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

In the Matter of
Extending Wireless Telecommunications
Services to Tribal Lands
WT Docket No. 99-266
                                
  Reply Comments of the Office of Advocacy, U.S. Small Business
                         Administration
                                
     The Office of Advocacy of the United States Small Business

Administration ("Advocacy") (1)respectfully submits these Reply

Comments in the above-captioned proceeding,(2) which is designed

to promote wireless provision of basic telephony to unserved

Native American tribal lands and other unserved areas.  As

indicated in Advocacy's Comments, filed on November 9, 1999, this

proceeding encourages large businesses to provide wireless phone

service, to the detriment of small business.(3) Specifically, the

Commission proposes to lift transfer restrictions on C- and F-

Block personal communications service ("PCS") licenses, which

restrictions assure small business provision of PCS.  The

Commission also proposes to offer future bidding credits to

companies that commit to serve unserved areas, without regard to

business size.  Last, the Commission's regulatory flexibility

analysis fails to discuss the impact that these proposals would

have on small business and fails to propose alternatives that

would minimize this impact.

1.   The Commission's Proposals Disadvantage Small Businesses

     The Commission has established incentives to encourage small

business participation in PCS spectrum auctions by setting aside

the C- and F-Blocks for small businesses or "designated entities"

("DEs").  These incentives fulfill a statutory mandate to avoid

excessive concentration of licenses and to disseminate licenses

among a wide variety of applicants, including small and rural

businesses.(4) The Commission currently prohibits transfer of

these licenses from small businesses (DEs) to non-DEs (e.g. large

entities) during the first five years of the license term,(5) but

now proposes to eliminate these restrictions for license areas

containing tribal lands.  The Commission reasons, "it is likely

that non-DEs will have more of the resources necessary to build

out on tribal lands and other unserved areas, particularly in

more remote areas."(6) Advocacy interprets this to mean that

small business, in the Commission's view, cannot provide these

services.

     This conclusion is unsupported by any evidence.  Neither the

Commission nor any other commenter provides information to

justify this conclusion.  In point of fact, the businesses most

likely to serve unserved tribal lands are existing local

businesses.  Many of these are small businesses.  It is probably

more reasonable to assume that the businesses that would attach

value to unserved tribal lands are those businesses that already

have ties to tribal lands, regardless of business size.

Certainly this hypothesis is more credible than that which

underlies the Commission's conclusion.  The important feature is

the local nature of the companies that serve rural and tribal

lands.  The Commission should concentrate its efforts on

encouraging existing local businesses to expand their services,

either through wireless or other technologies.

     Several commenters have indicated that the Commission should

provide regulatory relief on a larger scale than simply the

targeted tribal lands.(7) That is, a small business (DE) should

be able to transfer its entire basic trading area ("BTA") to a

non-DE, not just the portion of the BTA that contains the

unserved tribal land.  This proposition is outrageous and goes

beyond the scope and stated goals of this rulemaking.  Since many

PCS BTAs contain tribal or other unserved areas, this proposition

threatens to undermine small business provision of PCS generally.

Lifting DE transfer restrictions from an entire BTA doubtless

adds to the value of the transfer of the unserved areas within

the BTA, but it is unclear how this increases the likelihood that

a big business transferee would provide service to outlying

areas.  Chances are it does not.  There is no evidence that only

large businesses would or could serve these areas, and certainly

no evidence to justify eliminating DE provisions for whole BTAs.

     This BTA idea also points up a basic problem with the

Commission's DE proposal:  valuation.  An entire BTA has value

whereas an unserved rural area within the BTA does not have

value.  But this is mainly true from the perspective of a

newcomer.  Existing service providers already value their

customers and would expand their service if possible.  The key to

getting service to unserved areas is increasing the economic

feasibility of providing service.  Any business, small or large,

will react to economic incentives but it is the local business,

with community ties and existing good will, that is more likely

to fill in its service areas and not confine itself to populous

areas.

     In the words of San Carlos Apache Telecommunications Utility

Inc., which provides telecommunications and other utility

service, there is "no reason to believe that the large carriers'

historic indifference to serving the most rural areas will change

perceptibly in the future.  Larger, non-local carriers will

continue their practice of concentrating on pockets of

profitability."(8) The Commission should not eliminate its DE

transfer restrictions, nor should it grant DE benefits in future

auctions without regard to business size.  If the Commission is

serious about increasing penetration on tribal lands, it should

focus on ways to help those companies that currently serve these

rural communities, and should not take actions that would

undermine small business participation in PCS, particularly in

the absence of any indication that large businesses would

increase service to tribal lands.

2.   The Commission's IRFA Does Not Discuss the Regulatory Impact
     on Small Entities Nor Does it Propose Alternatives Designed
     to Minimize the Impact.

     The Commission's initial regulatory flexibility analysis

("IRFA") is entirely inadequate.  The Commission does not discuss

the significant economic impact its proposal would have on small

business nor does it propose alternatives to minimize this

impact, as is required by the RFA. (9)In fact, the Commission's

designated entity proposals would tend to ensure that PCS

licenses for tribal lands go to large business, and would

discourage small business participation. The Commission offers no

discussion of this impact.

     The Commission also fails to propose a single alternative

that would bring local phone service to tribal lands with minimal

impact on small business.(10) The Commission lists general

alternatives, but none designed to minimize impact on small

business.  In fact, the Commission lists its designated entity

proposals among its "IRFA alternatives", even though these would

impose burdens on small business, not minimize them.  The

Commission does not discuss the precise extent of these burdens

and why they are nevertheless justifiable in the public interest.

     The Commission should not promulgate rules in this

proceeding until it has analyzed the significant impact its

proposals might have on small business and until it has proposed

alternatives designed to minimize this impact while serving the

Commission's regulatory goals.

Conclusion

     The Commission's proposed changes to its designated entity

provisions risk driving small and local wireless businesses from

the market.  The Commission identifies the serious problem that

some rural and tribal residents lack access to vital

communications.  But the Commission concludes, without support,

that designated entity provisions contribute to this problem and

that small wireless businesses cannot provide these services.

The Commission ignores entirely the impact its rules may place on

small entities and proposes no alternatives to minimize this

impact.

     This rulemaking takes a wrong approach.  The Commission

should take a closer look at which companies provide telephony

services to rural localities and work with those companies to

provide economic incentives to fill in service gaps that have

left some Americans without basic communications.

Respectfully submitted,

Jere W. Glover
Chief Counsel for Advocacy

R. Bradley Koerner
Assistant Chief Counsel for Telecommunications

December 8, 1999

ENDNOTES
1.  Congress established Advocacy in 1976 by Pub. L. No. 94-305
to represent the views and interests of small business within the
Federal government.  (Codified as amended at 15 U.S.C.  634 a-
g, 637.)  Advocacy monitors agency compliance with the RFA and
reports this to Congress.
2.  Extending  Wireless Telecommunications Services to Tribal
Lands, Notice of Proposed Rulemaking, WT Docket No. 99-266, FCC
99-205 (rel. August 18, 1999); 64 Fed. Reg. 49,128 (1999).
3.  See Comments of the Office of Advocacy, U.S. Small Business
Administration, WT Docket No. 99-266, November 9, 1999.
4.  See 47 U.S.C.  309(j)(3)(B).
5.  NPRM, para 35.
6.  Id.
7.  See, eg., Comments of Bell Atlantic Mobile, Inc., WT Docket
99-266, November 9, 1999, Comments of Titan Wireless, WT Docket
99-266,  November 9, 1999.
8.  Comments of San Carlos Apache Telecommunications Utility,
Inc., WT Docket 99-266, November 9, 1999, p 5.
9.  5 U.S.C.  603(c).
10. The RFA requires four enumerated alternatives:  (1) different
compliance requirements or timetables, (2) clarification,
consolidation, or simplification of compliance requirements, (3)
use of performance rather than design standards, and (4)
exemption - either in whole or in part - for small entities.
The Commission does not propose or analyze a single one of these
alternatives and proposes none of its own.  5 U.S.C.  603(c)(1)-
(4).