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                                             FCC 95-301
                                Before the
                 FEDERAL COMMUNICATIONS COMMISSION
                          Washington, D.C. 20554
In the Matter of                   )
                                             )
Implementation of Section 309(j)        )
of the Communications Act -        )               PP Docket No. 93-253
Competitive Bidding                )
                              )
Amendment of the Commission's      )
Cellular PCS Cross-Ownership Rule  )         GN Docket No. 90-314
                              )
Implementation of Sections 3(n) and 332 )
of the Communications Act               )         GN Docket No. 93-252
Regulatory Treatment of Mobile Services )
                              )
                          SIXTH REPORT AND ORDER
       Adopted:  July 18, 1995                         Released:  July 18, 1995
By the Commission:
                             I.  INTRODUCTION
     1.  In this Sixth Report and Order, we modify our competitive bidding rules for the
"C block" of Personal Communications Services in the 2 GHz band (broadband PCS) to
eliminate race- and gender-based provisions that we believe raise legal uncertainties in the
aftermath of the Supreme Court's decision in Adarand Constructors, Inc. v. Pea.  We take
this action to accomplish three goals:  (1) promotion of rapid delivery of additional
competition to the wireless marketplace by C block licensees; (2) reduction of the risk of
legal challenge; and (3) minimal disruption to the plans of as many applicants as possible
who were in advanced stages of planning to participate in the C block auction when Adarand
was announced.  While taking action to ensure that the auction commences quickly, we also
want the maximum number of existing business relationships formed under our prior rules
and in anticipation of the C block auction -- including those of women and minority
applicants -- to remain viable.  We emphasize that our action today does not indicate that
race- and gender-based provisions at issue here could not be sustained without further
development of the record.  Nor do we believe that such measures generally are
inappropriate for future auctions of spectrum-based services.  We are considering the means
we should take to develop a supplemental record that will support use of such provisions in
other spectrum auctions held post-Adarand.
                              II.  BACKGROUND
     2.   Legislation and Commission Action.  In the Omnibus Budget Reconciliation Act
of 1993, Congress authorized the competitive bidding of spectrum-based services and
mandated that small businesses, rural telephone companies, and businesses owned by
members of minority groups and women (collectively known as "designated entities") be
ensured the opportunity to participate in the provision of such services.  In the Fifth Report
and Order, in PP Docket No. 93-253, we adopted competitive bidding rules designed to
encourage designated entity participation in broadband PCS.  Specifically, we established
"entrepreneurs' blocks" (the C and F frequency blocks allocated for broadband PCS) for
which eligibility is limited to individuals and entities under a certain financial size.  We
also adopted special provisions for businesses owned by members of minority groups or
women and we analyzed their constitutionality utilizing the "intermediate scrutiny" standard
of review articulated in Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 564-565 (1990).
We made subsequent changes to the entrepreneurs' block rules and special provisions for
designated entities in the Fifth MO&O.
     3.  Litigation and Auction Schedule.  On March 15, 1995, in response to a request
filed by Telephone Electronic Corp. (TEC) alleging that our broadband PCS competitive
bidding rules violated equal protection principles under the Constitution, the U.S. Court of
Appeals for the District of Columbia Circuit issued an Order stating that "those portions" of
the Commission's Order "establishing minority and gender preferences, the C block auction
employing those preferences, and the application process for that auction shall be stayed
pending completion of judicial review."  As a result, the C block auction, then scheduled to
commence 75 days after the March 13, 1995 close of the A and B block auction, was
postponed.  The court's stay was subsequently lifted on May 1, 1995, pursuant to TEC's
motion, after TEC decided to withdraw its appeal.  The Commission established August 2,
1995 as the new auction date.
     4.  On June 12, 1995, three days before initial short form applications (FCC Form
175) for the August 2nd C block auction were due, the Supreme Court decided Adarand.
The Supreme court decided to overrule Metro Broadcasting "to the extent that Metro
Broadcasting is inconsistent with" Adarand's holding that "all racial classifications . . . must
be analyzed by a reviewing court under strict scrutiny."  As a result of the Adarand
decision, the constitutionality of any federal program that makes distinctions on the basis of
race must serve a compelling governmental interest and must be narrowly tailored to serve
that interest.  By Public Notice released June 13, 1995, the Commission postponed the C
block auction again in order to give interested bidders and the Commission time to evaluate
the impact of Adarand.  We later established an August 29, 1995 date for the auction.
     5.  Further Notice of Proposed Rule Making.  On June 23, 1995, we adopted a
Further Notice of Proposed Rule Making, in which we identified four race- and gender-based
measures in our C block auction rules and two similar provisions in our commercial mobile
radio service (CMRS) and broadband PCS rules that were affected by the Court s ruling in
Adarand.  In the Further Notice, we proposed to eliminate these race- and gender-based
provisions and instead modify such measures to be race- and gender-neutral.  We, at the
same time, stated that we remain committed to the mandates and objectives of the Budget
Act.
     6.  In the Further Notice, we set forth our specific proposals and our rationale for
these C block auction rule changes.  While we stressed our commitment to the goal of
ensuring broad participation in PCS by designated entities, particularly minority- and women-
owned businesses, we indicated that Adarand required us to reevaluate our method for
accomplishing this Congressional objective.  Although we stated in the Further Notice that
our current record concerning adoption of the race- and gender-based measures contained in
our C block auction rules is strong, we tentatively concluded that additional evidence may be
necessary to meet the strict scrutiny standard of review required by Adarand.  We
cautioned that development of such a supplemental record would further delay the C block
auction, putting the C block winners at a greater competitive disadvantage in the CMRS
market vis-a-vis existing wireless carriers such as the A and B block winners, cellular and
Specialized Mobile Radio (SMR) carriers.
     7.  Additionally, we indicated that without changes to our race- and gender-based
rules, there was a substantial likelihood that the C block auction would be the subject of legal
challenge based on the holding in Adarand.  We stated that a stay would delay both the
auctioning and licensing of the C block, and that such a result might harm competition
overall in the CMRS marketplace.  Also, we recognized that even if the C block auction
were not stayed beforehand, there is a high likelihood that minority applicants and possibly
female applicants (who utilize bidding credits and other provisions available solely to
members of those groups) would be subject to license challenges (i.e., in the form of
petitions to deny and judicial appeals).  Such challenges could potentially delay their entry
into the market and postpone competition.
     8.  In addition, we recognized that many of the C block applicants have already
attracted capital and formed business relationships in anticipation of the C block auction.  We
observed that these relationships are more likely to survive if the auction is not significantly
delayed, and our rule changes are minimally disruptive to existing business plans.  We
suggested that by eliminating race- and gender-based provisions from our C block auction
rules, we would not only reduce the legal uncertainty associated with C block licensing, but
we would also further competition and ownership diversity by adopting provisions based on
economic size only.  By virtue of such rule changes, potential C block bidders, including
minority and women bidders, would have a better chance of becoming successful PCS
providers.  We also indicated that elimination of the race- and gender-based measures from
the C block auction rules would be consistent with our duty to implement the Budget Act,
since we believe that many designated entities would qualify as small businesses under our
rules.  Furthermore, as small businesses, such entities would be entitled to a small business
bidding credit and favorable installment payment terms.
     9.  Accordingly, we sought comment on amending six rule provisions as follows:
         Amend Section 24.709 of the Commission's Rules to make the 50.1/49.9
          percent "control group" equity structure available to all entrepreneurs' block
          applicants.
         Amend Section 24.720 of the Commission's Rules to eliminate the exception
          to the affiliation rules that excludes the gross revenues and total assets of
          affiliates controlled by investors who are members of a minority-owned
          applicant's control group.
         Amend Section 24.711 of the Commission's Rules to provide for three
          installment payment plans for entrepreneurs' block applicants that are based
          solely on financial size.
         Amend Section 24.712 of the Commission's Rules to provide for a 25 percent
          bidding credit for small businesses.
         Amend Section 24.204 of the Commission's Rules to make the 40 percent
          cellular attribution threshold applicable to ownership interests held by small
          businesses and rural telephone companies, and to non-controlling ownership
          interests held by investors in broadband PCS applicants/licensees that are small
          businesses.
         Amend Section 20.6 of the Commission's Rules to make the 40 percent
          attribution threshold for the CMRS "Spectrum Cap" applicable to ownership
          interests held by small businesses and rural telephone companies.
We received 41 timely-filed comments in response to the Further Notice.  In addition, after
announcement of the Adarand decision and prior to release of the Further Notice, we
received 42 informal comments addressing various issues regarding our C block competitive
bidding rules, the impact of Adarand, and the need for the C block auctions to proceed
expeditiously.
                             III.  DISCUSSION
A.   Rationale for Rule Changes
     10.  The overwhelming majority of commenters support the proposed rule changes set
forth in the Further Notice.  A few commenters, however, generally oppose our proposals on
the basis that Adarand does not require us to change the race- and gender-based provisions
contained in our C block competitive bidding rules.  Specifically, BET contends that
Adarand does not wholly invalidate such provisions but merely requires that their
constitutionality be determined utilizing a strict scrutiny standard of review.  BET and
NABOB argue that the race- and gender-based provisions can and should be retained because
they would survive a strict scrutiny standard of review and comply with the congressional
mandate of the Budget Act.  Similarly, Giles contends that the proposed rule changes
contravene the spirit and mandate of the Budget Act.  BET also proposes alternative rule
changes that it contends will satisfy the Congressional goals outlined in the Budget Act, flow
from the Commission's record, and comport with the standards pronounced in Adarand.
     11.  Upon careful review we remain concerned that our present record would not
adequately support the race- and gender-based provisions in our C block competitive bidding
rules under a strict scrutiny standard of review.  Significantly, the D.C. Circuit previously
stayed the C block auction in response to a constitutional equal protection challenge against
these provisions when a less strict standard of review was applicable.  As a result, we
strongly believe that there is a substantial likelihood of further legal challenge to the C block
auction in the wake of Adarand if such provisions remain unchanged.  None of the
commenters have challenged this belief.  Furthermore, as we indicated in the Further Notice,
we would need additional evidence to sufficiently develop our record to support these race-
and gender-based provisions consistent with the dictates of Adarand.  Any efforts to obtain
this additional evidence would require additional time and, therefore, further delay the
commencement of the C block auction.  The legal uncertainty associated with the race- and
gender-based provisions, combined with the views of potential C block bidders that the
auction not be subject to any further delay, prompt us to modify our rules in a fashion which
would be minimally disruptive to as many of the interested parties, potential bidders as well
as members of the financial and investment communities as possible.  We also disagree with
the assertion by BET and Giles that today's rule changes are inconsistent with the Budget
Act.  As we concluded in the Further Notice, today's rule changes would allow small
businesses to benefit from the most favorable bidding credits and installment payment plans
contained in our rules.  As a result, because we have evidence which supports a conclusion
that many designated entities, including minority and women-owned businesses, would
qualify as small businesses and, thus, benefit from such provisions, we believe that our
action is fully consistent with the Budget Act.  We further conclude that the proposals we
adopt today are necessary under the circumstances and indeed will best serve the public
interest.
     12.  With respect to alternative rule change proposals presented by the commenters,
we conclude, as discussed more fully below, that because they draw distinctions based upon
race, most of these proposals would engender the same danger of constitutional infirmity and
would result in the same legal uncertainties that we seek to mitigate by these decisions.  To
the extent that the commenters have presented race- and gender-neutral rule changes, we
conclude, as discussed herein, that the proposals set forth in the Further Notice, which are
broadly supported by numerous commenters, constitute the more prudent and expedient
course of action for proceeding with the auctioning of the C block licenses post-Adarand.
B.   Control Group Equity Structures
     13.  Background.  Our current rules permit broadband PCS applicants for licenses in
the C block to utilize one of two equity "control group" structures, so that the gross
revenues and total assets of persons or entities holding interests in such applicants will not be
considered.  These two equity structures are the Control Group Minimum 25 Percent Equity
Option (which is available to all applicants) and the Control Group Minimum 50.1 Percent
Equity Option (which is currently available only to minority or women applicants).  In the
Further Notice, we proposed to modify our rules to permit all C block applicants, including
small businesses and entrepreneurs, to avail themselves of the Control Group Minimum
50.1 Percent Equity Option.  When we adopted the Control Group Minimum 50.1 Percent
Equity Option in the Fifth R&O, we determined that making such a mechanism available to
minority- or women-owned businesses would better enable them to attract adequate financing.
We have previously noted that the primary impediment to participation by businesses owned
by women and minorities in broadband PCS is a lack of access to capital.  We tentatively
concluded that such a rule change would cause the least disruption and open up additional
financing options for other applicants in the C block auction.  The Further Notice sought
comment on this proposed rule change and tentative conclusion.
     14.  Comments.  Most commenters agree that the Control Group Minimum 50.1
Percent Equity Option should be made available to all C block applicants.  Several
commenters express concerns about further delay of the auctioning and licensing of the C
block and agree that this minimal rule change would not unduly disrupt existing business
relationships.  Other commenters support the proposed rule change on the basis that it
would substantially reduce, if not eliminate, the possibility of legal challenges to the C block
auction based on the Adarand decision.  DCR Communications and Small Business PCS
argue that elimination of minority- and gender-based provisions would provide meaningful
opportunity for small businesses, as well as minority- and women-owned businesses, to
participate in the C block auction.
     15.  Other commenters, however, oppose extending availability of the Control Group
Minimum 50.1 Percent Equity Option to all entrepreneurs.  K&M proposes that this equity
structure only be available to "very small businesses," defined as businesses with revenues up
to $20 million.  Omnipoint argues that because the Control Group Minimum 50.1 Percent
Equity Option was created to address the problems experienced by women- and minority-
owned companies in accessing capital, the Commission should either justify the measure
under the strict scrutiny standard of review or eliminate it completely.  Omnipoint expresses
concern that extension of the Control Group Minimum 50.1 Percent Equity Option equity
structure to all C block applicants would increase the number of "shams" financed by big
companies.  Similarly, Silverman and Century oppose allowing large companies, whether
minority- or women-owned, as a general matter, to own more than 25 percent of a C block
applicant's equity.
     16.  Decision.  We have decided to amend our rules to permit all C block applicants
to avail themselves of the Control Group Minimum 50.1 Percent Equity Option.  This
amendment enables minority- or women-owned applicants structured under our prior rule to
retain the Control Group Minimum 50.1 Percent Equity Option, while extending this option
to other applicants in the entrepreneurs' block as well.  We recognize that we originally
established the Control Group Minimum 50.1 Percent Equity Option as a race- and gender-
based measure aimed at addressing the unique financing problems experienced by women-
and minority-owned businesses.  All C block applicants, as well as the public, will be better
served if we proceed expeditiously in a manner which both reduces the likelihood of legal
challenges and enhances the opportunities for a wide variety of applicants, including
designated entities, to obtain licenses and rapidly deploy broadband PCS service.  Thus, we
conclude that use of this equity structure should now be dependent upon economic size, a
factor not implicated by the Court s decision in Adarand.  Moreover, retaining the Control
Group Minimum 50.1 Percent Equity Option should help to preserve existing business
relationships formed in reliance on our prior rules and encourage participation in the C block
auction.
     17.  We disagree with Omnipoint's position on the Control Group Minimum 50.1
Percent Equity Option rule change.  In the Fifth R&O and the Fifth MO&O, we indicated that
the equity structure options provided under our rules are designed to provide qualified
bidders with a reasonable amount of flexibility in attracting needed financing from other
entities, while ensuring that such entities do not acquire controlling interests in the qualified
bidders.  With respect to the Control Group Minimum 50.1 Percent Equity Option, we
previously explained that in order to guard against abuses, the control group of applicants
choosing this option must own at least 50.1 percent of the applicant's equity, as well as
retain control and hold at least 50.1 perent of the voting stock.  We have previously
concluded that this requirement reduces substantially the danger that a well-capitalized
investor with substantial ownership stake will be able to assume de facto control of the
applicant.  In addition, we previously clarified our rules so that persons or entities that are
affiliates of one another, or that have an "identity of interests," as well as their other
investors pursuant to Sections 24.709(c) and 24.813 will be treated as though they are one
person or entity and their ownership interests aggregated for purposes of determining
compliance with our nonattributable equity limits.  This clarification was aimed at
discouraging large investors from circumventing our equity limitations for nonattributable
investors.  We believe that these measures will be effective in deterring the type of "sham"
deals described by Omnipoint.  Moreover, we will have the opportunity to review these
structures through the application process when bidders who elect to utilize such equity
structures are required to identify the members of their control groups.  Consequently, we
believe that our rules adequately protect against "sham" deals.
     18.  Accordingly, under Section 24.709 of the rules, all applicants in the C block
auction selecting a "control group" structure in order to exclude the total assets and gross
revenues of certain investors will have two options for raising capital through the distribution
of equity among "qualifying investors," other eligible investors in the control group (e.g.,
management and institutional investors) and other non-attributable "strategic" investors.  In
light of the fact that we have eliminated the eligibility dichotomy in the two control group
equity options, we specify and clarify here how both options apply to C block applicants.
     19.  First, we note that under both options the following control and voting
requirements continue to apply: (1) the control group must own at least 50.1 percent of the
applicant's voting stock, if a corporation, or all of the applicant's general partnership
interests, if a partnership;  (2) qualifying investors, as defined in the rules, must hold at
least 50.1 percent of the voting stock and all general partnership interests within the control
group, and must have de facto control of the control group and the applicant; and (3) the
investor(s) holding "nonattributable equity" (up to 25 percent or 49.9 percent) are limited to
25 percent of a corporate applicant's voting equity (including the right to vote such interests
through a voting trust or other arrangement) and may hold only limited partnership interests,
if the applicant is a partnership.
     20.  Control Group Minimum 25 Percent Equity Option.  This equity structure option
requires the control group to hold at least 25 percent of the applicant s total equity.  Of this
25 percent equity, at least 15 percent must be held by "qualifying investors."  A "qualifying
investor" is generally defined as a member of, or a holder of an interest in a member of, the
applicant's or licensee's control group whose gross revenues and total assets, when
aggregated with those of all other attributable investors and affiliates, do not exceed the gross
revenues and total assets restrictions specified in our rules with regard to eligibility for
entrepreneurs' block licenses or status as a small business.  With regard to the remaining 10
percent of the control group's equity, this may be held by four types of noncontrolling
investors without these investors' assets and revenues being attributed to the applicant, as is
the case with other control group members.  These are (1) qualifying investors (small
businesses or entrepreneurs); (2) individuals who are members of the applicant's management
team; (3) existing investors in a preexisting entity that is a member of the control group; and
(4) institutional investors.  The minimum equity amounts within the control group vary
slightly three years after the license is received and for applicants whose sole control group
member is a preexisting entity.  As for the remaining 75 percent of the applicant s equity
(assuming the control group holds no more than the minimum 25 percent), the gross
revenues and total assets (and other affiliations) of an investor holding a portion of this
remaining equity are not considered so long as such investor (together with its affiliates)
holds no more than 25 percent of the applicant's total equity.
     21.  Control Group Minimum 50.1 Percent Equity Option.  This equity structure
option requires the control group to hold at least 50.1 percent of the applicant s total equity.
Of this 50.1 percent equity, at least 30 percent must be held by "qualifying investors."  The
remaining 20.1 percent of the control group's equity may be held by the same four types of
investors specified above.  As with the Control Group Minimum 25 Percent Equity Option,
the minimum equity amounts within the control group vary slightly three years after the
license is received and for applicants whose sole control group member is a preexisting
entity.  As for the remaining non-control group equity, the gross revenues and total assets
(and affiliates) of the investor(s) holding this remaining equity is not considered so long as
such investor(s) (together with its affiliates) holds no more than 49.9 percent of the
applicant's total equity.  The reasoning behind these two options and their advantages to
applicants for purposes of raising capital are set forth in our Fifth R&O and Fifth MO&O.
We affirm here that this reasoning and the advantages for maintaining both options remain
applicable.  We note that, under our prior rules, businesses owned by minorities and women
had the option to use either equity structure.  It is our understanding that such businesses,
depending on their particular circumstances, were forming applicants based on the option that
best met their needs for outside investment and what the capital markets were seeking from
them in the form of equity interests.  We now provide both options to all C block applicants
and we anticipate that each applicant will pursue (or switch to) the option that best suits its
particular capital needs and equity ownership situation.
     22.  Qualifying Investors.  The modification in the Fifth MO&O and here of the
control group minimum equity requirements to allow certain other investors to own "control
group equity" -- and not have their assets and revenues attributed to the applicant -- may
not be clear in light of the definition of "qualifying investor" in section 24.720(n) of the
Commission's rules.  Specifically, in the Fifth MO&O, we modified the rules to allow
certain noncontrolling investors who do not qualify for the entrepreneurs' block or as a small
business to be investors in an applicant's control group.  In making these limited changes to
the control group equity requirements, we said that this added, but limited, flexibility will (1)
promote investment in designated entities generally; (2) attract and promote skilled
management for applicants; and (3) encourage involvement by existing firms that have
valuable management skills and resources to contribute to the success of applicants.
     23.  We stated that the first category for inclusion in this 10 percent or 20.1 percent
portion of the control group is "investors in the control group that are women, minorities,
small businesses or entrepreneurs."  The text of the rules adopted in the Fifth MO&O and
the erratum to the Fifth MO&O capsulized this category as "qualifying investors," but the
definition of "qualifying investors" in the rules failed to reflect the broader nature and
purpose for allowing "women, minorities, small businesses or entrepreneurs" hold shares or
options in the 10 percent or 20.1 percent portion of the control group even though they --
like the other categories -- "if attributed, would cause the applicant to exceed the small
business or entrepreneurs' block financial caps . . .."  Consistent with our intent in the Fifth
MO&O, we clarify that, so long as the minimum equity requirements for "qualifying
investors" (15 percent or 30 percent) under our new rules are met, the remaining control
group equity (10 percent or 20.1 percent) may be held by investors that meet either the small
business or entrepreneur eligibility requirements.  We continue to believe that such entities,
if they wish to provide financial support to C block applicants, should not be precluded from
doing so because their financial status would, if considered with other control group
members, make the applicant ineligible for the C block or small business status.
Accordingly, we clarify our definition of "qualifying investor" for purposes of Section
24.709(b)(5)(i)(C) and (6)(i)(C).
C.   Affiliation Rules
     24.  Background.  We adopted affiliation rules for purposes of identifying all
individuals and entities whose gross revenues and assets must be aggregated with those of the
applicant in determining whether the applicant exceeds the financial caps for the
entrepreneurs  blocks or for small business size status.  There are two exceptions to our
broadband PCS affiliation rules.  Under one exception, applicants affiliated with Indian tribes
and Alaska Regional or Village Corporations organized pursuant to the Alaska Native Claims
Settlement Act, 43 U.S.C.  1601 et seq., are generally exempt from the affiliation rules for
purposes of determining eligibility to participate in bidding on C block licenses. These
applicants additionally qualify as a small business with a rebuttable presumption that revenues
derived from gaming, pursuant to the Indian Gaming Regulatory Act, 25 U.S.C.  2701 et
seq. will be included in the applicant's eligibility determination.  Under the second
exception, the gross revenues and assets of affiliates controlled by minority investors who are
members of the applicant s control group are not attributed to the applicant for purposes of
determining compliance with the eligibility standards for entry into the entrepreneurs'
block.
     25.  In the Further Notice, we proposed to eliminate the exception pertaining to
minority investors.  In crafting this exception, we anticipated that it would permit minority
investors that control other business entities to be members of an applicant s control group
and to bring their management skills and financial resources to bear in its operation without
the assets and revenues of those other concerns being counted as part of the applicant s total
assets and revenues.  We further anticipated that such an exception would permit minority
applicants to pool their resources with other minority-owned businesses and draw on the
expertise of those who have faced similar barriers to raising capital in the past.  In the
Further Notice, we tentatively concluded that it would be imprudent to respond to Adarand
by extending this exception to all entrepreneurs because to do so would frustrate the
Commission's goals in establishing the entrepreneurs' block -- namely, to ensure that
broadband PCS will be disseminated among a wide variety of applicants including small
businesses and rural telephone companies.
     26.  The Further Notice proposed to retain the affiliation exception for Indian tribes
and Alaska Regional or Village Corporations.  We tentatively concluded that the "Indian
Commerce Clause" of the United States Constitution provides an independent basis for this
exception that is not implicated by the Adarand decision.
     27.  Comments.  The commenters overwhelmingly support elimination of the
exception to our affiliation rules that excludes the gross revenues and total assets of affiliates
controlled by minority investors who are members of an applicant's control group.  Some
commenters agree that this rule change would reduce the likelihood of a further delay to the
C block auction resulting from legal challenges premised on the Adarand decision.  Other
commenters argue that the Court's ruling in Adarand requires elimination of the affiliation
rule exception applicable solely to investors who are members of minority groups.  With
respect to the effect of such rule change, Central Alabama & Mobile Tri-States argue that by
virtue of the current rule, well-financed entities who might otherwise not qualify as an
entrepreneur or as small businesses are allowed to participate in the C block which is
ultimately to the detriment of those C block applicants who actually experience difficulties in
accessing capital.  DCR Communications contends that the proposed rule change would not
deprive women and minority-owned businesses of investment from other minorities whose
affiliates would exceed the financial size limitations imposed under our rules; rather, it would
limit such investment to 25 percent before it becomes attributable.
     28.  BET, NABOB, and O.N.E. oppose elimination of the affiliation rule exception
pertaining to investors who are members of minority groups.  NABOB argues that such
elimination will prevent many bidders from including experienced, successful minority
entrepreneurs in their control groups, which, in turn, may cause them to lose financing
dependent upon such alliances, and, thus, prevent them from participating in the C block
auctions.  Similarly, BET argues that this rule change would not only exclude several
minority entrepreneurs, but, because the A and B blocks already have been licensed, such
minorities would be precluded from any meaningful participation in broadband PCS.  BET
further argues that elimination of the affiliation rule exception would be inconsistent with the
congressional mandate given in the Budget Act and the record established by the Commission
regarding those problems experienced by minority-owned businesses that the exception was
specifically designed to address.  Also, BET contends that Adarand does not require such a
rule change.
     29.  Some commenters generally propose alternative modifications to the affiliation
rule exception for minority investors.  NABOB proposes that the exception be modified so
that an entity controlled by a member of the control group of a small business applicant or
licensee would not be considered an affiliate of the applicant if the entity would qualify as an
entrepreneur.  Spectrum Resources proposes that investors who have affiliates with gross
revenues and total assets sufficiently large to disqualify a small business applicant would still
be allowed to invest in the application if their investment was capped at a relatively low
level, such as $100,000.  Spectrum Resources argues that this modification would increase
the pool of investors for small businesses while ensuring that the applicant remains a small
business.
     30.  BET suggests four alternative affiliation rule exceptions.  Under BET's first
alternative exception, it proposes that the exception be made available only when the
revenues and assets of each of the affiliates of minorities in a control group separately qualify
as entrepreneurs under our rules.  If, however, any of the affiliates exceeded the financial
limitations for the C block, then the minority-owned applicant would not be allowed to
participate in the C block auction.  BET argues that this proposal is analogous to the
Commission's treatment of small business consortia in the C Block.  Under BET's second
proposal, the revenues and assets of affiliates of minority members of an applicant's control
group would be excluded if the average revenues of the affiliates over the past two years are
less than the C block financial limits.  BET argues that without such modification, Native
Americans are being singled out for special treatment in violation of the Equal Protection
Clause.  Under these proposals, BET suggests that aggregation of the gross revenues and
total assets of these affiliates would not be required in determining whether the applicant
qualifies as an entrepreneur or a small business.  BET's other affiliation rule exception
proposals consist of making the first two proposals described above applicable to all members
of a control group regardless of race.  BET argues that these proposals would exclude large
telecommunications companies, allow otherwise excluded minority applicants to participate in
the C block auction, and provide for the limited growth of small companies.
     31.  With regard to the affiliation rule exception pertaining to Native Americans,
CIRI, the Oneida Tribe, and Prairie Island agree that such exception should be retained.
These commenters also agree that this exception is authorized by the Indian Commerce
Clause of the Constitution.  Furthermore, CIRI and Prairie Island contend that the
affiliation rule exception is not a race-based measure implicated by Adarand.  Prairie
Island argues that the exception is an outgrowth of an accommodation by the federal
government of several Indian tribes as sovereign political entities in a trust relationship with
the United States.  CIRI and Prairie Island also argue that this exception is part of federal
Indian law and policy.  CIRI also argues that elimination of the affiliation rule exception
pertaining to Indian tribes would be:  (1) inconsistent with the Small Business
Administration's treatment of tribal entities; and (2) without record support since the record
supports the exception's underlying purpose and the essential circumstances justifying such
exception have not changed.
     32.  Decision.  Although we proposed to eliminate the exception to our affiliation
rules pertaining to minority-controlled affiliates, we now decide to modify it in a manner
similar to BET's proposal.  When we originally crafted this exception for minority-owned
applicants, we anticipated that it would permit minority investors who control other concerns
to be members of a minority-owned applicant s control group and to bring their management
skills and financial resources to bear in its operation without the assets and revenues of those
other concerns being counted as part of the applicant s total assets and revenues.  We
further anticipated that such an exception would permit minority-owned applicants to pool
their resources with other minority-owned businesses and draw on the expertise of those who
have faced similar barriers to raising capital in the past.  However, as we recognized in
allowing small business consortia to apply in the C block and in granting small businesses
special measures, all small businesses, including those owned by minorities and women,
should not be precluded from pooling their resources in this capital intensive service.  We
believe that to some extent, these firms face barriers to raising capital not faced by the larger
firms.  In addition, small businesses experienced in managing smaller businesses should not
be penalized because they own or are otherwise affiliated with other businesses whose assets
and revenues must be considered on a cumulative basis and aggregated for purposes of
qualifying for the C block auction.
     33.  Our modification will benefit small business applicants only where the financial
position of their affiliates or their qualifying control group member's affiliates, when
considered individually and on a cumulative basis, would not present an unfair competitive
advantage in the auction.  Thus, to achieve the objectives outlined above --  including
minimizing the adverse impact on existing business relationships, mitigating the risk of legal
challenges, and ensuring that the auctions are fair and do not present any bidder with an
unfair competitive advantage -- we modify this exclusion from affiliation coverage as
follows:
     o  For purposes of the affiliation rules, a small business applicant can exclude from
     coverage of the affiliation rules any affiliate of the small business applicant if the
     following conditions are met:
          (1) the affiliate would otherwise qualify as an entrepreneur pursuant to section
          24.709(a)(1) ($125 million in gross revenues and $500 million in total assets);
          and
          (2) the total assets and gross revenues of all such affiliates, when considered
          on a cumulative basis and aggregated with each other, do not exceed these
          amounts.
This exemption will apply for purposes of qualifying for both the C block auction and small
business status.
     34.  We will also retain the affiliation exception for Indian tribes and Alaska Regional
or Village Corporations.  In the Fifth MO&O, we stated that our decision to exempt Indian
tribes generally from our affiliation rules was premised on the fact that Congress has
imposed unique legal constraints on the way they can utilize their revenues and assets.  We
recognized that as a result of such constraints imposed by the Alaska Native Claims
Settlement Act, 43 U.S.C.  1601 et seq., Native American corporations are precluded from
utilizing two important means of raising capital:  (1) the ability to pledge the stock of the
company against ordinary borrowings, and (2) the ability to issue new stock or debt
securities.  We further recognized that Congress has mandated that the Small Business
Administration determine the size of a business concern owned by a tribe without regard to
the concern's affiliation with the Indian tribe and determined that the affiliation exception
contained in our C block affiliation rules mirrored this congressional mandate.  Although
Indian tribes are minorities under our C block auction rules, we conclude that their affiliation
rule exception is different from the exception applicable only to minority investors in that it
is premised on their unique legal status as recognized in the "Indian Commerce Clause" of
the United States Constitution.
D.   Installment Payments
     35.  Background.  Five different installment payment plans are available to C block
applicants under Section 24.711 of the Commission's Rules.  In the Further Notice, we
sought comment on our proposal to allow all small businesses, regardless of racial or gender
classification, the opportunity to use the most favorable installment payment plan to pay for
their licenses.  This proposal provides for interest-only payments for six years and payments
of principal and interest amortized over the remaining four years of the license term.  We
indicated that this approach would allow many prospective bidders to maintain their pre-
Adarand business arrangements.
      36.  Comments.  A majority of the comments support the elimination of installment
payment plans that are tied to an applicant's status as a minority- or women-owned business,
and to provide for three installment payment plans that are based solely on financial size.
Several commenters note that our proposal will result in the least amount of delay to the
auction and grant of C block licenses.  GO Communications asserts that delays and threats
of delay to the C block auction will irrevocably damage all entrepreneurs.  Airlink
expresses a similar opinion when it notes that there is a direct link between auction delays,
market competitiveness and investor confidence.  Airlink further maintains that auction
delays inhibit the ability of applicants to keep and find sources of investment.  Small
Business PCS was even more adamant that any other alternative would result in further delay
and no viable licenses for any small businesses.  Although the majority of commenters
favor our proposal, Minority Media et al. also suggests allowing any applicant who can
demonstrate "good cause" to request a waiver under Sections 1.3 and 24.819(a) of our
rules to be eligible for small business preferences and the bidding credit under our
proposed rule.  Under Minority Media et al.'s proposed alternative, any waiver requests
by women and minorities would receive a "plus" factor since there is record evidence in this
proceeding and in congressional legislation that establishes compelling governmental interests
in diversity of ownership.
      37.  Several commenters oppose our proposal to modify our installment payment
plan.  InTouch asserts that we are raising barriers to accessing capital by minority-owned
businesses.  By eliminating the race and gender preference, BET argues that we are not
assisting minority-owned small businesses in overcoming obstacles to entry into the PCS
marketplace.  BET further maintains that the Further Notice must still satisfy Congress'
directive to disseminate licenses among a wide variety of applicants and to ensure that
minorities are not excluded from the auction process.  O.N.E. charges that we are wrong
to eliminate all race- and gender-based preferences without proposing a race- and gender-
neutral solution.  Specifically, O.N.E. argues that our proposals do not create a size
standard that is race and gender neutral yet small enough to ensure that businesses owned by
members of minority groups and women are given the opportunity to participate in the
provision of PCS.  As a result, they assert that our proposals have the effect of restricting
opportunities to only an elite handful of minorities and women.
      38.  RTC disagrees with our installment plans as set forth in the Further Notice and
suggests two proposals of its own.  First, RTC would make the same installment payment
terms available to all small businesses that qualify to participate in the C block auction.
Alternatively, RTC would maintain the existing differentials available to small businesses that
meet the $40 million gross revenues test vis-a-vis other small businesses that qualify as
"entrepreneurs."  RTC asserts that the effect of the proposals creates a massive gulf
between small businesses whose control groups can meet the $40 million gross revenues test
versus those whose control group cannot meet that test.
      39.  Decision.  We will amend our rules concerning installment payments as set forth
in the Further Notice.  We have concluded that revision of our installment payment program
in this manner, is minimally disruptive to the established business arrangements of the
applicants.  All small businesses, including minority- or women-owned small businesses,
will continue to be eligible for the most favorable installment plan.
      40.  We further conclude that our installment payment plan designed solely for small
businesses will give designated entities an opportunity to participate in the provision of
spectrum-based services.  By allowing all small businesses to pay for their licenses in this
manner (i.e., using installments, at a rate equal to ten-year U.S. Treasury obligations
applicable on the date the license is granted and requiring that payments include interest only
for the first six years with payments of principal and interest amortized over the remaining
four years of the license term), we will provide the most favorable plan to the smallest
companies.  We are not, as O.N.E. suggests, restricting opportunities to a handful of
minorities and women.  We are  complying with our statutory obligations in a manner that
we believe is necessary under the circumstances.  We reject RTC's alternatives to make the
same installment plan available to all applicants.  Our record shows that smaller companies
need more assistance accessing capital for broadband licenses and, therefore, the Commission
decided these businesses should receive more favorable treatment than the medium to large
companies participating in the C block auction.
      41.  Based on our experience, we conclude that Minority Media et al.'s waiver
proposal as described in its comments is administratively burdensome, and potentially has its
own legal risks since it is based in part on an applicant's status as a woman or minority.  A
major purpose of our proposals is to avert further delays in the auction and grant of C block
licenses.  The waivers would give losing applicants a built-in reason to challenge the auction
results with petitions to deny if a winning applicant utilized the bidding credit solely as a
result of a waiver for "good cause."  Therefore, for purposes of the C block auction, we will
not adopt such a waiver proposal.
      42.  Although the revised rules do not specifically target minorities and women, we
realize that because a large number of minority- or women-owned businesses are small
businesses, our new rules will nonetheless, afford designated entities opportunities to
participate in the C block auction.  We recognize that this amendment to the installment
payment plan will not allow some minority- and women-owned businesses to elect the most
favorable installment payment plan because these businesses exceed our small business
threshold.  We further recognize that these businesses may have to restructure agreements to
obtain additional capital to participate in the C block auction.
      43.  We weighed the risks of litigation to the Commission and to winning bidders, the
need to preserve competition, and our commitment to providing service to the public as
expeditiously as possible against the additional financial burden this rule change will have on
minority- and women-owned businesses that do not qualify as small businesses under our
rules.  After carefully considering these issues, we determined that the need to mitigate
litigation risks, enhance market competition, and encourage prompt service to the public far
out-weigh the additional financial burden this rule change would create for potential bidders.
E.    Bidding Credits
      44.  Background.  Our current rules provide three tiers of bidding credits ranging
between 10 percent and 25 percent.  Small businesses are eligible for a 10 percent bidding
credit.  Businesses owned by women or minorities are eligible for a 15 percent bidding credit
and small businesses owned by women or minorities are eligible for a 25 percent total
bidding credit.  The bidding credit acts as a discount on the winning bid amount that a
licensee actually pays for the license.  In the Further Notice, we proposed increasing the
bidding credit for small businesses from 10 percent to 25 percent and eliminating the
remaining bidding credits.  We recognized that this proposal would enhance the
competitiveness of all small businesses which will receive a 15 percent increase in their
bidding credits.  The positions of minority- or women-owned small businesses will remain
the same because they are already eligible for a 25 percent bidding credit.
      45.  Comments.  Commenters generally advocate increasing the small business
bidding credit to 25 percent and the elimination of bidding credits based upon an applicant's
race or gender.  Some commenters supported our proposal to differentiate between
applicants on the basis of size in order to avert any Adarand or TEC legal challenges to our
rules.  Minority Media et al. repeated its "good cause" waiver argument under Sections
1.3 and 24.819(a) of our rules.
      46.  Two commenters oppose the proposed bidding credit modification.  Both BET
and InTouch argue that race neutral alternatives serve only to reinforce the barriers to capital
that many minority-owned businesses face.  BET specifically states that the bidding credit
is meant to "address directly the financing obstacles encountered by minorities."  Two
commenters presented alternative proposals for consideration.  RTC
wants to either (1) make the same bid credits available to all small businesses that qualify to
participate in the C block auction or (2) maintain the existing differentials available to small
businesses that meet the $40 million gross revenues test vis-a-vis other small businesses that
qualify as "entrepreneurs."  O.N.E. proposes increasing the bidding credit for small
businesses to 40 percent.
      47.  Decision.  We amend our rules to provide for a 25 percent small business
bidding credit only.  Restructuring our bidding credits in this manner is consistent with our
post-Adarand concerns about the C block auction.  While small businesses, in general, will
benefit with a higher credit (i.e., from 10 to 25 percent), this rule change will allow the
Commission and prospective bidders to avoid litigation, allow the auction to proceed as close
to its original schedule as possible and permit prospective bidders to maintain previously
negotiated business arrangements and financial agreements.
      48.  We understand BET's and InTouch's concerns, but believe our proposals do not
contradict our statutory obligations.  Many commenters have noted that the elimination of
minority- and gender-based preferences is necessary in light of recent court challenges to
race-based statutes if the C block auction is to proceed without significant delay.
Specifically, GO Communications comments that our bidding credit proposal strikes an
appropriate balance by leveling benefits upward in a manner that mitigates potential harm to
all affected parties.  Spectrum Resources contends that the proposal is reasonable and
viable although a slight negative effect will result because of the additional competition into
the bidding process and a diminishing number of successful minority and women bidders.
DCR Communications argues that the proposal is the most sensible and is necessary to
ensure participation by designated entities in the auction for, and offering of, PCS.  We
agree that we are striking an appropriate balance between varied interests to retain our
statutory mandate to provide opportunities for designated entities.
F.    Cellular PCS Cross-Ownership and CMRS Spectrum Aggregation Limit
      49.  Background.  Our cellular-PCS cross-ownership rule prohibits entities with
attributable interests in cellular licenses from holding more than 10 MHz of PCS spectrum in
an overlapping PCS service area.  For purposes of this rule, a 20 percent or greater
interest in a cellular license is considered to be attributable, except in the case of cellular
interests held by designated entities.  In the latter case, we permit small businesses, rural
telephone companies, and businesses owned by minorities or women to hold up to a 40
percent non-controlling interest in a cellular licensee without being subject to the cellular-
PCS cross-ownership restriction.  We also apply a 40 percent cellular attribution threshold
to any entity with a non-controlling interest in a PCS license controlled by minorities or
women.   The same attribution rules apply to our 45 MHz spectrum cap, which restricts
any entity from holding interests in more than 45 MHz of broadband PCS, cellular, and
SMR spectrum in the same geographic area.  Thus, while interests of 20 percent or more
in a broadband PCS, cellular, or SMR license are generally attributable for purposes of the
spectrum cap, small businesses, rural telephone companies, and businesses owned by
minorities or women are subject to a 40 percent attribution threshold.
      50.  In the Further Notice, we proposed to modify both the cellular-PCS cross-
ownership and the PCS/cellular/SMR spectrum cap rule with respect to the C block by
eliminating the use of the 40 percent attribution threshold on the basis of race or gender.
Thus, in the cellular-PCS context, we proposed to apply the 40 percent attribution threshold
only to cellular interests held by small businesses and rural telephone companies, but to
apply the 20 percent threshold to all other cellular interests, including those held by minority
and women-controlled entities that are not small business or rural telephone companies.  We
further proposed to eliminate the rule allowing 40 percent cellular attribution for non-
controlling investors in minority- or women-controlled PCS applicants or licensees and
instead proposed to apply the 40 percent threshold to non-controlling investors in PCS
applicants or licensees controlled by small businesses.  In this regard, we noted that the
extension of the 40 percent threshold to non-controlling investors in small businesses might
result in additional investment in small business PCS applicants.  Similarly, with respect to
the PCS/cellular/SMR spectrum cap, we proposed to use the 40 percent attribution threshold
where PCS/cellular/SMR interests are held by small businesses and rural telephone
companies, but to use the 20 percent threshold in all other cases.  Although we noted that
the cellular-PCS and spectrum cap rules applied to more than just the C block, we proposed
to change the rules with respect to the C block only.
      51.  Comments.  The comments generally support our proposals for modifying the
cellular-PCS cross-ownership and CMRS spectrum aggregation limit rules.  Most of the
comments mirror earlier comments concerning the commenters' desire to avoid delay; to
avoid Adarand and TEC type legal challenges; and to minimize disruption.  DCR
Communications notes that our proposal will promote investment.  Only two commenters
object to our proposal.  O.N.E. reasserts its argument that we should not eliminate all race-
and gender-based preferences without proposing a race- and gender-neutral solution.
Radiofone challenges both the 40 percent cellular-PCS cross-ownership rule and our proposed
amendment as unlawful and discriminatory.
      52.  Decision.  We will amend our cellular PCS cross-ownership and
PCS/cellular/SMR spectrum aggregation limit rules with respect to C block as proposed in
the Further Notice.  These changes will help to avoid further delay or legal challenges to the
C block auction and are strongly supported  by the comments.  We reject Radiofone's
argument that the cellular-PCS cross-ownership rule should be eliminated.  This argument
has been fully addressed previously in the PCS docket and is not an issue raised in this
proceeding.  Specifically, we modify Section 24.204(d)(2)(ii) with respect to the C block to
eliminate the provision in the cellular-PCS cross-ownership rule that increases the attribution
threshold to 40 percent on the basis of the race or gender of the holder of the ownership
interest, but we will continue to apply the 40 percent threshold to cellular interests held by
small businesses and rural telephone companies.  We also modify Section 24.204(d)(2)(ii) to
provide that non-controlling investors in C block PCS applicants or licensees controlled by
small businesses may hold up to a 40 percent interest in a cellular licensee without being
subject to the cellular-PCS cross-ownership restrictions.  Finally, we make the same
modification to the attribution provisions in our spectrum cap rule in Section 20.6(d)(2) that
we have made to our cellular-PCS rule.  Thus, small businesses or rural telephone companies
may hold up to a 40 percent interest in broadband PCS, cellular, or SMR licenses without
such interests being attributable under the 45 MHz spectrum cap, but minority- and women-
controlled interest holders who are not small businesses or rural telephone companies will be
subject to the 20 percent attribution rule for purposes of determining C block eligibility under
the spectrum cap.  To avoid any apparent inconsistency, Section 20.6(d)(2) will also reflect
the modification with respect to non-controlling investors in C block PCS applicants and
licensees that are small businesses.
G.    Miscellaneous Issues
      53.  Information Collection.  With respect to our proposal to continue requesting
information on the short-form applications (FCC Form 175) regarding minority- or women-
owned status, both Spectrum Resources and Central Alabama & Mobile Tri-States agree
that we should continue to collect such information.  Central Alabama & Mobile Tri-States
believe that collection of the status data will enable the Commission to analyze the applicant
pool and auction results to determine if small business provisions alone were sufficient to
achieve the participation of all designated entities, including businesses owned by minorities
or women.  Central Alabama & Mobile Tri-States further state that in the event that such
participation is not obtained, then the collected information would be helpful in establishing a
record supporting race- and gender-based preferences for future auctions.  Similarly,
Spectrum Resources believes that such information could prove valuable in supporting the
Commission's actions in any ensuing litigation.
      54.  We agree that continuing to request information on the short-form applications
(FCC Form 175) concerning the minority- or women-owned status of applicants will assist us
in analyzing the applicant pool and the auction results to determine whether we have
accomplished substantial participation by minorities and women through provisions available
to small businesses as required by the Budget Act.  We conclude that such information will
be helpful and probative in two respects: (1) our preparation of a report to Congress on the
participation of designated entities in the auctions and in the provision of spectrum-based
services; and, (2) our development of a supplemental record should we find that special
provisions for small businesses in the C block PCS auctions prove unsuccessful in ensuring
participation by businesses owned by members of minority groups and women in broadband
PCS.  In this connection, we emphasize that those applicants who indicate that they are
minority- or women-owned must meet the applicable definitions as set forth in Section
24.720(c) of our rules.
      55.  Other.  Several commenters addressed issues regarding the auctioning and
licensing of the C block other than the specific rule changes proposed in the Further Notice.
These issues included the following:  (a) scheduled commencement of the C block auction;
(b) proposals of special provisions for entrepreneurs with gross revenues between $40 and
$75 million; (c) proposals of circumstances under which upfront payments and down
payments can earn interest and be withdrawn; (d) definition of small businesses; (e)
criteria for determining C block eligibility; (f) the rebuttable presumption concerning
Indian gaming revenues; and (g) effect of business growth and development on C block
small business status. We have adequately considered these issues previously and we
find no basis to revisit them here in this narrowly-focused rule making.  Therefore, we will
not make the rule changes proposed by commenters pertaining to such issues.
      56.  On our own motion, however, we clarify the measurement of gross revenues.
Section 24.720 (f) specifies that gross revenues shall be measured "for the relevant number
of calendar years preceding January 1, 1994, or if audited financial statements were not
prepared on a calendar-year basis, for the most recently completed fiscal years preceding the
filing of the applicant's short-form application (Form 175)."  For purposes of qualifying
for the C block, an entity, together with its affiliates and persons or entities that hold an
attributable interest in such entity and their affiliates, must have gross revenues of less than
$125 million in each of the last two years.  Therefore, such an entity would measure its
annual gross revenues for the calendar years 1992 and 1993, or for its two most recently
completed fiscal years.  For purposes of qualifying as a small business, an entity, together
with its affiliates and persons or entities that hold an attributable interest in such entity and
their affiliates, must have average annual gross revenues of not more than $40 million for the
preceding three years.  Therefore, such an entity would calculate its average annual gross
revenues for the years 1991, 1992, and 1993, or for its three most recently completed fiscal
years.
      57.  We note that this definition of gross revenues was adopted when the C block
applications were to be filed in early 1995, when audited calendar year 1994 financial
statements for most firms were not yet available and when it was unlikely that there would
be a substantial difference between calendar and fiscal years for accounting purposes.  If our
rule's distinction between calendar years and fiscal years results in undue hardship due to a
company's particular accounting practices, we will entertain waiver requests to use either a
calendar-year or a fiscal-year measurement of gross revenues to determine compliance with
the financial caps.  We did not intend to discriminate based upon a company's particular
accounting practices.  We delegate authority to the Wireless Telecommunications Bureau to
decide such waivers on a case-by-case basis and to grant such upon an affirmative showing
pursuant to Section 24.419 of the Commission's rules.
IV.  PROCEDURAL MATTERS AND ORDERING CLAUSES
      58.  The Final Regulatory Flexibility Analysis, as required by Section 604 of the
Regulatory Flexibility Act, is set forth in Appendix B.
      59.  IT IS ORDERED that the rule changes specified in Appendix A ARE
ADOPTED.
      60.  IT IS FURTHER ORDERED that the rule changes set forth in Appendix A
WILL BECOME EFFECTIVE upon publication in the Federal Register.  Pursuant to 5
U.S.C.  553(d)(3) we find "good cause" exists to have the rule amendments set forth herein
take effect immediately upon publication in the Federal Register.  The C block auction for
broadband PCS is  scheduled to commence on August 29, 1995, and initial short-form
applications are due July 28, 1995.  Our revised rules need to be effective prior to receipt of
the short-form applications in order to avoid the delays and litigation risks associated with
prior rules.
      61.  IT IS FURTHER ORDERED that the Wireless Telecommunications Bureau has
delegated authority to decide waiver requests pertaining to our C block competitive bidding
rules as specified in paragraph 57 of this Sixth Report and Order.

      62.  This action is taken pursuant to Sections 4(i), 303(r), and 309(j) of the
Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r) and 309(j).
                              FEDERAL COMMUNICATIONS COMMISSION
                              William F. Caton
                              Acting Secretary
                                APPENDIX A
                                FINAL RULES
Parts 20 and 24 of Chapter I of Title 47 of the Code of Federal Regulations are amended as
follows:
PART 20 - COMMERCIAL MOBILE RADIO SERVICES
1.  The authority citation for Part 20 continues to read as follows:
AUTHORITY:  Secs 4, 303, and 332, 48 Stat. 1066, 1082, as amended; 47 U.S.C.  154,
303, and 332, unless otherwise noted.
2.  Section 20.6 is amended by revising paragraph (d)(2) to read as follows:
 20.6 CMRS spectrum aggregation limit.
* * * * *
(d)* * *
(2)      Partnership and other ownership interests and any stock interest amounting to 20
percent or more of the equity, or outstanding stock, or outstanding voting stock of a
broadband PCS, cellular or SMR licensee shall be attributed, except that ownership will not
be attributed unless the partnership and other ownership interests and any stock interest
amount to at least 40 percent  of the equity, or outstanding stock, or outstanding voting stock
of a broadband PCS, cellular or SMR licensee if the ownership interest is held by a small
business, a rural telephone company or a business owned by minorities and/or women, as
these terms are defined in Sec. 1.2110 of this chapter or other related provisions of the
Commission's rules, or if the ownership interest is held by an entity with a non-controlling
equity interest in a broadband PCS licensee or applicant that is a business owned by
minorities and/or women.  For purposes of broadband PCS licenses for frequency block C,
the 40 percent attribution levels shall only apply to interests held by a small business or a
rural telephone company and interests held by an entity with a non-controlling equity interest
in a licensee or applicant that is a small business.
* * * * *
PART 24 - PERSONAL COMMUNICATIONS SERVICES
1.  The authority citation for Part 24 continues to read as follows:
AUTHORITY: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066, 1082, as amended; 47
U.S.C.  154, 301, 302, 303, 309 and 332, unless otherwise noted.
2.  Section 24.204 is amended by revising paragraph (d)(2)(ii) to read as follows:
 24.204 Cellular eligibility.
                                 * * * * *
(d)* * *
(2)* * *
 (ii) Partnership and other ownership interests and any stock interest amounting to 20 percent
or more of the equity, or outstanding stock, or outstanding voting stock of a cellular licensee
will be attributable, except that ownership will not be attributed unless the partnership and
other ownership interests and any stock interest amount to 40 percent or more of the equity,
or outstanding stock, or outstanding voting stock of a cellular licensee if the ownership
interest is held by a small business, a rural telephone company, or a business owned by
minorities and/or women, as these terms are defined in Sec. 24.720, or if the ownership
interest is held by an entity with a non-controlling equity interest in a broadband PCS
licensee or applicant that is a business owned by minorities and/or women.  For purposes of
broadband PCS licenses for frequency block C, the 40 percent attribution levels shall only
apply to interests held by a small business or rural telephone company and interests held by
an entity with a non-controlling equity interest in a licensee or applicant that is a small
business.
                                  *****
3.  Section 24.709 is amended by revising the heading and paragraphs (a), (b)(6),
(c)(1)(ii)(B), (c)(2), (c)(2)(ii) and (e) to read as follows:
 24.709 Eligibility for licenses for frequency Block C.
(a) General Rule.
  (1) No application is acceptable for filing and no license shall be granted for frequency
block C, unless the applicant, together with its affiliates and persons or entities that hold
interests in the applicant and their affiliates, have gross revenues of less than $125 million in
each of the last two years and total assets of less than $500 million at the time the applicant s
short-form application (Form 175) is filed.
 (2) The gross revenues and total assets of the applicant (or licensee), and its affiliates, and
(except as provided in paragraph (b) of this section) of persons or entities that hold interests
in the applicant (or licensee), and their affiliates, shall be attributed to the applicant and
considered on a cumulative basis and aggregated for purposes of determining whether the
applicant (or licensee) is eligible for a licensee for frequency block C under this section.
 (3) Any licensee awarded a license pursuant to this section (or pursuant to  24.839(d)(2))
shall maintain its eligibility until at least five years from the date of initial license grant,
except that a licensee s (or other attributable entity s) increased gross revenues or increased
total assets due to nonattributable equity investments (i.e., from sources whose gross
revenues, and total assets are not considered under paragraph (b) of this section), debt
financing, revenue from operations or other investments, business development or expanded
service shall not be considered.
 (b)* * *
 (5)* * *
      (C) The remaining 10 percent of the applicant's (or licensee's) total equity may be
owned, either unconditionally or in the form of stock options, by any of the following
entities, which may not comply with  24.720(n)(1):
      (1) Institutional investors;
      (2) Noncontrolling existing investors in any preexisting entity that is a member of the
control group;
      (3) Individuals that are members of the applicant's (or licenses's) management; or
      (4) Qualifying investors, as specified in  24.720(n)(4).
 (6) Control Group Minimum 50.1 Percent Equity Requirement.  In order to be eligible to
exclude gross revenues and total assets of persons or entities identified in paragraph (b)(4) of
this section, an applicant (or licensee) must comply with the following requirements:
 (i) Except for an applicant (or licensee) whose sole control group member is a preexisting
entity, as provided in paragraph (b)(6)(ii) of this section, at the time the applicant s short-
form application (Form 175) is filed and until at least three years following the date of initial
license grant, the applicant s (or licensee s) control group must own at least 50.1 percent of
the applicant s (or licensee s) total equity as follows:
 (A) at least 30 percent of the applicant s (or licensee s) total equity must be held by
qualifying investors, either unconditionally or in the form of options, exercisable at the option
of the holder, at any time and at any exercise price equal to or less than the market value at
the time the applicant files its short-form application (Form 175);
 (B) Such qualifying investors must hold 50.1 percent of the voting stock and all general
partnership interests within the control group and must have de facto control of the control
group and of the applicant;
 (C) The remaining 20.1 percent of the applicant s (or licensee s) total equity may be owned
by qualifying investors, either unconditionally or in the form of stock options not subject to
the restrictions of paragraph (b)(6)(i)(A) of this section, or by any of the following entities
which may not comply with  24.720(n)(1):
 (1) Institutional investors, either unconditionally or in the form of stock options;
 (2) Noncontrolling existing investors in any preexisting entity that is a member of the control
group, either unconditionally or in the form of stock options;
 (3) Individuals that are members of the applicant s (or licensee s) management, either
unconditionally or in the form of stock options; or
 (4) Qualifying investors, as specified in  24.720(n)(4).
  (D) Following termination of the three-year period specified in paragraph (b)(6)(i) of this
section, qualifying investors must continue to own at least 20 percent of the applicant s (or
licensee s) total equity, either unconditionally or in the form of stock options subject to the
restrictions in paragraph (b)(6)(i)(A) of this section.  The restrictions specified in paragraph
(b)(6)(i)(C)(1) through (4) of this section no longer apply to the remaining equity after
termination of such three-year period.
  (ii) At the election of an applicant (or licensee) whose control group s sole member is a
preexisting entity, the 50.1 percent minimum equity requirements set forth in paragraph
(b)(6)(i) of this section shall apply, except that only 20 percent of the applicant s (or
licensee s) total equity must be held by qualifying investors, and that the remaining 30.1
percent of the applicant s (or licensee s) total equity may be held by qualifying investors, or
noncontrolling existing investors in such control group member or individuals that are
members of the applicant s (or licensee s) management.  These restrictions on the identity of
the holder(s) of the remaining 30.1 percent of the licensee s total equity no longer apply after
termination of the three-year period specified in paragraph (b)(6)(i) of this section.
                                 * * * * *
(c)* * *
 (1) Short-form Application.  In addition to certifications and disclosures required by Part 1,
subpart Q of this Chapter and  24.813, each applicant for a license for frequency Block C
shall certify on its short-form application (Form 175) that it is eligible to bid on and obtain
such license(s), and (if applicable) that it is eligible for designated entity status pursuant to
this section and  24.720, and shall append the following information as an exhibit to its
Form 175:
                                 * * * * *
  (2) Long-form Application.  In addition to the requirements in subpart I of this part and
other applicable rules (e.g.,  24.204(f), 20.6(e)  and 20.9(b) of this chapter), each
applicant submitting a long-form application for a license(s) for frequency block C shall, in
an exhibit to its long-form application:
                                 * * * * *
  (ii) List and summarize all agreements or other instruments (with appropriate references to
specific provisions in the text of such agreements and instruments) that support the
applicant s eligibility for a license(s) for frequency Block C and its eligibility under 
24.711, 24.712, 24.714 and 24.720, including the establishment of de facto and de jure
control; such agreements and instruments include articles of incorporation and bylaws,
shareholder agreements, voting or other trust agreements, partnership agreements,
management agreements, joint marketing agreements, franchise agreements, and any other
relevant agreements (including letters of intent), oral or written; and
                                 * * * * *
(e) Definitions.  The terms affiliate, business owned by members of minority groups and
women, consortium of small businesses, control group, existing investor, gross revenues,
institutional investor, members of minority groups, nonattributable equity, preexisting  entity,
publicly traded corporation with widely dispersed voting power, qualifying investor, small
business and total assets used in this section are defined in  24.720.
      4.  Section 24.711 is amended by revising the heading and paragraphs (a)
introductory text, (a)(1), (b) introductory text and (b)(3), and removing paragraphs (b)(4) and
(5) to read as follows:
 24.711 Upfront payments, down payments and installment payments for licenses for
frequency Block C.
 (a) Upfront Payments and Down Payments.
  (1) Each eligible bidder for licenses on frequency Block C subject to auction shall pay an
upfront payment of $0.015 per MHz per pop for the maximum number of licenses (in terms
of MHz-pops) on which it intends to bid pursuant to  1.2106 of this Chapter and procedures
specified by Public Notice.
                                 * * * * *
 (b) Installment Payments.  Each eligible licensee of frequency Block C may pay the
remaining 90 percent of the net auction price for the license in installment payments pursuant
to  1.2110(e) of this Chapter and under the following terms:
                                 * * * * *
      (3) For an eligible licensee that qualifies as a small business or as a consortium of
small businesses, interest shall be imposed based on the rate for ten-year U.S. Treasury
obligations applicable on the date the license is granted; payments shall include interest only
for the first six years and payments of interest and principal amortized over the remaining
four years of the license term.
                                 * * * * *
      5.  Section 24.712 is amended by revising the heading and paragraph (a), removing
paragraphs (b) and (c), and redesignating paragraph (d) as paragraph (b) to read as follows:
 24.712  Bidding credits for licenses for frequency Block C.
  (a) A wining bidder that qualifies as a small business or a consortium of small businesses
may use a bidding credit of twenty-five percent to lower the cost of its winning bid.
 * * * * *
6.   Section 24.713 is removed and reserved.
7.  A new Section 24.715 is added to Subpart H to read as follows:
 24.715 Eligibility for licenses for frequency Block F.
 (a) General Rule.
  (1) No application is acceptable for filing and no license shall be granted for frequency
block F, unless the applicant, together with its affiliates and persons or entities that hold
interests in the applicant and their affiliates, have gross revenues of less than $125 million in
each of the last two years and total assets of less than $500 million at the time the applicant's
short-form application (Form 175) is filed.
  (2) The gross revenues and total assets of the applicant (or licensee), and its affiliates, and
(except as provided in paragraph (b) of this section) of persons or entities that hold interests
in the applicant (or licensee), and their affiliates, shall be attributed to the applicant and
considered on a cumulative basis and aggregated for purposes of determining whether the
applicant (or licensee) is eligible for a license for frequency block F under this section.
  (3) Any licensee awarded a license pursuant to this section (or pursuant to  24.839(d)(2))
shall maintain its eligibility until at least five years from the date of initial license grant,
except that a licensee's (or other attributable entity's) increased gross revenues or increased
total assets due to nonattributable equity investments (i.e., from sources whose gross
revenues, and total assets are not considered under paragraph (b) of this section), debt
financing, revenue from operations or other investments, business development or expanded
service shall not be considered.
  (b) Exceptions to General Rule.
  (1) Small Business Consortia.  Where an applicant (or licensee) is a consortium of small
businesses, the gross revenues and total assets of each small business shall not be aggregated.
  (2) Publicly-Traded Corporations.  Where an applicant (or licensee) is a publicly traded
corporation with widely dispersed voting power, the gross revenues and total assets of a
person or entity that holds an interest in the applicant (or licensee), and its affiliates, shall
not be considered.
  (3) 25 Percent Equity Exception.  The gross revenues and total assets of a person or entity
that holds an interest in the applicant (or licensee), and its affiliates, shall not be considered
so long as:
  (i) Such person or entity, together with its affiliates, holds only nonattributable equity
equaling no more than 25 percent of the applicant's (or licensee's) total equity;
  (ii) Except as provided in paragraph (b)(5) of this section, such person or entity is not a
member of the applicant's (or licensee's) control group; and
  (iii) The applicant (or licensee) has a control group that complies with the minimum equity
requirements of paragraph (b)(5) of this section, and, if the applicant (or licensee) is a
corporation, owns at least 50.1 percent of the applicant's (or licensee's) voting interests, and,
if the applicant (or licensee) is a partnership, holds all of its general partnership interests.
  (4) 49.9 Percent Equity Exception.  The gross revenues and total assets of a person or
entity that holds an interest in the applicant (or licensee), and its affiliates, shall not be
considered so long as:
  (i) Such person or entity, together with its affiliates, holds only nonattributable equity
equaling no more than 49.9 percent of the applicant's (or licensee's) total equity;
  (ii) Except as provided in paragraph (b)(6) of this section, such person or entity is not a
member of the applicant's (or licensee's) control group; and
  (iii) The applicant (or licensee) has a control group that complies with the minimum equity
requirements of paragraph (b)(6) of this section and, if the applicant (or licensee) is a
corporation, owns at least 50.1 percent of the applicant's (or licensee's) voting interests, and,
if the applicant (or licensee) is a partnership, holds all of its general partnership interests.
  (5) Control Group Minimum 25 Percent Equity Requirement.  In order to be eligible to
exclude gross revenues and total assets of persons or entities identified in paragraph (b)(3) of
this section, and applicant (or licensee) must comply with the following requirements:
  (i) Except for an applicant (or licensee) whose sole control group member is a preexisting
entity, as provided in paragraph (b)(5)(ii) of this section, at the time the applicant's
short-form application (Form 175) is filed and until at least three years following the date of
initial license grant, the applicant's (or licensee's) control group must own at least 25 percent
of the applicant's (or licensee's) total equity as follows:
  (A) At least 15 percent of the applicant's (or licensee's) total equity must be held by
qualifying investors, either unconditionally or in the form of options exercisable, at the
option of the holder, at any time and at any exercise price equal to or less than the market
value at the time the applicant files its short-form application (Form 175);
  (B) Such qualifying investors must hold 50.1 percent of the voting stock and all general
partnership interests within the control group, and must have de facto control of the control
group and of the applicant;
  (C) The remaining 10 percent of the applicant's (or licensee's) total equity may be owned
by qualifying investors, either unconditionally or in the form of stock options not subject to
the restrictions of paragraph (b)(5)(i)(A) of this section, or by any of the following entities,
which may not comply with section 24.720(n)(1):
  (1) Institutional investors, either unconditionally or in the form of stock options;
  (2) Noncontrolling existing investors in any preexisting entity that is a member of the
control group, either unconditionally or in the form of stock options;
  (3) Individuals that are members of the applicant's (or licensee's) management, either
unconditionally or in the form of stock options; or
  (4) Qualifying investors, as specified in  24.720(n)(4).
  (D) Following termination of the three-year period specified in paragraph (b)(5)(i) of this
section, qualifying investors must continue to own at least 10 percent of the applicant's (or
licensee's) total equity, either unconditionally or in the form of stock options subject to the
restrictions in paragraph (b)(5)(i)(A) of this section.  The restrictions specified in paragraph
(b)(5)(i)(C)(1) through (4) of this section no longer apply to the remaining equity after
termination of such three-year period.
  (ii) At the election of an applicant (or licensee) whose control group's sole member is a
preexisting entity, the 25 percent minimum equity requirements set forth in paragraph
(b)(5)(i) of this section shall apply, except that only 10 percent of the applicant's (or
licensee's) total equity must be held by qualifying investors and that the remaining 15 percent
of the applicant's (or licensee's) total equity may be held by qualifying investors or
noncontrolling existing investors in such control group member or individuals that are
members of the applicant's (or licensee's) management.  These restrictions on the identity of
the holder(s) of the remaining 15 percent of the licensee's total equity no longer apply after
termination of the three-year period specified in paragraph (b)(5)(i) of this section.
  (6) Control Group Minimum 50.1 Percent Equity Requirement.  In order to be eligible to
exclude gross revenues and total assets of persons or entities identified in paragraph (b)(4) of
this section, an applicant (or licensee) must comply with the following requirements:
  (i) Except for an applicant (or licensee) whose sole control group member is a preexisting
entity, as provided in paragraph (b)(6)(ii) of this section, at the time the applicant's
short-form application (Form 175) is filed and until at least three years following the date of
initial license grant, the applicant's (or licensee's) control group must own at least 50.1
percent of the applicant's (or licensee's) total equity as follows:
  (A) at least 30 percent of the applicant's (or licensee's) total equity must be held by
qualifying minority and/or women investors, either unconditionally or in the form of options
exercisable, at the option of the holder, at any time and at any exercise price equal to or less
than the market value at the time the applicant files its short-form application (Form 175);
  (B) Such qualifying minority and/or women investors must hold 50.1 percent of the voting
stock and all general partnership interests within the control group and must have de facto
control of the control group and of the applicant;
  (C) The remaining 20.1 percent of the applicant's (or licensee's) total equity may be owned
by qualifying investors, either unconditionally or in the form of stock options not subject to
the restrictions of paragraph (b)(5)(i)(A) of this section, or by any of the following entities,
which may not comply with section 24.720(n)(1):
  (1) Institutional investors, either unconditionally or in the form of stock options;
  (2) Noncontrolling existing investors in any preexisting entity that is a member of the
 24.716 Upfront payments, down payments, and installment payments for licenses for
frequency Block F.
  (a) Upfront Payments and Down Payments.
  (1) Each eligible bidder for licenses on frequency Block F subject to auction shall pay an
upfront payment of $0.015 per MHz per pop for the maximum number of licenses (in terms
of MHz-pops) on which it intends to bid pursuant to  1.2106 of this Chapter and procedures
specified by Public Notice.
  (2) Each winning bidder shall make a down payment equal to ten percent of its winning bid
(less applicable bidding credits); a winning bidder shall bring its total amount on deposit with
the Commission (including upfront payment) to five percent of its net winning bid within five
business days after the auction closes, and the remainder of the down payment (five percent)
shall be paid within five business days after the application required by  24.809(b) is
granted.
  (b) Installment Payments. Each eligible licensee of frequency Block F may pay the
remaining 90 percent of the net auction price for the license in installment payments pursuant
to  1.2110(e) of this Chapter and under the following terms:
  (1) For an eligible licensee with gross revenues exceeding $75 million (calculated in
accordance with  24.709(a)(2) and (b)) in each of the two preceding years (calculated in
accordance with 24.720(f)), interest shall be imposed based on the rate for ten-year U.S.
Treasury obligations applicable on the date the license is granted, plus 3.5 percent; payments
shall include both principal and interest amortized over the term of the license.
  (2) For an eligible licensee with gross revenues not exceeding $75 million (calculated in
accordance with  24.715(a)(2) and (b)) in each of the two preceding years, interest shall be
imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the
license is granted, plus 2.5 percent; payments shall include interest only for the first year and
payments of interest and principal amortized over the remaining nine years of the license
term.
  (3) For an eligible licensee that qualifies as a small business or as a consortium of small
businesses, interest shall be imposed based on the rate for ten-year U.S. Treasury obligations
applicable on the date the license is granted, plus 2.5 percent; payments shall include interest
only for the first two years and payments of interest and principal amortized over
the remaining eight years of the license term.
  (4) For an eligible licensee that qualifies as a business owned by members of minority
groups and/or women, interest shall be imposed based on the rate for ten-year U.S. Treasury
obligations applicable on the date the license is granted; payments shall include interest only
for the first three years and payments of interest and principal amortized over the remaining
seven years of the license term.
  (5) For an eligible licensee that qualifies as a small business owned by members of
minority groups and/or women or as a consortium of small business owned by members of
minority groups and/or women, interest shall be imposed based on the rate for ten-year U.S.
Treasury obligations applicable on the date the license is granted; payments shall include
interest only for the first six years and payments of interest and principal amortized over the
remaining four years of the license term.
  (c) Unjust Enrichment.
  (1) If a licensee that utilizes installment financing under this section seeks to assign or
transfer control of its license to an entity not meeting the eligibility standards for installment
payments, the licensee must make full payment of the remaining unpaid principal and any
unpaid interest accrued through the date of assignment or transfer as a condition of approval.
  (2) If a licensee that utilizes installment financing under this section seeks to make any
change in ownership structure that would result in the licensee losing eligibility for
installment payments, the licensee shall first seek Commission approval and must make full
payment of the remaining unpaid principal and any unpaid interest accrued through the date
of such change as a condition of approval. A licensee's (or other attributable entity's)
increased gross revenues or increased total assets due to nonattributable equity investments
(i.e., from sources whose gross revenues and total assets are not considered under 
24.715(b)), debt financing, revenue from operations or other investments, business
development or expanded service shall not be considered to result in the licensee losing
eligibility for installment payments.
  (3) If a licensee seeks to make any change in ownership that would result in the licensee
qualifying for a less favorable installment plan under this section, the licensee shall seek
Commission approval and must adjust its payment plan to reflect its new eligibility status.  A
licensee may not switch its payment plan to a more favorable plan.
      9.  A new Section 24.717 is added to Subpart H to read as follows:
 24.717 Bidding credits for licenses for frequency Block F.
  (a) A winning bidder that qualifies as a small business or a consortium of small businesses
may use a bidding credit of ten percent to lower the cost of its winning bid.
  (b) A winning bidder that qualifies as a business owned by members of minority groups
and/or women may use a bidding credit of fifteen percent to lower the cost of its winning
bid.
  (c) A winning bidder that qualifies as a small business owned by members of minority
groups and/or women or a consortium of small business owned by members of minority
groups and/or women may use a bidding credit of twenty-five percent to lower the cost of its
winning bid.
  (d) Unjust Enrichment.
  (1) If during the term of the initial license grant (see  24.15), a licensee that utilizes a
bidding credit under this section seeks to assign or transfer control of its license to an entity
not meeting the eligibility standards for bidding credits or seeks to make any other change in
ownership that would result in the licensee no longer qualifying for bidding credits under this
section, the licensee must seek Commission approval and reimburse the government for the
amount of the bidding credit as a condition of the approval of such assignment, transfer or
other ownership change.
  (2) If during the term of the initial license grant (see  24.15), a licensee that utilizes a
bidding credit under this section seeks to assign or transfer control of its license to an entity
meeting the eligibility standards for lower bidding credits or seeks to make any other change
in ownership that would result in the licensee qualifying for a lower bidding credit under this
section, the licensee must seek Commission approval and reimburse the government for the
difference between the amount of the bidding credit obtained by the licensee and the bidding
credit for which the assignee, transferee or licensee is eligible under this section as a
condition of the approval of such assignment, transfer or other ownership change.
      10.  Section 24.720 is amended by revising paragraphs (a), (b)(2), (c)(2), (j)(2),
(1)(11)(i), (l)(11)(ii), (n)(1), (n)(3) and adding paragraph (n)(4) to read as follows:
 24.720 Definitions.
      (a) Scope. The definitions in this section apply to  24.709 through 24.717, unless
otherwise specified in those sections.
      (b)* * *
      (2) For purposes of determining whether an entity meets the $40 million average
annual gross revenues size standard set forth in paragraph (b)(1) of this section, the gross
revenues of the entity, its affiliates, persons or entities holding interests in the entity and
their affiliates shall be considered on a cumulative basis and aggregated, subject to the
exceptions set forth  24.709(b) or 24.715(b).
                                 * * * * *
      (c)* * *
      (2) That complies with the requirements of  24.715(b)(3) and (b)(5) or 
24.715(b)(4) and (b)(6).
                                 * * * * *
      (j)* * *
      (2) For purposes of assessing compliance with the equity limits in  24.709(b)(3)(i)
and (b)(4)(i) or  24.715(b)(3)(i) and (b)(4)(i), where such interests are not held directly in
the applicant, the total equity held by a person or entity shall be determined by successive
multiplication of the ownership percentages for each link in the vertical ownership chain.
      (l)* * *
      (11) * * *
      (i) For purposes of  24.709(a)(2), 24.715(a)(2) and paragraphs (b)(2) 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  24.709 (b)(3) and (b)(5) or  24.709 (b)(4)
and (b)(6) or  24.715 (b)(3) and (b)(5) or  24.715 (b)(4) and (b)(6) , 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  24.709(a) or 
24.715(a) and paragraphs (b) and (d) 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.
      (ii) For the C block, for purposes of  24.709(a)(2) and paragraph (b)(2) of this
section, an affiliate with gross revenues of less than $125 million in each of the last two
years and total assets of less than $500 million at the time the applicant's short-form
application (Form 175) is filed will not be considered an affiliate of an applicant (or licensee)
that qualifies as a small business under section 24.720(b)(2) (small business definition)
provided the gross revenues and total assets of all such affiliates, when considered on a
cumulative basis and aggregated with each other do not exceed the amounts specified in
section 24.709(a)(1) (entrepreneurs' block caps).
                                * * * * *
      (n) * * *
      (1) A qualifying investor is a person who is (or holds an interest in) a member of the
applicant's (or licensee's) control group and whose gross revenues and total assets, when
aggregated with those of all other attributable investors and affiliates, do not exceed the gross
revenues and total assets limits specified in  24.709(a) or  24.715(a) , or, in the case of an
applicant (or licensee) that is a small business, do not exceed the gross revenues limit
specified in paragraph (b) of this section.
 * * * * *
(3) For purposes of assessing compliance with the minimum equity requirements of 
24.709(b)(5) and (6) or  24.715(b)(5) and (6), where such equity interests are not held
directly in the applicant, interests held by qualifying investors or qualifying minority and/or
woman investors shall be determined by successive multiplication of the ownership
percentages for each link in the vertical ownership chain.
(4) For purposes of  24.709(b)(5)(C) and (b)(6)(C) or  24.715(b)(5)(C) and (b)(6)(C), a
qualifying investor is a person who is (or holds an interest in) a member of the applicant's
(or licensee's) control group and whose gross revenues and total assets do not exceed the
gross revenues and total assets limits specified in  24.709(a) or  24.715(a).
                                * * * * *
                                                                    APPENDIX B
                  FINAL REGULATORY FLEXIBILITY ANALYSIS
Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.  603, the Commission
incorporated an Initial Regulatory Flexibility Analysis (IRFA) into the Further Notice of
Proposed Rule Making.  Written public comments on the IRFA were requested.  The
Commission's final regulatory flexibility analysis for this Sixth Report and Order in GN
Docket No. 93-253 is as follows:
      A. NEED FOR AND PURPOSE OF RULES
      1.  This rule making proceeding was initiated to secure comment on proposals to
eliminate all race- and gender-based provisions in our competitive bidding rules for our C
block auction only.  The proposals adopted herein are also designed to implement Congress's
goal of giving small businesses, rural telephone companies, and businesses owned by
members of minority groups and women the opportunity to participate in the provision of
spectrum-based services in accordance with 47 U.S.C.  309(j)(4)(D).
      B.  ISSUES RAISED BY THE PUBLIC IN RESPONSE TO THE INITIAL
ANALYSIS
      2.  No comments were submitted specifically in response to the Initial Regulatory
Flexibility Analysis.
      C.  SIGNIFICANT ALTERNATIVES CONSIDERED
      3.  The Further Notice of Proposed Rule Making in this proceeding offered numerous
proposals.  All significant alternatives have been addressed in the Sixth Report and Order.
The majority of the commenters supported the major tenets of the proposed changes and
some commenters suggested changes to some of the Commission's proposals.  The regulatory
burdens we have retained for C block applicants, including small entities, are necessary to
carry out our duties under the Communications Act of 1934, as amended and the Omnibus
Budget Reconciliation Act of 1993.  For example, although we developed race- and gender-
neutral rules, we retained the requirement for applicants claiming status as a business owned
by members of minority groups and/or women.  This requirement will allow the Commission
to submit its report to Congress concerning the participation of minorities and women in the
provision of spectrum.
APPENDIX C
                 COMMENTS FILED IN PP DOCKET No. 93-253
        IN RESPONSE TO THE FURTHER NOTICE OF PROPOSED RULE MAKING
 1.   Airlink
 2.   Allied Communications Group, Inc. (Allied)
 3.   Asian Business Association of San Diego
 4.   Association of Public Safety-Communications Officials-International, Inc. (APCO)
 5.   Black Entertainment Television Holdings, Inc. (BET)
 6.   Cellular Service, Inc. (CSI)
 7.   Central Alabama Partnership L.P. 132 and Mobile Tri-States L.P. 130 (Central Alabama &
      Mobile Tri-States)
 8.   Century Communications, Inc. (Century)
 9.   Chase Telecommunications L.P. (Chase Telecommunications)
10.   Chicano Federation of San Diego County, Inc. (Chicano Federation)
11.   Comtech, Inc. (Comtech)
12.   Cook Inlet Region, Inc. (CIRI)
13.   DCR Communications, Inc. (DCR Communications)
14.   General Wireless, Inc. (General Wireless)
15.   Giles Television, Inc. (Giles)
16.   GO Communications Corporation (GO Communications)
17.   Infocore, Inc. (Infocore)
18.   InTouch PCS, Inc. (InTouch)
19.   Jackmont Telecom, Inc.
20.   K&M Engineering and Consulting Corporation (K&M)
21.   MasTec, Inc. (MasTec)
22.   Michigan Telecommunications Group, Inc. (Michigan Telecommunications)
23.   Minority Business Enterprise Legal Defense and Education Fund, Inc. (Minority Business
      Enterprise)
24.   Minority Media and Telecommunications Council, Communications Task Force, National
      Paging and Personal Communications Association, and National Institute of Communication
      and Education (Minority Media et al.)
25.   National Association of Black Owned Broadcasters, Inc. (NABOB)
26.   National Telecomm
27.   Omnipoint Corporation (Omnipoint)
28.   Ondas Communications Services, Inc. (Ondas)
29.   O.N.E., Inc. (O.N.E.)
30.   Oneida Tribe of Indians of Wisconsin, Sovereign Nation of (Oneida Tribe)
31.   Prairie Island Dakota Community (Prairie Island)
32.   Radiofone, Inc. (Radiofone)
33.   Roseville Telephone Company (RTC)
34.   Santarelli, Smith & Carroccio
35.   Silverman, Joel (Silverman)
36.   The Small Business PCS Association (Small Business PCS)
37.   Smart Box Systems Group, Inc. (Smart Box)
38.   Spectrum Resources, Inc. (Spectrum Resources)
39.   Sprint Telecommunications Venture (Sprint)
40.   Telecorp, Inc. (Telecorp)
41.   Unicomm PCS (Unicomm)
42.   United Church of Christ
43.   Unitel Cellular Communications Systems, Inc. (Unitel)
44.   U.S. Airwaves, Inc. (U.S. Airwaves)
45.   The Richard L. Vega Group (Vega Group)
APPENDIX D
                                     LET                   TERS FILED IN PP DOCKET No. 93-253
1.    Adams, Gerard G.
2.    Barnes, Stephen Y.
3.    Blanchard, Elizabeth L.
4.    Borland, Gloria
5.    Camarillo, Mateo
6.    Carroccio, A. Thomas
7.    Casey, James A.
8.    Chambers, Jonathan
9.    Dickerson, Terri
10.   Eckert, Patricia
11.   Erikson, Mark R.
12.   Guinta, Tara Kalagher
13.   Greenwald, Eliot J.
14.   Hart, Thomas A. Jr.
15.   Honig, David
16.   Huhndorf, Roy M.
17.   Ireland, James F.
18.   Jackson, Henry O.
19.   Johnson, Robert L.
20.   Jones, Terry L.
21.   Kappaz, Michael Hegel
22.   King, Bruce
23.   Kyle, Robert H.
24.   Leong, Harvey
25.   Lucero, C. Steven
26.   Marshall, Sherrie
27.   Martis, Sandra Goeken
28.   McDermott, Martin F. III
29.   Moy, Celeste M.
30.   Peterson, Charles M.
31.   Rivera, Henry
32.   Robinson, Anthony W.
33.   Robinson, Jack E.
34.   Symons, Howard
35.   Sidman, Lawrence
36.   Spencer, Shelley L.
37.   Tauber, Mark J.
38.   Telecommunications Development Fund
39.   Walker, Micheal
40.   White, Curtis T.
41.   Winston, James L.
42.   Zecola, Steve A.