Before the
              FEDERAL COMMUNICATIONS COMMISSION     Washington, D.C. 20554


In the Matter of                )
                                )
Rulemaking To Amend Parts 1, 2, 21, and 25)       CC Docket No. 92-297
Of the Commission's Rules to Redesignate)         
The 27.5-29.5 GHz Frequency Band, To)        
Reallocate the 29.5-30.0 GHz Frequency)
Band, To Establish Rules and Policies for)
Local Multipoint Distribution Service)
And for Fixed Satellite Services)
                                )
Petitions for Reconsideration of the)
Denial of Applications for Waiver of the)
Commission's Common Carrier Point-to-) 
Point Microwave Radio Service Rules)
                                )
Suite 12 Group Petition for     )       PP-22
Pioneer Preference              )


                     Order On Reconsideration

     Adopted: May 8, 1997                    Released:  May 16, 1997

By the Commission:

                         I.  Introduction

     1.  On our own motion, pursuant to 47 C.F.R.  1.108, we reconsider the Second Report
and Order in the above captioned proceeding, in which we adopted rules for the Local Multipoint
Distribution Service ("LMDS").  First, we affirm our decision to refer CellularVision's Pioneer's
Preference request to peer review; however, we clarify our basis for doing so.  Second, we
amend an LMDS competitive bidding rule, Section 101.1112, to include subsection
101.1112(d)(11), as set forth in Appendix A.  Consistent with our rules governing the Wireless
Communications Service ("WCS") and broadband Personal Communications Services ("PCS"),
this new subsection exempts from the affiliation rules entities owned and controlled by Indian
tribes or Alaska Regional or Village Corporations for purposes of determining whether an entity
meets the definition of a small business or a business with average annual gross revenues of not
more than $75 million.

                    II.  Pioneer's Preference
     2.  In the LMDS Second Report and Order, we ordered the initiation of a peer review
process to examine the pending Pioneer's Preference request filed by CellularVision.  We stated
that we were undertaking this action pursuant to Section 1.402(h) of the Commission's Rules. 
On reconsideration, we recognize that Section 1.402(h) does not apply directly to the request
filed by CellularVision.  The rule applies only to a Pioneer's Preference request accepted for filing
after September 1, 1994, and CellularVision's predecessor in interest, Suite 12 Group, filed its
request on September 24, 1991.

     3.  Nothing in Section 1.402(h) or in the Commission Orders amending the Pioneer's
Preference rules pursuant to the legislation conferring competitive bidding authority upon the
Commission, and the legislation implementing the General Agreement on Tariffs and Trade
("GATT"), however, precludes us from ordering peer review in cases where applications were
filed before that date.  While the rule is clear that applications filed after September 1, 1994, must
be subject to peer review, the rule is silent with respect to applications filed before that date.  The
Commission's Pioneer's Preference policy prior to the enactment of the GATT legislation
explicitly contemplated referral of preference requests to peer review at the Commission's
discretion.

     4.  In amending Section 1.402(h), we did not intend to constrain our exercise of discretion
with respect to invocation of the peer review process in the case of applications filed prior to
September 1, 1994.  Nor do we believe that our action in amending the rule can be reasonably
construed as resulting in any limitation on the exercise of our discretion.  The rule, on its face,
cannot be read to limit or terminate our ability to refer to peer review an application filed prior to
September 1, 1994.

     5.  Likewise, in the Commission Reports and Orders discussing the applicability of the
new rules, we did not indicate any intention to limit our discretion to refer pre-September 1, 1994,
applications to peer review.  Although we indicated that the new regulations would not apply to
the Pioneer's Preference applicants that had been granted tentative preferences, including
CellularVision, this means only that the revised rule requiring peer review would not apply; it
did not nullify our ability to seek peer review on a discretionary basis, as provided under the
preexisting policy.

     6.  Thus, in the case of CellularVision, we clarify that, consistent with the preexisting
Pioneer's Preference rules, we have concluded that we would benefit from a more thorough
review and analysis by persons with highly specialized expertise before we make a final
determination on the CellularVision request.  As a policy matter, we appropriately exercised our
discretion in this case to obtain the opinion of experts to assist us in determining whether
CellularVision should be awarded a Pioneer's Preference.  Although we have tentatively decided
to grant the request filed by CellularVision, there are several reasons why it would be
advantageous to subject the application to peer review at this time.  First, referring
CellularVision's proposal to a panel of experts would supplement the record with the evaluations
of disinterested experts who are familiar with the technology.  Although we ordinarily rely upon
the standard notice and comment process to guide our decision making, the highly technical
nature of the issues presented by the CellularVision proposal leads us to believe that we would
benefit from the additional advice of technical experts who do not have a stake in the outcome of
this proceeding.  It is our responsibility to verify that the proposal constitutes a technological
advancement.  The peer review process will help ensure the reasonableness of our final decision
on these highly technical matters.

     7.  Second, CellularVision for several years has been using millimeter wave technology to
provide video service.  As a result, there may now be available more demonstrable evidence that
would be relevant to an inquiry into whether the service being provided by CellularVision is either
a new service or a substantial enhancement to an existing service, as required by the Pioneer's
Preference rules.  Of particular relevance is whether the work done by CellularVision merely
constitutes an adaptation of existing technology.  Finally, in light of the modifications to the
Pioneer's Preference policy resulting from the GATT legislation and the decision to use
competitive bidding to choose between mutually exclusive LMDS applications, CellularVision is
now potentially eligible to receive a substantial discount on its license.  Under these
circumstances, which have changed during the pendency of the CellularVision request, it is
particularly appropriate that we utilize the peer review process to enable the Commission to make
a fully-informed, well-reasoned decision on the Pioneer's Preference request.  For these reasons,
we affirm our decision to refer CellularVision's Pioneer's Preference request to peer review, and
clarify that we do so pursuant to our pre-1994 policy.


                 III.  Competitive Bidding Rules
     8.  In the LMDS Second Report and Order, the Commission adopted rules providing that,
for purposes of determining eligibility for installment payments and bidding credits, an entity's
average gross revenues for the preceding three years would be aggregated with the average gross
revenues of its affiliates and controlling principals.  Affiliation generally exists when the
applicant controls or has the power to control another entity, another entity controls or has the
power to control the applicant, the applicant and another entity are controlled by the same third
party, or another entity has an identity of interest with the applicant.  In our broadband PCS and
WCS affiliation rules, we specifically exempted entities owned and controlled by Indian tribes or
Alaska Regional or Village Corporations from being considered affiliates of applicants or
licensees that are owned and controlled by such entities.  In the LMDS Second Report and
Order, however, we did not adopt this exemption.  

     9.  The exemption we provide in the broadband PCS and WCS rules mirrors Small
Business Administration ("SBA") rules that exclude from affiliation coverage entities owned and
controlled by Indian tribes or Alaska Regional or Village Corporations.  The SBA is required by
statute to determine the size of a small business concern owned by an Indian tribe (or a wholly
owned business entity of such tribe) "without regard to its affiliation with the tribe, any entity of
tribal government, or any other business enterprise owned by the tribe, unless the Administrator
determines that one or more such tribally owned business concerns have obtained, or are likely to
obtain, a substantial unfair competitive advantage within an industry category."  Additionally,
Section 29(e) of the Alaska Native Claims Settlement Act (43 U.S.C.  1626(e)) provides that:

     (1) For all purposes of Federal law, a Native Corporation shall be considered to be
     a corporation owned and controlled by Natives and a minority and economically
     disadvantaged business enterprise if the Settlement Common Stock of the
     corporation and other stock of the corporation held by holders of Settlement
     Common Stock and by Natives and descendants of Natives, represents a majority
     of both the total equity of the corporation and the total voting power of the
     corporation for the purposes of electing directors.

     (2) For all purposes of Federal law, direct and indirect subsidiary corporations,
     joint ventures, and partnerships of a Native Corporation qualifying pursuant to
     paragraph (1) shall be considered to be entities owned and controlled by Natives
     and a minority and economically disadvantaged business enterprise if the shares of
     stock or other units of ownership interest in any such entity held by such Native
     Corporation and by the holders of its Settlement Common Stock represent a
     majority of both--
       (A) the total equity of the subsidiary corporation, joint venture, or partnership; 
     and
       (B) the total voting power of the subsidiary corporation, joint venture, or
     partnership for the purpose of electing directors, the general partner, or principal
     officers.

These statutory provisions have been incorporated into the SBA's regulations.

     10.  We believe that entities owned and controlled by Indian tribes and Alaska Regional or
Village Corporations should be eligible to bid in LMDS auctions as small businesses or as
businesses with average annual gross revenues not exceeding $75 million, notwithstanding their
affiliation with other entities owned by tribes or Alaska Native Corporations whose gross
revenues cause the combined average gross revenues of the entity and its affiliates to exceed the
general limits for eligibility for bidding as such a business.  An exemption from our affiliation rules
will ensure that these entities will have a meaningful opportunity to participate in spectrum-based
services from which they would otherwise be precluded.  As is true of other services where we
have adopted this exception, LMDS is expected to be a highly capital intensive wireless service. 
Furthermore, we do not believe that this exemption for the specified entities will entitle them to an
unfair advantage over entities that are otherwise eligible for small business status.  We will
therefore amend the LMDS affiliation rules so as not to preclude the eligibility of entities owned
and controlled by Indian tribes and Alaska Native Corporations for classification as small
businesses, or as businesses with average annual gross revenues not exceeding $75 million.

                      IV.  Ordering Clauses

     11.  Accordingly, IT IS ORDERED that the Chief, Office of Engineering and Technology,
SHALL SELECT a panel of experts to review the specific technologies set forth in the Pioneer's
Preference request that was filed by the Suite 12 Group on September 23, 1991, as amended on
November 19, 1991, and that was accepted and placed on Public Notice on December 16, 1991.

     12.  IT IS FURTHER ORDERED that Part 101 of the Commission's Rules is amended as
set forth in the attached Appendix A.

     13.  IT IS FURTHER ORDERED that the rule changes made herein WILL BECOME
EFFECTIVE 30 days after their publication in the Federal Register.  This action is taken pursuant
to Section 4(i), 303(r) and 309(j) of the Communications Act of 1934, as amended by the
Telecommunications Act of 1996, 47 U.S.C.  154(i), 303(r) and 309(j).


                              FEDERAL COMMUNICATIONS COMMISSION


                              William F. Caton
                              Acting Secretary

                            APPENDIX A

                           FINAL RULES

Part 101 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows: 


     1.  Section 101.1112 is amended by adding subsection (d)(11):

 101.1112  Definitions.

                            * * * * * 
(d) Affiliate.

                            * * * * * 
 (11)     Exclusion from Affiliation Coverage.  For purposes of paragraphs (b) and (d) of this
section, Indian tribes or Alaska Regional or Village Corporations organized pursuant to the
Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), or entities owned and controlled
by such tribes or corporations, are not considered affiliates of an applicant (or licensee) that is
owned and controlled by such tribes, corporations or entities, and that otherwise complies with
the requirements of paragraphs (b), except that gross revenues derived from gaming activities
conducted by affiliated entities pursuant to the Indian Gaming Regulatory Act (25 U.S.C. 2701 et
seq.) will be counted in determining such applicant's (or licensee's) compliance with the financial
requirements of paragraph (b) of this section, unless such applicant establishes that it will not
receive a substantial unfair competitive advantage because significant legal constraints restrict the
applicant's ability to access such gross revenues.