of FY99.

**•** Expanding OET\'s Internet presence by adding a Docket Tracking Web
page, which compiles all the Commission Items that are within various ET
Dockets onto one page. In addition, the Office simplified its home page,
using comments received from the public, to make most of the information
on its Web site accessible with just one single click. Web site. In just
one month (October 1998), FCC ID Search was used 47,742 times.

• Developing spectrum management software, including publishing on the
Internet the tables that set forth the various radio licensing systems.
In addition, OET has developed a series of programs which use raw
assignment data to create a master frequency file database system and
tools to analyze spectrum usage above 900 MHz.

***Technical Support for Commission Initiatives***

• Conducting spectrum management and usage studies in support of several
rule makings, including Mobile Satellite Service (MSS), 1990--2110 MHz;
SkyBridge/Northpoint, 10.7 to 13.25 GHz and 17.7 to 19.7 GHz; and
interference to medical telemetry devices resulting from land mobile
operations in the 450‑470 MHz band.

• Conducting studies in support of Commission policy items, including a
determination of the susceptibility of wireless medical telemetry
devices, a characterization of the emissions from three ultra wideband
radiolocation and communications technologies, a yearlong study of
short-term fading of UHF TV signals (in support of development of
technical standards for DTV), and a study of skywave radio propagation.

• Further refining DTV allotment table algorithms and software as well
as development and support of computer programs and to assist in
analyzing radio paths, service areas and interference potential for MMDS
and TV broadcast services.

• Preparation of technical briefs and working papers on the Skybridge
NGSO/FSS system, satellite-based cellular communications, linear and
continuous-phase modulation, and spectrum management implications of
millimeter-wave propagation and smart antennas.

***Compliance***

• Ensuring compliance with the Commission\'s equipment authorization and
marketing regulations by opening approximately 100 enforcement cases and
resolving approximately 75 cases, evaluating sample equipment, and
responding to over 1,000 enforcement related telephone calls.

***International Coordination***

• Participating in the development of the United States / European Union
(US/EU) and the Asian Pacific Economic Cooperation (APEC) Mutual
Recognition Arrangement (MRA). Final rules that establish a framework
for the FCC to implement the MRAs are expected in the first quarter of
FY99.

**Major Proceedings**

**Advanced Television Systems and Their Impact upon the Existing
Television Broadcasting Service (DTV)**

**(MM Docket No. 87-268)**

On April 23, 1997, the Commission released the *Sixth Report and Order*
in the DTV proceeding setting forth policies and plans for the
establishment of an initial DTV Table of Allotments and the assignment
of those allotments to eligible broadcasters, an initial DTV Table that
was developed using those policies and a sophisticated computer channel
allotment system, and plans for spectrum recovery. This DTV Table also
facilitated the early recovery of the 60 MHz of spectrum now used for TV
channels 60-69 (746-806 MHz), and provided for recovery of additional
spectrum at the end of the DTV transition period.

The DTV Table, allotment policies, and spectrum recovery plans were
further refined in response to petitions for reconsideration in the
February 17, 1998, *Memorandum Opinion and Order on Reconsideration of
the Sixth Report and Order*, and the November 24, 1998, *Second
Memorandum Opinion and Order on Reconsideration of the Fifth and Sixth
Report and Orders.*

The essential task of this proceeding was to identify DTV allotments
that would accommodate all eligible, *i.e.*, existing, television
broadcasters, while minimizing interference to both service provided by
both DTV and existing television operations. In this regard, the
Commission sought to preserve service to the existing population of
television receiving equipment during the transition. To facilitate this
effort, the FCC engineers developed computer models capable of
generating and evaluating alternative DTV Table of Allotments and
completed empirical studies relating to television receiver performance
and the short term propagation variability of UHF television signals.
Studies were also conducted to minimize the impact of the new DTV
stations on existing analog television stations during the transition to
all DTV service.

In addition to providing significant improvements in free, over-the-air
television service, the new digital broadcast television technology will
allow broadcasters users to take advantage of the full range of
capabilities offered by digital technologies in providing ancillary
services to their viewers and others.

**Digital Electronic Message Service**

**(ET Docket 97-99)**

In October 1997, the Commission released an *Order* amending Parts 74,
78, and 101 of its rules regarding, respectively, Auxiliary Broadcast
Services, Cable Television Relay Service, and Fixed Microwave Services
to specify permanent coordination criteria between these services and
Government operations in the 17.8-19.7 GHz (18 GHz) band. This action
ensures that 18 GHz Government satellite Earth stations important to
national security will operate without harmful interference being caused
to them by 18 GHz non-Government operations.

**Arecibo Coordination Zone**

**(ET Docket 96-2)**

In October 1997, the Commission released a *Report and Order*
establishing a Coordination Zone regarding the Arecibo Radio Astronomy
Observatory that operates near Arecibo, Puerto Rico. The *Report and
Order* specified that radio facilities in various communications
services must provide notification of their proposed operations to the
Arecibo Observatory to protect the operations of the Observatory from
harmful interference. In July 1998, in response to a petition for
reconsideration of the *Report and Order,* the Commission released a
*Memorandum Opinion and Order* that clarified rules regarding the
Coordination Zone.

**Amendment of Part 15 of the Commission\'s Rules to Permit Operation of
Biomedical Telemetry Devices on VHF TV Channels 7‑13 and on UHF TV
Channels 14‑46**

**(ET Docket 95-177)**

This *Report and Order*, released in October 1997, established standards
and operating frequencies for unlicensed biomedical telemetry
transmitters used in health care facilities for such purposes as remote
monitoring of hearth, blood pressure and respiration monitors.
Previously, Part 15 only permitted operation on TV channels 7‑13 and at
a lower power level. The rule change would expand significantly the
number of channels available for unlicensed biomedical telemetry.

**Review of the Pioneer\'s Preference Rules**

**(ET Docket 93-266)**

In April 1998, the Commission released a *Memorandum Opinion and Order*
denying a petition for reconsideration of the August 1997 *Order* that
terminated the Commission\'s pioneer\'s preference program. The *Order*
followed enactment of the Balanced Budget Act of 1997, which specified
an expiration date for the pioneer\'s preference program of August 5,
1997. In its petition for reconsideration, Qualcomm, Incorporated
contended that the *Order* constituted retroactive rulemaking with
respect to Qualcomm\'s pioneer\'s preference request because that
request had been remanded from the United States Court of Appeals to the
Commission for further proceedings, and was still pending before the
Commission as of August 1997. In the *Memorandum Opinion and Order* the
Commission found that from August 5, 1997, it lacked Congressional
authority to consider the merits of any pioneer\'s preference request.

**Amendment of Parts 2, 15, 18 and Other Parts of the Commission\'s
Rules to Simplify and Streamline the Equipment Authorization Process for
Radio Frequency Equipment.**

**(ET Docket 97‑94)**

This *Report and Order*, released in April 1998, reduced the burden of
the authorization program on manufacturers and on Commission staff. It
simplified the equipment authorization process by creating a single
authorization procedure and made many types of equipment subject to
manufacturers\' self‑approval, thereby reducing by half the number of
applications required to be filed with the Commission. This item also
provided for the electronic filing of applications and thus reduced the
processing time by eliminating delays in the old paper system.

**In the Matter of 1998 Biennial Regulatory Review ‑‑ Conducted
Emissions Limits Below 30 Mhz for Equipment Regulated Under Parts 15 and
18 of the Commission\'s Rules**

**(ET Docket 98-42)**

In April 1998 the Commission began its review of the conducted emission
limits in Parts 15 and 18 of the Commission\'s rules as part of an
ongoing program of regulatory reassessment. It seeks to examine whether
these regulations continue to be necessary, and if so, whether any
changes to the limits may be appropriate.

**Revision of Part 2 Relating to the Marketing and Authorization of RF
Devices**

**(ET Docket 94‑45)**

In May 1998 the Commission released a *Memorandum Opinion and Order*
concerning its marketing rules. In response to petitions for
reconsideration, the Commission amended its importation rules to permit
manufacturers of transmitters for which a license is required to operate
to import greater product numbers prior to testing or authorization
provided the equipment is used for testing, evaluation or demonstration
purposes. It also permits a manufacturer operating such equipment to do
so under the authority of a local licensee.

**In the Matter of 1998 Biennial Regulatory Review ‑‑ Amendment of Parts
2, 25 and 68 of the Commission\'s Rules to Further Streamline the
Equipment Authorization Process for Radio Frequency Equipment, *et
al*.**

**(GEN Docket 98‑68)**

In May 1998 the Commission released this *Notice of Proposed Rule
Making*, which speeds up the certification process by allowing
designated private parties in the U.S. to issue equipment authorizations
in place of the Commission. In addition, it implements Mutual
Recognition Agreements (MRAs) by allowing designated parties in other
countries to issue equipment authorizations in place of the Commission.
This action will ensure market access in other countries and promote
competition in the provision of telecommunications products and
electronic equipment.

**In the Matter of 1998 Biennial Regulatory Review ‑‑ Amendment of Part
18 of the Commission\'s Rules to Update Regulations for RF Lighting
Devices**

**(ET Docket 98-80)**

The Commission adopted a *Notice of Proposed Rulemaking* on April 1,
1998, proposing to amend Part 18 of its rules to update the regulations
for radio frequency (RF) lighting devices. Recent developments and
advances in RF lighting technology offer potential economic and
environmental benefits for consumers and industry. The current FCC
rules, however, may not easily accommodate these technological
advancements and may thus hinder the further development and
implementation of these new products.

In June 1998, the Commission proposed to update the regulations for RF
lighting devices that offer potential economic and environmental
benefits for consumers and industry. This action seeks to reduce
unnecessary regulatory burden and to support the introduction of new and
beneficial products while ensuring that spectrum‑based communications
services continue to be protected from interference. Specifically, the
Commission proposed to relax the line‑conducted emission limits and to
adopt radiated emission limits above 1 GHz for RF lighting devices.

**Revision of Part 15 Regarding Ultra‑wideband Transmission Systems**

**(ET Docket 98‑153)**

In September 1998, the Commission released a *Notice of Inquiry* into
the regulation of ultra-wideband transmission systems. This inquiry
seeks to determine the standards and measurement procedures that should
be applied to ultra‑wideband transmission systems in order to ensure a
low probability that the operation of these systems will result in
harmful interference to other users of the radio spectrum.

**Allocation of Spectrum within the 5.850-5.925 GHz Band for Use by
Dedicated Short Range Communications (DSRC) for Intelligent
Transportation Systems (ITS)**

**(ET Docket 98-95)**

On June 11, 1998, the Commission released the *Notice of Proposed
Rulemaking* which proposes to allocate the 5.875-5.925 GHz band on a
primary basis to the mobile service for the provision of Dedicated Short
Range Communications (DSRC) for Intelligent Transportation Services
(ITS). The Intermodal Surface Transportation Efficiency Act of 1991
(ISTEA) established a national program within the U.S. Department of
Transportation (DOT) to develop ITS within the United States.

DOT, in cooperation with public and private partners throughout the
United States, has sought to foster the development of ITS through the
creation of a \"National ITS Program Plan\" and \"National ITS
Architecture.\" The National ITS Program Plan and Architecture identify
30 \"user services\" or applications that comprise the collaborative
public/private vision of ITS. These ITS applications rely upon the
integration of advanced communications systems and highway
infrastructure systems. While many ITS communications requirements are
being met within the framework of existing telecommunications systems,
the National ITS Architecture identifies a need for a dedicated block of
spectrum for reliable short-range wireless communications links between
vehicles traveling at highway speeds and roadside systems, *i.e.,* DSRC.

**Unlicensed NII Devices at 5 GHz (U-NII), (formerly known as WINForum
and Apple Petitions)**

**(ET Doc. 96-102)**

A *Memorandum Opinion and Order* was released in June 1998, addressing
two Petitions for Reconsideration and a Petition for Clarification. The
MO&O amends Part 15 of the rules to permit fixed, point-to-point
Unlicensed National Information Infrastructure (\"U-NII\") devices in
the 5.725-5.825 GHz band to operate with one watt (\"W\") maximum
transmitter output power and directional antennas of up to 23 dBi gain.
The Commission also amended its rules to specify transmit power limits
in the form of a logarithmic equation as a function of channel
bandwidth. The Commission also clarified its rules regarding unwanted
emissions and specified these limits in terms of absolute radiated power
levels. Further, this action clarified and addressed other issues raised
in the petitions regarding the operation of, and regulations governing,
U-NII devices.

##### Office Of Plans And Policy

###### Overview

The Office of Plans and Policy (OPP) serves as the principal economic,
technical and policy advisor to the Commission. OPP assists, advises,
and makes recommendations to the Commission with respect to the
development and implementation of communications policies in all areas
of Commission authority and responsibility, particularly those that
cross traditional industry and institutional boundaries.

The Office is composed of a small group of multidisciplinary staff
members, including economists, engineers, attorneys, MBAs, and social
scientists. OPP is particularly active in assisting the Commission in
ensuring that broadband services are deployed and accessible to all
Americans.

A principal function of the Office is to conduct independent economic
and policy analyses of programs and responsibilities of other bureaus
and offices and to recommend appropriate Commission action. OPP staff
work to assess the long term effects of alternative Commission policies
on domestic and international communications industries and services.
These analyses often take the form of working papers or staff reports.
The Office is also responsible for evaluating government, academic, and
industry sponsored research affecting Commission policy issues.

During FY98 OPP continued to analyze current agenda items while
developing long-term policy on issues that affect the entire
communications industry. The Office sought to encourage economic growth
in the communications industry with an increased focus on new
communications technology and the availability of advanced
telecommunications facilities. OPP continually seeks to stimulate
innovation in new products and services, provide a sound economic basis
allowing greater competition among providers, and promote
market-oriented approaches to spectrum management.

**Major Accomplishments in FY 98**

**[Broadband Technology and Advanced Services]{.underline}**. OPP helped
to develop and coordinate the Commission's policies to promote the
deployment of advanced services, in accordance with the
Telecommunications Act of 1996. OPP helped to co-manage and staff the
inter-Bureau Broadband Task Force, which, among other things, identified
and prioritized all the proceedings at the Commission affecting
broadband access. OPP also helped to organize a Commission *En Banc* on
Broadband Technology. In FY98 OPP worked closely with the Common Carrier
Bureau and the Office of Engineering and Technology on drafting the
*Advanced Services Notice of Proposed Rulemaking* and *Notice of
Inquiry*.

[**Industry Analysis**.]{.underline} In FY98 OPP assisted the Bureaus in
conducting competitive analysis of industry consolidation and evaluating
the long-term implications and economic bases of domestic and
international telecommunications mergers. OPP facilitated discussion of
industry consolidation by helping to organize academic forums and
Commission *en bancs* on these issues.

**[Spectrum Policy.]{.underline}** In FY98 OPP continued to provide
leadership and analysis in support of economically efficient spectrum
allocation and licensing policies for a wide range of rulemakings over
the year dealing with different portions of the radio spectrum. It also
continued its support of research in efficient spectrum management
policies. OPP co-chairs the FCC's internal Spectrum Coordinating
Committee that coordinates spectrum management activities across the
Bureaus and Offices. In FY98, among other things, OPP collaborated with
the Bureaus on the 36.0-51/4 GHz band plan *Report and Order* to
partition spectrum between satellite and terrestrial uses, and worked on
designing a combinatorial bidding system, as required by the 1997 Budget
Act.

**[Disabilities Issues]{.underline}**. OPP staff co-chairs the FCC\'s
inter-Bureau Disabilities Issues Task Force (DITF). The DITF helps to
develop Commission policy on all proceedings directly or indirectly
affecting the disabilities community. The DITF also helps respond to
inquiries from the public on disabilities issues relating to
communications. In FY98, the DITF worked closely with the Bureaus on
several proposed rulemakings that would ensure that telecommunications
services and equipment are accessible by persons with disabilities
(Section 255), would improve the quality of Telecommunications Relay
Service (Section 225), and on amended rules on closed captioning
requirements for video programming providers (Section 713) in accordance
with the Telecommunications Act of 1996. The DITF also worked
extensively with an industry-consumer forum examining solutions to make
TTY\'s and digital wireless handsets compatible.

**[Communications Policy Issues.]{.underline}** In FY98 OPP provided
critical support to the Bureaus on a wide range of issues including:
high cost, access reform and universal service proceedings; economic
models regarding local and broadband competition; reviewing the DTV fees
draft Report and Order; analyzing set-top box and digital convergence
issues including digital must carry; reviewing the cable programming
costs report; reviewing the *Satellite Home Viewer Act NPRM*; helping to
draft the annual Cable Competition Report; assisting with the review of
mass media cross-ownership rules; and assisting with inquiries about the
entry of utilities into telecommunications.

**[Internet Issues]{.underline}**. During FY98, OPP continued to lead
the Commission's Internet policy efforts. OPP staff worked closely with
the Common Carrier Bureau on several major items that considered the
legal status of Internet services under the Communications Act. In
particular, OPP helped develop the portion of the April 8, 1998 Report
to Congress on Universal Service addressing whether Internet services
should be subject to universal service rules. OPP also heads the
Internet Coordinating Committee, staffed by representatives of all the
major Bureaus and Offices. OPP continues to monitor the relationship
between communications and Internet services.

**Office of General Counsel**

**Overview**

The Office of General Counsel (OGC) serves as the chief legal advisor to
the Commission and to its various bureaus and offices. The Office of
General Counsel also represents the Commission in litigation in federal
courts, recommends decisions in adjudicatory hearing matters before the
Commission, assists the Commission in its decision-making capacity, and
performs a variety of legal functions regarding internal and other
administrative matters.

In the past year OGC reviewed over 375 draft decision documents
presented to the Commission by bureaus and offices. OGC prepared and
submitted for Commission consideration 32 hearing, rulemaking, FOIA and
other draft decision documents. OGC participated on behalf of the
Commission in more than 300 federal appeals and Supreme Court
proceedings, and 100 federal district court cases. OGC drafted 45
appellate briefs and participated in 35 oral arguments, and assisted the
Department of Justice in numerous cases pending before federal district
courts and the Supreme Court.

The Office of General Counsel has two Divisions:

The **ADMINISTRATIVE LAW DIVISION** provides the Commissioners and the
agency\'s bureaus and offices with legal advice on a broad range of
communications and general administrative law issues. Its attorneys and
paralegals also provide the public with legal information on such
matters. The division reviews all draft Commission decisions for legal
sufficiency. Division staff provides legal advice to the Commission
concerning a wide array of statutes, regulations, and procedures,
including, for example, the Communications Act of 1934, as amended by
the Telecommunications Act of 1996, the Administrative Procedure Act,
the Freedom of Information Act, the Privacy Act, the Regulatory
Flexibility Act, the Paperwork Reduction Act of 1995, the Government in
the Sunshine Act, the Contract with America Advancement Act of 1996,
negotiated rulemaking, alternative dispute resolution, the Commission\'s
procedural rules, procurement issues, and the agency\'s ex parte and
ethics rules. The Division staff is available to answer inquiries from
the public concerning these matters. The Division also drafts all
Commission decisions involving matters on review from Administrative Law
Judges, Freedom of Information Act applications for review, and
regulatory and filing fee applications for review.

The **LITIGATION DIVISION** represents the Commission in Federal courts
of appeals when parties challenge Commission actions, and, in
conjunction with the United States Department of Justice and United
States Attorneys offices, represents the Commission in litigation in
Federal district courts. In addition, Litigation Division attorneys work
with the Solicitor General of the United States in representing the
Commission in actions in the United States Supreme Court.

**Major Proceedings**

Among the significant Commission documents submitted by the Office of
General Counsel during FY 1998 were the following:

**TREATMENT OF CONFIDENTIAL INFORMATION**

The Commission adopted a Report and Order addressing its general
policies governing the handling of competitively sensitive information
that has been provided to the Commission and amending its rules to set
out more clearly what should be contained in a request that information
not be routinely available for public disclosure, to provide that audit
information and programming contracts will be presumed to be exempt from
public disclosure, and to codify the Commission\'s practice of sometimes
deferring action on a request for confidentiality until a request for
inspection is made. The Report and Order also adopted a Model Protective
Order.

**COMPETITIVE BIDDING PROCEDURES FOR COMMERCIAL BROADCAST AND
INSTRUCTIONAL FIXED TV SERVICES LICENSES**

The Commission adopted a Report and Order implementing provisions of the
Balanced Budget Act of 1997, which expanded the Commission\'s
competitive bidding authority to utilize auctions for broadcast
services; established a \"new entrant\" bidding credit to ensure that
small business, rural telephone companies, and businesses owned by
members of minority groups and women are given the opportunity to
participate in the provision of spectrum-based services; and concluded
that certain mutually exclusive commercial broadcast applications filed
before July 1, 1997 should be resolved by competitive bidding
procedures.

**Among the significant court decisions during fiscal year 1998
involving cases that the Office of General Counsel briefed and argued,
or assisted the Department of Justice in briefing, were the following:**

[Arkansas Educational Television Comm\'n v. Forbes]{.underline}, 118
S.Ct. 1663 (1998).

The Supreme Court held that the Arkansas Educational Television
Commission, a state agency, did not violate the First Amendment when it
organized and broadcast, on stations licensed to the Arkansas
Commission, a political candidate debate that excluded a particular
candidate because, the Arkansas Commission determined, he had not
generated appreciable public interest. The FCC filed a brief supporting
the Arkansas Commission.

[BellSouth Corp. v. FCC]{.underline}, 144 F.3d 58 (D.C. Cir. 1998).
Petitions for Writ of Certiorari pending in [BellSouth Corp. v.
FCC]{.underline}, No. 98-1046 (Sup. Ct.) and [U S WEST, Inc. v.
FCC]{.underline}, No. 98-1153 (Sup. Ct.).

The Court affirmed the FCC\'s order adopting rules to implement Section
274 of the Act, which restricts the participation of the Bell Operating
Companies in electronic publishing services over their own networks for
four years from the adoption of the 1996 Act. The Court rejected
arguments that the restrictions, which apply only to the BOCs, were an
unconstitutional bill of attainder and that they violated the BOCs\'
First Amendment rights.

[Lutheran Church-Missouri Synod v. FCC]{.underline}, 141 F.3d 344,
[rehearing denied]{.underline}, 154 F.3d 494 (D.C. Cir. 1998).

A panel of the court of appeals held that the FCC\'s regulation, which
required radio and television stations to maintain a positive effort to
ensure equal opportunity in employment by recruiting new employees from
a wide variety of sources that are likely to include women and
minorities and by regular self-evaluation, was a racial classification
that should be subjected to strict scrutiny under the equal protection
provision of the Constitution. Although the FCC had explicitly stated
that the rule did not impose any hiring requirements, the panel said
that the regulation necessarily pressured stations to engage in
race-conscious hiring. The panel concluded that the regulation did not
meet the strict scrutiny requirement because the interest in producing
program diversity was not compelling and because the regulation was not
narrowly tailored since it applied to all station employees without
regard to whether they were likely to influence the station\'s
programming. The court denied a subsequent petition for rehearing filed
by the Commission, with four judges dissenting.

[MCI Telecommunications Corp. v. FCC]{.underline}, 143 F.3d 606 (D.C.
Cir. 1998).

The Court reversed and remanded the FCC\'s order adopting rules to
govern the compensation to be paid to payphone operators for coinless
calls placed from their phones. The Court held that the Commission had
failed to explain adequately its derivation of the compensation amount.

[SBC Communications, Inc. v. FCC]{.underline}, 154 F.3d 226 (5th Cir.
1998), [cert. denied]{.underline}, 119 S.Ct. 889 (1999).

The Court reversed a district court ruling and held that sections
271-275 of the Act, which restrict certain activities of the Bell
Operating Companies, were nonpunitive in character and thus did not
violate the constitutional prohibition against bills of attainder.

[SBC Communications, Inc. v. FCC]{.underline}, 138 F.3d 410 (D.C. Cir.
1998).

The Court affirmed the Commission\'s order denying the application of
Southwestern Bell, pursuant to section 271 of the Act, for authorization
to provide long distance service in Oklahoma.

[Alexander J. Serafyn, et al. v. FCC]{.underline}, 149 F.3d 1213 (D.C.
Cir. 1998).

Alexander J. Serafyn appealed a Commission grant of an application by
CBS to acquire a Detroit television station on the ground that a segment
of a CBS Network \"60 Minutes\" broadcast about modern Ukraine had
distorted the news in violation of FCC policies against news distortion.
The court held that the Commission had applied its own news distortion
standard incorrectly in addressing Serafyn\'s complaints about the
factual inaccuracies in the broadcast. The court recognized the
sensitive First Amendment issues that arise in government review of
whether news broadcasts have been distorted but remanded the appeal for
further explanation by the Commission of the application of its news
distortion policy in this case.

[Southwestern Bell Telephone Co. v. FCC]{.underline}, 153 F.3d 523 (8th
Cir. 1998).

The Court affirmed in all respects an order and rules of the FCC
modifying and reforming the rate structure for the access charges that
long distance carriers pay local exchange telephone companies for the
use of their local networks in initiating and terminating long distance
calls.

[Southwestern Bell Telephone Co. v. FCC]{.underline}, 153 F.3d 597 (8th
Cir. 1998). Petition for Writ of Certiorari pending in [Ameritech
Corporation, et al. v. FCC]{.underline}, No. 98-1381 (Sup. Ct.).

The Court affirmed the Commission\'s order clarifying that the
obligation of local exchange carriers to provide \"unbundled network
elements\" to requesting competitors included the obligation to provide
\"shared transport\" facilities.

[United States v. Dunifer]{.underline}, 997 F.Supp. 1235 (N.D.Cal.
1998), [appeal pending]{.underline}, No. 99-15035 (9th Cir. docketed
Jan. 5, 1999).

The United States District Court for the Northern District of California
issued a permanent injunction against unlicensed radio broadcaster
Stephen Dunifer, who operated \"Free Radio Berkeley\" in Berkeley,
California. The decision reaffirms the FCC\'s authority to require a
license before any person can broadcast on the public airwaves.

**Office of Legislative and Intergovernmental Affairs**

**[Overview]{.underline}**

The Office of Legislative and Intergovernmental Affairs (OLIA) informs
the Congress of the Commission\'s decisions, prepares Commission
witnesses for congressional hearings, coordinates responses to
congressional inquiries, drafts Commission legislative proposals,
analyzes and comments on other proposed legislation, assists in the
coordination of the Commission\'s annual budget and appropriations
legislation, and acts as liaison between the Commission and other
Federal, state and local government agencies.

**[Enacted Laws]{.underline}**

During Fiscal Year 1998 (October 1, 1997-September 30, 1998), the
Congress enacted 10 laws directly affecting, or of interest to, the
Commission. These 10 laws: (1) continued appropriations for the
Commission and other Federal agencies by means of a series of six,
separate \"Continuing Resolutions\"; (2) appropriated funds to the
Commission for FY 1998; (3) provided for the designation of common
carriers not subject to the jurisdiction of a State commission as
\"eligible\" telecommunications carriers for purposes of receiving
Federal universal service support; (4) criminalized the possession
and/or use of scanning receivers or software used for modifying or
copying cellular phone electronic serial numbers; and (5) required the
FCC to complete a rulemaking on the allocation of spectrum for
\"intelligent\" transportation systems. A more detailed, chronological
listing follows:

**1. PL 105-64 (HJRes 97), 105-68 (HJRes 101), 105-69 (HJRes 104),
105-71 (HJRes 105), 105-84 (HJRes 106), and 105-240 (HJRes 128):**

**\"Continuing Resolution\"** Approved continuing appropriations for the
Commission and other related agencies in the Commerce, Justice, State
appropriations bill for fiscal year 1998. These Continuing Resolutions
were signed into law on October 24, 1997, November 7, 1997, November 9,
1997, November 10, 1997, November 13, 1997, and September 25, 1998.

**2. PL 105-119 (HR 2267):**

**\"An Act Making Appropriations for Fiscal Year 1998\"** Appropriated
the FCC \$186,514,000 for FY 1998, of which amount only \$23,991,000 was
to come from a direct appropriation and the balance of \$162,523,000
from the collection of regulatory fees. Required the Commission to
review and report to the Congress no later than April 10, 1998 regarding
implementation of the universal service provisions of the
Telecommunications Act of 1996. Repealed a provision of law regarding
the withholding of payments to the Universal Service Fund. Requested the
General Accounting Office to review the FCC\'s then proposed move to the
new Portals building including concerns about the Portals lease. This
bill was signed into law on November 26, 1997.

**3. PL 105-125 (S. 1354):**

**The \"Eligible Telecommunications Carriers Act of 1997\"** Amended
Section 214(e) of the Communications Act of 1934 to provide for the
designation of common carriers not subject to the jurisdiction of a
State public service commission such as common carriers owned or
controlled by Native Americans as telecommunications carriers
\"eligible\" to receive Federal universal service support. This bill was
signed into law on December 1, 1997.

**4. PL 105-172 (S. 493):**

**\"The Wireless Telephone Protection Act\"** Amended 18 U.S.C. Sec.
1029 of the Criminal Law Code with respect to cellular telephone cloning
paraphernalia. Made criminal the possession and/or use of scanning
receivers or software used for modifying or copying cellular phone
electronic serial numbers, with an exemption provided for certain
telecommunication service providers. This bill was signed into on April
24, 1998.

**5. PL 105-178 (H.R. 2400):**

**\"Transportation Equity Act for the 21st Century\"** Directed the FCC
\"to consider, in consultation with the Secretary of Transportation, the
spectrum needs of intelligent transportation systems,\" and \"to
complete a rulemaking considering the allocation of spectrum for
intelligent transportation systems by January 1, 2000.\" This bill was
signed into law on June 9, 1998.

**[Liaison Activities]{.underline}**

A chief mission of OLIA is to ensure, to the maximum extent possible,
good working relationships between the Commission, Members of Congress
and their staffs. A primary means of meeting this mission is consistent,
conscientious and effective communication with congressional offices.
OLIA seeks to maintain the highest standards for responsiveness to
congressional and public legislative inquiries, both oral and written.

For example, in FY 1998, OLIA provided considerable assistance to
congressional offices in responding to their requests for information,
public documents, status reports, and issue briefings. The majority of
these requests were made on behalf of individual constituents. OLIA
handled approximately 20,000 telephone calls, approximately 10% or 2000
of which were directly from the public on such topics as FCC
appropriations and reauthorization legislation, amateur radio matters,
broadcast indecency, cable TV rates and regulation, children\'s TV,
telecommunications reform and regulation, implementation of the
Telecommunications Act of 1996, reform of the Satellite Home Viewer Act,
as well as countless calls and letters from the public concerned about
two non-existent matters: the FCC imposing a telephone surcharge on each
computer modem, and the FCC granting a petition allegedly (but not
actually) filed by famous atheist Madalyn Murray O\'Hair to ban
religious broadcasting.

**[Congressional Correspondence]{.underline}**

In FY 1998, OLIA coordinated FCC responses to over 9000 congressional
letters on major pending FCC policy matters. The entire OLIA staff
shares responsibility for responding to congressional and public
inquiries. However, four Congressional Liaison Specialists within OLIA
currently have chief responsibility for tracking Commission responses to
written congressional inquiries. This responsibility includes:

 Operation of an automated congressional correspondence tracking
system, including the development of a new Y2K compliant system with
automated reporting capability;

 Establishment of written procedures for management of congressional
inquiries, as well as coordinating with designated Bureau and Office
Liaisons for congressional correspondence;

 Monitoring a revised and streamlined congressional correspondence
package for presentation to the Chairman and eventual submission to the
Hill; and

 Assuring compliance with tight response deadlines, *i.e.,* 10 workdays
for both the Bureaus/Offices and the Chairman\'s Office.

**[Other Responsibilities]{.underline}**

OLIA works with staff from other Federal, state and local governments to
respond to their inquiries and to assist in coordinating or facilitating
contact within the agency. Such contacts have included not only arms of
Congress such as Congressional Research Services, but also the Office of
Management and Budget, the Department of Justice, the Department of
State, the General Services Administration, the Federal Trade Commission
and the Federal Aviation Administration. OLIA also works with Federal
Advisory Committees such as the Local State Government Advisory
Committee and the Public Safety Advisory Committee.

OLIA also works with staff of the House Committee on Commerce and the
House Office of Legislative Counsel to add newly enacted amendments to
the Communications Act of 1934 for publication in the biennial
[Compilation of the Communications Act of 1934 and Related Provisions of
Law.]{.underline}

On request, OLIA staff speak to various FCC, industry, state and local
governments and public groups about the relationship between the
Commission and the Congress and pending legislative matters.

In addition, OLIA responds promptly to periodic FOIA requests for
legislative information.

**[Accomplishments]{.underline}**

In Fiscal Year 1998, OLIA accomplished the following:

 **Hearings**

Coordinated preparation of testimony, briefing material, and responses
to follow-up questions for 23 congressional oversight and legislative
hearings requiring FCC witnesses.

 **Congressional Correspondence and Inquiries**

Coordinated FCC responses to 9274 written congressional inquiries and
approximately 20,000 oral inquiries.

 **Congressional Monitoring**

Monitored over 100 congressional hearings, bill mark ups, and floor
debates and votes on a wide variety of telecommunications issues.

 **Oversight Investigations**

Responded to requests from Congress for FCC documents as part of
congressional oversight and investigation.

 **Legislative Comments**

Coordinated the preparation of over two dozen comments on pending
communications legislation for both the Office of Management and Budget
and the Congress.

 **Legislative Program**

Worked on legislative proposals to deregulate and streamline the FCC as
well as implement the Commission\'s policy objectives of expanding
telecommunications competition, increasing telecommunications
opportunities, and strengthening enforcement of remaining FCC rules and
regulations.

 **Congressional Briefings**

Conducted 58 subject matter briefings for Members of Congress and
congressional staff.

 **Freedom of Information Act Requests**

Prepared responses to four FOIA requests.