Before the
	Federal Communications Commission
	Washington, D.C. 20554

In the Matter of 	)
	)
Implementation of Section 309(j) of the	)		MM Docket No. 97-234
Communications Act -- Competitive Bidding	)
for Commercial Broadcast and Instructional	)
Television Fixed Service Licenses	)
	)
Reexamination of the Policy Statement	)		GC Docket No. 92-52
on Comparative Broadcast Hearings	)
	)
Proposals to Reform the Commission's	)		GEN Docket No. 90-264 
Comparative Hearing Process to Expedite	)
the Resolution of Cases	)
						      	


MEMORANDUM OPINION AND ORDER


   Adopted:  April 15, 1999  	Released:  April 20, 1999

By the Commission:  Chairman Kennard approving in part, abstaining in part and issuing a statement.


	TABLE OF CONTENTS

											Paragraph
I.	INTRODUCTION AND BACKGROUND						1	II.	DISCUSSION									
	A.  Issues Pertaining to Pending Competing Applications				
		1.  Use of Auctions								5
		2.  Reimbursement of Expenses						10
		3.  Pre-Auction Procedures							14
		4.  Pending Applications With Requests for Waiver of the Freeze on the
		Filing of Television Applications						19
		5.  Interim Operation								23
	B.  Filing and Other Procedural Issues
		1.  Window Filing Approach for FM Translator and AM Services		27
		2.  Protection of Preferred FM Site Coordinates				33
		3.  Petition to Deny Period							38
		4.  Use of Proprietary Network and Software for Filing Applications
		Electronically									42
		5.  Ownership Disclosure Requirements for Transfer and Assignment
		Applications									45
	C.  Competitive Bidding Issues
		1.  Auctioning of LPTV and Television Translator Displacement Applications	46
		2.  Minimum Opening Bids and Reserve Prices				49
		3.  "Qualified" Applicants and Grants by Default				52
		4.  Anti-Collusion Rule							57
		5.  Eligibility for and Terms of New Entrant Bidding Credit			68
		6.  Unjust Enrichment								83
III.	PROCEDURAL MATTERS AND ORDERING CLAUSES				86

Appendix A:  List of Parties Filing Pleadings
Appendix B:  Supplemental Final Regulatory Flexibility Analysis
Appendix C:  Rules  


I.  INTRODUCTION AND BACKGROUND							  
	1.  The Commission has before it petitions for reconsideration of the First Report and Order in MM Docket No. 97-234, GC Docket No. 92-52 and GEN Docket No. 90-264, 13 FCC Rcd 15920 (1998) (First Report and Order), which implemented provisions of the Balanced Budget Act of 1997 expanding the Commission's competitive bidding authority, under Sections 309(j) and 309(l) of the Communications Act of 1934, 47 U.S.C.  309(j), 309(l), to include the broadcast services.  Prior to the passage of the Budget Act, the Commission traditionally used comparative hearings to decide among mutually exclusive applications to provide commercial broadcast service.  It also used a system of random selection to award certain types of secondary broadcast licenses (low power television and television translator), pursuant to Section 309(i) of the Communications Act, 47 U.S.C.  309(i).  For purposes of comparative hearings, the Commission developed a variety of comparative criteria, including the "integration" of ownership and management, which presumed that a station would offer better service to the public to the extent that its owner(s) were involved in the station's day-to-day management.  However, in Bechtel v. FCC, 10 F.3d 875, 878 (D.C. Cir. 1993) (Bechtel II), the United States Court of Appeals for the District of Columbia Circuit held that "continued application of the integration preference is arbitrary and capricious, and therefore unlawful."  The Commission subsequently froze all ongoing comparative cases pending resolution of the questions raised by Bechtel II, and released a further notice of proposed rulemaking seeking comment on a variety of issues raised by Bechtel II.    

	2.  On August 5, 1997, Congress enacted the Budget Act, which expanded the Commission's auction authority under Section 309(j) of the Communications Act to include commercial broadcast applicants.  Amended Section 309(j) provides that, except for licenses for certain public safety noncommercial services and for certain digital television services and noncommercial educational or public broadcast stations, "the Commission shall grant the license or permit to a qualified applicant through a system of competitive bidding . . . [i]f . . . mutually exclusive applications are accepted for any initial license or construction permit."  Balanced Budget Act of 1997,  3002(a)(1), codified as 47 U.S.C.  309(j).  In addition, Section 3002(a)(2), codified as 47 U.S.C.  309(i), amended Section 309(i) to terminate the Commission's authority to issue any license through the use of a system of random selection after July 1, 1997, except for licenses or permits for stations defined by Section 397(6) of the Communications Act (i.e., noncommercial educational or public broadcast stations).  Finally, Section 3002(a)(3) adopted new Section 309(l), codified as 47 U.S.C.  309(l), which governs the resolution of pending comparative broadcast licensing cases.  This section says the Commission "shall have the authority" to resolve mutually exclusive applications for commercial radio or television stations filed before July 1, 1997 by competitive bidding procedures.  It specifies further that any auction conducted pursuant to this provision must be restricted to persons filing competing applications before July 1, 1997.  Thus, as a result of passage of the Budget Act, the Commission may no longer resolve competing applications for commercial broadcast stations by comparative hearings, except for certain applications filed before July 1, 1997, and we lack the authority to resolve competing applications for commercial broadcast stations by a system of random selection.

	3.  To implement these provisions of the Budget Act expanding the Commission's competitive bidding authority to include the various broadcast services, we released a Notice of Proposed Rulemaking requesting comment on proposed auction procedures, and subsequently adopted the First Report and Order.  In that order, the Commission adopted competitive bidding procedures to select among mutually exclusive applicants for the commercial analog broadcast services and the Instructional Television Fixed Service (ITFS), as mandated by the amended Section 309(j).  More specifically, the First Report and Order determined to follow, as closely as possible, the Commission's recently revised Part 1 auction rules in conducting auctions for the broadcast services.  To facilitate the efficient determination of groups of mutually exclusive applications for auction purposes, we replaced the disparate filing procedures for the various broadcast and secondary broadcast services with a uniform window filing approach.  In conjunction with broadcast service auctions, we also adopted a "new entrant" bidding credit to further the goals of the designated entity provisions of Section 309(j).  In addition, pursuant to our discretion under Section 309(l) to utilize either comparative hearings or competitive bidding procedures to resolve certain mutually exclusive commercial broadcast applications filed before July 1, 1997, the First Report and Order determined that all of these pre-July 1st applications should be resolved by competitive bidding procedures.   

	4.  Thirty-one parties have now filed petitions for reconsideration on various aspects of the First Report and Order, including the procedures adopted for auctioning the pre-July 1, 1997 competing full service commercial broadcast applications, the application of the general anti-collusion rule to broadcast auctions, and the eligibility standards for the "new entrant" bidding credit.  Oppositions to those petitions, and replies to the oppositions, have also been received by the Commission.  We will grant certain aspects of the petitions for reconsideration, most notably amending the applicability of the anti-collusion rule and refining the standards for applicants to qualify for the "new entrant" bidding credit.  We will deny other issues presented in the petitions, and clarify certain aspects of the rules adopted in the First Report and Order.  In addition, we have considered certain issues pertaining to the First Report and Order on our own motion.   We discuss each of the subjects raised by the petitions for reconsideration in turn.   


	II.  DISCUSSION	

A.  Issues Pertaining to Pending Competing Applications
		1.  Use of Auctions 

	5.  Background.  In the First Report and Order, 13 FCC Rcd at 15931, the Commission determined that it had authority under Section 309(l) of the Communications Act to resolve competing applications filed before July 1, 1997 for full-service commercial radio or analog television stations by either competitive bidding or the comparative hearing process.  Exercising this discretion, the Commission concluded that auctions would generally be fairer and more expeditious than deciding through the comparative hearing process the approximately 130 cases involving an estimated 600 pre-July 1st commercial applications that did not settle.  Id. at 15933.  In concluding that auctions would better serve the public interest, the Commission cited its long experience with the delays and uncertainties associated with the comparative hearing process, the complexities raised by the court's invalidation in Bechtel II of a central comparative criterion previously used to decide such cases, and the difficulties and delays associated with developing and defending a revised comparative system that would have only limited applicability, now that auctions are required for mutually exclusive applications filed after June 30, 1997.  Id. at 15933-35.  Using auctions for pending pre-July 1st applications was also not unfair, the Commission reasoned, because the vast majority of these applications were filed after Bechtel II and the imposition of the comparative freeze when the need for a change in the comparative system was clear, and because Bechtel II legally precludes the Commission from deciding any pending case in accordance with the expectations of those applicants that filed prior to Bechtel II.  Id. at 15936.     

	6.  The Commission also focused on the special considerations raised in the fewer than ten remaining hearing cases that had been prosecuted at least through an Initial Decision by an Administrative Law Judge before the Commission in February 1994 imposed a freeze on all ongoing comparative proceedings pending resolution of the issues raised by Bechtel II.  Although recognizing the considerable expenditures of time and money by these applicants in prosecuting their applications before Bechtel II and the unusual delays encountered in obtaining a final decision on their applications, the Commission concluded that these circumstances did not outweigh the additional delays, uncertainties and costs that would result if the Commission were to resolve these cases through the comparative hearing process rather than by a system of competitive bidding.  Id. at 15940.  Particularly in light of the court's invalidation of the central comparative criterion in Bechtel II, the lengthy comparative freeze, and the tendency of the comparative process to produce significant litigation over matters of questionable public interest importance, the Commission anticipated that auctions would be speedier than the comparative process.  Id. at 15940-41.  It noted that the financial impact of having to participate in an auction was mitigated somewhat by the statutory provision restricting eligible bidders to other pending applicants in a particular proceeding, and that pending applicants would likely incur additional expenditures whether their applications were resolved through the comparative hearing process or by a system of competitive bidding. Id. at 15941-42.   
     
	7.  Pleadings.  Two petitions for reconsideration challenge our determination to use auctions to decide among pending broadcast applications.  First, Barbara D. Marmet, one of two pending applicants in a pre-July 1, 1997 hearing case, has filed a petition for reconsideration, as well as a motion to stay the auction rules as they pertain to resolution of her adjudicatory proceeding.  She maintains that special circumstances militate against the use of an auction in this specific proceeding, particularly given her pending request that the Commission resolve a basic qualifications issue allegedly warranting the denial of the only other pending applicant, Jerome Thomas Lamprecht.  She also cites the age of her proceeding, the fact that the Commission twice granted her application on comparative grounds, and the fact that, as a result of her interim operation, the resolution of this proceeding will not bring additional broadcast service to the public.  In opposition, Lamprecht asserts that the petition for reconsideration repeats arguments made by Marmet in a series of pleadings filed in the adjudicatory proceeding and that he has filed responsive pleadings substantively and factually challenging Marmet's claims.  Second, Michael Ferrigno, a post-June 30, 1997 applicant, argues that auctions will not promote the maximum diversification of the airwaves.  He predicts that auctions will totally eliminate the participation of small entities in broadcasting.  Auctions, according to Ferrigno, are particularly unfair to pending applicants, who, prior to the adoption of auction rules for mutually exclusive commercial broadcast applications, bore the expense and time necessary to have the frequency at stake in the licensing proceeding allocated to the community.  

	8.  Discussion.  We deny Marmet's petition for reconsideration and dismiss as moot the related motion for stay.  Marmet seeks relief in the context of a particular proceeding, urging that it is arbitrary and capricious to use an auction, given her more than sixteen-year prosecution of her application in reliance on the comparative hearing process, her more than eight-year interim operation on Station WAFY(FM), and her repeated requests that the Commission consider the merits of Lamprecht's alleged admission in September 1990 that he lost his transmitter site in 1982.  The delays and costs incurred by Marmet, however, are not appreciably different from those experienced by other applicants in the frozen hearing cases, and, in any event, do not offset the additional costs, delays and uncertainties that would result if we proceeded with the hearing in this case.  Despite two non-final Commission decisions granting Marmet's application, those decisions are invalidated by Bechtel II, inasmuch as the comparative issue was dispositive in both decisions.  Additional costs and delays are therefore unavoidable, whether we proceed with the hearing or use an auction.  It is far from clear that the additional costs likely to be incurred by both applicants in this proceeding would be greater if it is resolved through competitive bidding procedures.  As we reasoned in the First Report and Order, 13 FCC Rcd at 15942, even assuming the additional costs to the prevailing applicant will be greater in the case of an auction, it is unclear that it is fairer to the losing applicants to make them bear the significant, additional costs of proceeding with the hearing.  Here, the allegations regarding Lamprecht are disputed and have not been litigated; thus, their resolution is unlikely to be without cost or particularly expeditious.  At a minimum, consideration of the merits of Marmet's motion to dismiss would require that the Commission determine whether Marmet's allegations raise a substantial and material question of fact warranting the specification of a qualifications issue against Lamprecht.  Moreover, resolution of Marmet's request would avoid an auction in this proceeding only if it were determined, after a lengthy evidentiary hearing and the exhaustion of all possible administrative and judicial appeals, that Lamprecht is not qualified.  Without expressing any view on what will or should happen in an auction, the possibility of such further hearing proceeding over Lamprecht's qualifications will not arise at all unless Lamprecht wins the auction, and, further, may not be necessary if the Commission decides that designation is not warranted, either because Marmet's allegations are not pertinent under our auction procedures or because they are not sufficient to present a substantial and material question of fact on matters that are pertinent to the grant of an auction winner's (Lamprecht's) application.  We are therefore not persuaded that proceeding with the hearing and immediately considering the questions involving Lamprecht would be more expeditious or fairer than conducting an auction.  Further, whether or not Station WAFY(FM) is already on the air, resolving this proceeding as expeditiously as possible serves the public interest by the conserving the resources of the applicants and of the Commission.  Thus, we are not persuaded that Marmet's specific proceeding presents special circumstances making it inappropriate to use an auction. 

	9.  We also deny the petition for reconsideration filed by Michael Ferrigno, a small business owner, who challenges generally our decision to use auctions to award broadcast permits where there are mutually exclusive applications. To the extent that Ferrigno predicts that the use of auctions will detrimentally affect the provision of local broadcast service and our efforts to maximize diversification of ownership, we noted in the First Report and Order, 13 FCC Rcd at 15935, that Congress had made the judgment that auctions are generally preferable by requiring them for all mutually exclusive commercial broadcast applications filed on or after July 1, 1997.  This would include Ferrigno, who, despite his efforts beginning in January 1996 to have a new FM frequency allocated, was not afforded an opportunity to file an application for that channel before July 1, 1997.  We consider in Section C(5) below Ferrigno's request for the adoption of a more significant bidding credit reflecting the expenditure of time and money by persons, such as Ferrigno, who undertake successfully the procedure required to have a new frequency added to the FM Table of Allotments.  

 	2.  Reimbursement of Expenses  

	10.  Background.  In response to the Notice several commenters suggested that the Commission has a legal obligation to reimburse all expenses incurred by broadcast applicants who filed with the expectation that, if mutually exclusive applications were filed, the Commission would use a comparative hearing to select the licensee.  The Commission rejected this argument in the First Report and Order.  13 FCC Rcd at 15939.  It indicated that, whatever these applicants' expectations, they had no vested interest in having their pending applications decided by comparative hearing.  A decision to resolve these cases through a system of competitive bidding, pursuant to subsequent legislation expressly authorizing such resolution, in the Commission's view, did not entail a deprivation of due process or a taking of property.  The Commission also questioned whether it had legal authority to grant such compensation and distinguished cases in which courts had awarded compensation for losses stemming from unanticipated regulatory action in the context of contractual agreements in which the government had expressly agreed to indemnify parties against such loss.     

	11.  Pleadings.  Several petitioners seek reconsideration of this point. In virtually identical pleadings, three pre-July 1st applicants in frozen hearing cases challenge as unlawful the Commission's refusal to reimburse applicants in comparative proceedings that assertedly were adversely affected by the decision to resolve these cases instead by auction.  Three applicants in frozen comparative cases, as well as two pending applicants who filed on or after July 1, 1997, also seek reimbursement of all expenditures incurred with the expectation that the license would be awarded through the comparative hearing process.  They claim to have filed in reliance on the Commission's express invitation indicating that any mutually exclusive applications would be resolved by a comparative hearing.  They maintain that subjecting pending applications to auction without fully reimbursing pending applicants for the substantial legal and engineering fees incurred in preparing their applications, and in some instances prosecuting them through the Commission and in court, constitutes an unconstitutional taking of property without due process of law.  In this regard, they rely on United States v. Winstar Corp., 518 U.S. 839 (1996), in which the Supreme Court held that the government may not retroactively repudiate a contract with a private party.  Additionally, the applicants in hearing cases dispute the Commission's conclusions that pending applicants have no vested interest in having their mutually exclusive applications resolved through the comparative hearing process, and that the restriction on bidder eligibility somehow mitigates the adverse economic impact of the Commission's determination to dispense with the comparative hearing process. Citing precedent in which the Commission assertedly recognized that reliance on Commission rules or policies creates equitable interests, they submit further that under the Fifth Amendment the public, not private individuals, should bear the cost of developing an evidentiary record upon which the Commission can identify the applicant that will best serve the public interest when the Commission dispenses with its comparative system.   

	12.  Discussion.  For the reasons set forth in the First Report and Order the decision to use auctions, pursuant to legislation expressly authorizing auctions in some cases and requiring them in other cases, does not authorize, let alone require, reimbursement of pending applicants for expenditures incurred in reliance on the existing comparative hearing process.  Petitioners have not cited any precedent authorizing the Commission to make the requested reimbursements.   Even if we did have such authority there is no legal obligation to reimburse pending applicants for expenses incurred in connection with the now discarded comparative process.  Reliance on Commission rules or policies may create equitable interests under certain circumstances.  However, as the Supreme Court made clear in United States v. Storer Broadcasting Co., 351 U.S. 192, 202 (1956), and courts have consistently recognized, pending applicants do not have a vested right in having their applications decided by hearing, and, moreover, pending applications may be dismissed based on changed processing rules.  Here, we determined that the public interest would be best served by using auctions to resolve all pending mutually exclusive commercial broadcast applications, and there has been no taking of property without due process that would warrant compensation under the Fifth Amendment.  Nor, as the Commission indicated in the First Report and Order, 13 FCC Rcd at 15937, is the application of competitive bidding procedures to pending applications retroactive "merely because it is applied in a case arising from conduct antedating the statute's enactment . . . or upsets expectations based in prior law."  Landgraf v. USI Film Prods., 511 U.S. 244, 269 (1994).  

	13.  By the same token, Winstar is clearly inapposite.  Reimbursement was allowed in that case because the court found that the government had contractually agreed to indemnify private banks against financial loss as a result of a regulatory change.  When Congress enacted legislation effectively deleting retroactively terms on which the banks had agreed to take over failing financial institutions, the Court held that the government was liable under ordinary contract principles to reimburse the banks for their losses.  In contrast, the Commission, by releasing Public Notices that accurately reflected then-current procedures for resolving mutually exclusive applications, made no promise, either express or implied, that it would reimburse prospective applicants for expenditures incurred in anticipation of a comparative hearing, if a change in the processing rules made such expenses unnecessary.   Finally, the statutory limitation on bidder eligibility for proceedings involving applications filed before July 1, 1997 -- as well our determination to exercise our discretion not to solicit competing applications in proceedings involving mutually exclusive applications filed after June 30, 1997 -- ensures that none of the pending applicants will be disadvantaged in the auction as a result of expenditures made in anticipation of a comparative hearing.  All eligible bidders are likely to have incurred similar expenditures, which mitigates somewhat the economic impact on these applicants of having the licensee selected by competitive bidding procedures instead of by comparative hearing.  The special circumstances raised by an interim operator are addressed in  23-26 below.    
      
	3.  Pre-Auction Procedures

	14.  Background.  In the First Report and Order, 13 FCC Rcd at 15951-53, 15960, the Commission determined that, in accordance with its usual practice in auctions generally, it would defer until after the auction consideration of outstanding basic qualifications issues and resolve such questions after the auction only with regard to the winning bidder.  It reasoned that this would avoid unnecessary litigation that would delay service to the public.  Id. at 15952-53.  Even where resolution of an outstanding qualifications issue raised either in a petition to deny or a motion to enlarge issues would potentially eliminate all but one applicant, the Commission concluded that the fairer and more expeditious approach would be to resolve any outstanding issues after the auction.  Id.   

	15.  Pleadings.  Several petitions for reconsideration address this issue.  Snyder Hill Broadcasting, a pre-July 1, 1997 applicant for a new FM station in Ithaca, New York, contends that conducting the auction before resolving a pending petition to deny against the only other applicant violates due process and is contrary to Section 309(j)(1)'s requirement that the license be awarded to a qualified applicant.  It complains that this places the applicant in the awkward position of having to bid against a potentially unqualified bidder with no certainty as to the ultimate resolution of the bidder's qualifications; it must either gamble that the Commission will adversely resolve the issue or risk being the high bidder (and having to pay) for a license that would have not been decided by auction if the competing applicant were ultimately disqualified.  Pre-auction resolution of basic qualifications, Snyder Hill argues, is the best assurance that the ultimate licensee will be qualified.  Additionally, the law firm of Bechtel & Cole seeks reconsideration urging that the Commission should adopt pre-auction procedures to verify the bona fides of pending pre-July 1st applicants in non-hearing cases, and to exclude from the auction any applicant unable to demonstrate both that it was financially qualified at the time of certification and that its application was not filed for the purpose of entering into a settlement agreement.  In a related context, two applicants in frozen hearing cases, who filed settlement agreements within the 180-day period specified in Section 309(l)(3), seek clarification of the determination in  89 of the First Report and Order that an applicant whose application has not been finally denied or dismissed is entitled to participate in the auction without regard to any outstanding basic qualifications issues.  Specifically, they argue that  applicants disqualified or dismissed in the context of a settlement agreement, which is contingent on the disqualification of one or more applicants, should not be entitled to participate in the auction even if the disposition of those applications is not final.

	16.  Discussion.  We deny reconsideration of our determination to defer until after the auction basic qualifications issues, whether raised in an unresolved petition to deny or motion to enlarge issues, or in an outstanding hearing issue.  As we indicated in the First Report and Order, 13 FCC Rcd at 15953-54, Section 309(j)(1) specifies that a license may be awarded only to a qualified applicant, but the statute accords the Commission discretion to make the determination as to basic qualifications to hold a license either before, or after, the auction.  See also infra  55.  We concluded, moreover, that the public interest would be best served by not delaying the commencement of the auction to litigate potentially irrelevant issues, and that deferring these issues conserves the resources of the private litigants as well as of the Commission, thereby expediting service to the public.  We are not persuaded that the public interest would be served by instituting special pre-auction procedures to verify the bona fides of certain pre-July 1st applicants in non-hearing cases who filed their applications after the imposition of the comparative freeze in February 1994.  With regard to questions concerning specific applications, these matters can be considered more expeditiously after the auction.  To the extent that Bechtel and Cole focus generally on financial qualifications and speculative intent, we continue to believe that our auction rules, by penalizing applicants who default on their bids or who are ultimately disqualified and by prescribing special disclosure requirements for transfers or assignments of stations held less than three years, afford adequate safeguards against financially unqualified applicants or applicants who filed their applications for a speculative purpose.  See First Report and Order, 13 FCC Rcd at 15956.  Given that these rules apply fully to pending applicants who elect to participate in the auction, it is unnecessary to pursue site and financial issues except to the extent that they involve a question of false certification.  Nor does this approach abridge any cognizable rights of competing applicants.  In deciding whether to participate in the auction, however, pending applicants who filed their applications before the adoption of competitive bidding procedures should carefully consider the impact of auction rules prescribing penalties in the event of default or disqualification.

	17.  We are not persuaded that a different approach is warranted in proceedings involving only two applications.  We recognize that, in such proceedings, one applicant must participate in an auction without certainty as to whether the competing applicant will ultimately be found qualified by the Commission.  Any uncertainty as to whether a competing applicant will prevail if its basic qualifications are challenged is not different from the uncertainty that exists in all contested licensing proceedings, whether the licensee is selected by competitive bidding, by comparative hearing, or by some other method.  Litigating a competing applicant's basic qualifications is not without cost, moreover. We would accordingly expect that, in formulating their auction bids, applicants in two party proceedings will take into account the likelihood of establishing that a competing applicant is basically unqualified, as well as the estimated time and expense of litigation to establish the applicant's disqualification.  We do not believe, therefore, that deferring consideration of potentially irrelevant issues deprives applicants in two applicant proceedings of due process or forces them to take unfair risks.  We thus reaffirm our determination that, regardless of how many applicants remain and whether an issue is potentially dispositive, the public interest is best served by deferring the consideration of outstanding qualifications issues until after the auction and resolving such issues only with respect to auction winners. 

	18.  Finally, we clarify the circumstances under which applicants may participate in an auction without regard to an outstanding qualifications issue.   We indicated in  89 of the First Report and Order that where the Commission has dismissed or disqualified an applicant in a frozen hearing case, and where the latter ruling is not subject to further administrative or judicial review, the applicant would not be entitled to participate in the auction.  We also stated that all pending applicants remaining in the proceeding would be entitled to participate in the auction without regard to any unresolved issues as to their basic qualifications.  We were, however, referring in  89 only to cases that did not settle pursuant to Section 309(l)(3), and we were not addressing the special circumstances raised by a settlement agreement executed by February 1, 1998 expressly conditioned on the Commission's resolving specific basic qualifications issues.  In this regard, our practice under the former comparative freeze policy has been to adjudicate basic qualifications issues in the context of a settlement agreement that is contingent on the resolution of a specific basic qualifications issue.  To facilitate settlements of the frozen comparative cases, Section 309(l)(3) provides that, for settlement requests executed by February 1, 1998, the Commission must waive certain regulations to permit settlements among competing pre-July 1st applications. Therefore, consistent with the underlying thrust of Section 309(l)(3) and settlements under our comparative freeze policy, applicants disqualified by the Commission pursuant to such a contingent settlement agreement executed by February 1, 1998 will be permitted to participate in an auction only if an auction becomes necessary as a consequence of a subsequent court decision that reverses their disqualification.  As we recently recognized, the congressional purpose of facilitating settlements in these cases would be thwarted if we held that, notwithstanding a settlement agreement contingent on the disqualification of one or more applicants, an auction is nevertheless required so long as an applicant's disqualification or dismissal has not become final.  In contrast, if a court subsequently remanded our dismissal or disqualification of an applicant, we would either reaffirm our decision regarding that applicant's basic qualifications or return the applicants to the status quo ante, and only hold an auction (or consider an amended settlement agreement) among all the qualified applicants, upon finding that the dismissed or disqualified applicant is fully qualified and should be reinstated.  These policies ensure that no applicant's right to compete for the license will be forfeited based on a non-final determination as to its basic qualifications, but also serve the public interest, in accordance with congressional intent, by facilitating the resolution of frozen comparative proceedings in which the applicants executed a settlement agreement meeting the requirements of Section 309(l)(3).

			4.  Pending Applications With Requests for Waiver of the Freeze on the Filing of Television Applications

	19.  Background.  In the Sixth Further Notice in the digital television proceeding, the Commission indicated that it would no longer accept applications for vacant analog television allotments, but afforded an additional 30-day period (until September 20, 1996) for the filing of such applications.  It indicated further that it would continue to process on a case-by-case basis pending requests for waiver of the 1987 freeze involving the top-30 markets and requests for waiver of the permanent freeze.  It also pledged to provide a cut-off period for the filing of competing applications if it granted any waiver requests and accepted the related television applications.  In response to several commenters, the Commission in the First Report and Order, 13 FCC Rcd at 15945-47, considered whether pending television applications with waiver requests, all filed before July 1, 1997, were subject to Section 309(l).  Of particular concern was the applicability of Section 309(l)(2), which precludes the acceptance of additional applications that would be mutually exclusive with, and would be included in any auction employed to resolve, competing applications filed before July 1, 1997.  Discerning no distinction in the statute between applications and applications filed with waiver requests, we concluded that Section 309(l) does apply to multiple pending applications with waiver requests that, if accepted for filing, would result in mutually exclusive pending applications for a particular television allotment.  Id. at 15945.  We determined, however, that Section 309(l) would not apply if only one application was ever filed for a particular allotment (such that the grant of the waiver request would result in the acceptance of a singleton application), because the threshold requirement of "competing applications . . . filed with the Commission before July 1, 1997" was not satisfied.  Citing legislative history reflecting that the Commission should open a filing window where there is a singleton application "because the Commission has yet to open a filing window," we advised that in the event we grant a waiver and accept a singleton application, we would open a filing period and use an auction to select the licensee if mutually exclusive applications are filed. 

	20.  Pleadings.  Petitions filed by Davis Television Duluth and Davis Television Topeka, and by Montgomery Communications, seek reconsideration of the Commission's determination to open filing windows and permit the filing of competing applications that would be mutually exclusive with a singleton pre-July 1st application with a pending waiver request.  Davis Television Duluth/Topeka, the only applicants that filed applications with freeze waiver requests by September 20, 1996 for channels 27 in Duluth and channel 43 in Topeka, respectively, urge that their waiver requests should be immediately processed and the related television applications granted.  Montgomery Communications is the licensee of a LPTV station on channel 43 that would be displaced if Davis's application for channel 43 is granted.  By way of explanation, Montgomery states that, given the freeze involving the top-30 markets, it did not file an application for channel 43 by the September 20, 1996 deadline; but that, threatened with the loss of its LPTV station, it filed an application on August 20, 1997 that is mutually exclusive with Davis' September 20, 1996 application.  

	21.  The Davis petitioners submit that the Commission effectively opened a filing window, as contemplated by Congress in the Conference Report, when it announced in the Sixth Further Notice a further period ending on September 20, 1996 for the filing of applications for vacant television allotments before it ceased accepting such applications.  Petitioners therefore claim that there is no basis to open a further window for the filing of competing applications.  They point out that, although the Commission concluded that the 30-day period was intended to permit the filing of applications already in progress, there was no threshold requirement that applicants submitting applications by the September 20, 1996 deadline demonstrate that they were in the process of preparing such applications when the Commission announced the filing deadline.  The petitioners therefore reason that anyone interested in filing applications for channels 27 and 43 had an opportunity to do so.  To further support the claim that the Commission should not solicit additional applications for channels 27 and 43, they rely on Sections 309(j)(6)(E) and 309(j)(7), respectively, requiring the Commission to avoid mutual exclusivity and prohibiting it from basing a public interest finding solely or predominately on the expectation of federal revenues from the use of a system of competitive bidding to select the licensee.  Montgomery, on the other hand, agrees with the Commission that, for purposes of determining whether to grant a singleton application without affording an opportunity for the filing of competing applications, the 30-day period announced in the Sixth Further Notice did not constitute a filing window as contemplated by Congress in the Conference Report.  It maintains, however, that the Conference Report does not require that the Commission open a filing period for competing applications for channel 43 since mutually exclusive applications have already been filed for that channel.  It therefore urges the Commission to process the pending applications and related waiver requests and to restrict the qualified bidders to the two pending applicants.  Montgomery also asserts that the Budget Act is an unconstitutional ex post facto law in that it distinguishes between two groups of applications already on file when the legislation was enacted on August 5, 1997 (that is, applications filed before July 1, and applications filed after June 30, 1997), although prospective applicants had no notice of the legal significance of filing an application before July 1, 1997 until that date had passed.

	22.  Discussion.  We deny the petitions for reconsideration of our determination that Section 309(l) does not preclude the opening of a new filing window with respect to singleton television applications (with waiver requests) filed by September 20, 1996.  We reaffirm our conclusion that, in the event that waiver requests are granted and related singleton applications are accepted, a filing window for competing applications should be opened.  For the reasons set forth in the First Report and Order, 13 FCC Rcd at 15946-47, we continue to believe that the 30-day period ending September 20, 1996 does not constitute a filing window as contemplated by Congress in the Conference Report. The period for submitting analog television applications that ended on September 20, 1996 may, as the Davis petitioners suggest, have afforded additional time to permit the filing of applications not already in progress when that deadline was announced.  However, the Commission did not publish a list of applications already on file or otherwise give notice of an opportunity to file competing applications as it had promised in the Sixth Further Notice.  As to the competing applications for channel 43 submitted on September 20, 1996 by Davis/Topeka and on August 20, 1997 by Montgomery, Section 309(l), which would preclude the opening of a filing window for competing applications under certain circumstances, is inapplicable, inasmuch as only Davis's application was filed before July 1, 1997. The threshold requirement of competing applications filed before July 1, 1997 is therefore not satisfied.  Indeed, Montgomery's mutually exclusive application, submitted after June 30, 1997 and nearly a year after the September 20, 1996 filing deadline, has been returned.  And, because no filing period was ever opened for competing applications for either channel 27 or channel 43, Sections 309(j)(6) and 309(j)(7) do not provide a basis for granting the applications of Davis Duluth/Topeka for these channels.  Thus, consistent with Congress's expectation and the Commission's explicit pledge in the Sixth Further Notice to provide a further opportunity for the filing of competing applications with respect to any waiver requests filed by September 20, 1996 that the Commission grants, we will provide such an opportunity in the event that Davis's waiver requests are granted and the related applications are accepted.  At that time, Montgomery may resubmit its application for channel 43.  There is, however, no statutory basis for restricting the eligible bidders for that channel as petitioners request.  Finally, contrary to Montgomery's suggestion, the Budget Act is not an ex post facto law or impermissibly retroactive, inasmuch as it is neither a penal statute nor does it change the legal consequences of past conduct. 

  	5.  Interim Operation

	23.  Background.  One of the fewer than ten frozen hearing cases that has not settled and that remains for resolution by the competitive bidding procedures adopted in the First Report and Order is the Biltmore Forest, North Carolina FM proceeding.  The Commission initially awarded a construction permit to Orion, the comparative winner under the criterion in place before Bechtel, but later rescinded Orion's construction permit and operating authority.   Thereafter, the Commission granted an application for joint interim operating authority filed by a non-profit consortium comprised of the other competing applicants for the Biltmore Forest station.  (Orion was invited to participate in the consortium but declined to do so.)  The D.C. Circuit subsequently concluded that the Commission erred in rescinding Orion's construction permit and operating authority, and it ordered that Orion be reinstated as the interim operator.  Altogether Orion has operated the Biltmore Forest station on a for-profit basis for more than three years.   

	24.  Pleadings.  One of the members of the consortium in the Biltmore Forest FM proceeding, Biltmore Forest Broadcasting FM, Inc. (BFB), seeks reconsideration arguing that the competitive bidding procedures should make some provision for the fact that Orion has been allowed to operate the station for profit, whereas the consortium was required to operate on a not-for-profit basis.  This disparity, according to BFB, has permitted Orion to amass funds through the operation of the FM station that can now be used to its advantage in bidding in the auction for the permanent license for the station.  BFB asserts that this deprives the consortium members of an opportunity to compete fairly in the auction against Orion, thereby undermining the Commission's conclusion in the First Report and Order (13 FCC Rcd at 15936, 15941) that the switch to auctions does not unfairly disadvantage pending applicants who, pursuant to Section 309(l)(2)'s restriction on bidder eligibility, will be competing only against other, similarly situated, pending applicants.  Maintaining that Orion's selection as the high bidder is a foregone conclusion, BFB claims that allowing the for-profit operation of the station by Orion violates the fundamental principle of Community Broadcasting Co. v. FCC, 274 F.2d 753 (D.C. Cir. 1960), that interim operators not be allowed to secure a comparative advantage in the permanent licensing proceeding as a result of the interim operation.  Orion's unique status, according to BFB, also contravenes Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945), by effectively precluding the other mutually exclusive applicants from a fair opportunity to compete with Orion for the license.  BFB suggests a variety of options for ameliorating the alleged unfairness of this situation.  These include requiring Orion to cease its interim operation in order to participate in the auction; requiring Orion to make a detailed accounting with the other applicants being accorded bidding credits equal to any profit earned by Orion; and allowing the other applicants to join in the interim operation.  

	25.  Discussion.  We deny BFB's petition for reconsideration. Orion's operation of station WZLS(FM) is pursuant to a court of appeals decision expressly instructing the Commission "to reinstate Orion forthwith as the interim licensee pending such further proceedings as the Commission may conduct in order to choose either an interim or a final licensee."  Moreover, in reversing the Commission's grant of interim authority to a consortium comprised of the other competing applicants, the court implicitly rejected the argument that interim operation by Orion is fundamentally unfair to the other applicants.  Specifically, the court interpreted 47 C.F.R.  73.3592(b) and Consolidated Nine, Inc. v. FCC, 403 F.2d 585 (D.C. Cir. 1968), to apply only in cases in which a hearing is yet to be held.  The court again rejected this argument when it dismissed a court appeal of the Commission's order installing Orion as the interim operator.  It concluded that all of the issues raised by that appeal, including whether the Commission must order Orion to operate on a not for-profit basis to avoid prejudicing the other applicants, "either were raised and answered in, or are logically precluded by, our opinion in Orion Communications Limited v. FCC, 131 F.3d 176 (1997)."

	26.  Orion's interim operation of the station pursuant to the court's explicit order in no way contravenes the rights of the competing applicants to a fair and impartial selection process under the principles articulated in Community and Ashbacker.  Nor is some accommodation warranted because the consortium's joint interim operation was on a non-profit basis, whereas Orion's operation has been on a for-profit basis.  Specifically regarding profits accrued by an interim operator, the court has made clear that the paramount interest is in ensuring that the interim operation does not unfairly influence the choice of the permanent licensee, not in equalizing the economic pressures on competing applicants.  By the same token, we do not believe that disparities in the individual financial circumstances of competing applicants, even if arguably attributable to interim operations authorized by the Commission, undercut our conclusion that the statutory requirement limiting auctions in these cases to the competing applicants mitigates somewhat the unfairness of requiring such applicants to compete in an auction.  We reasoned that such applicants, having incurred similar expenses and delays in prosecuting their applications, would not be disadvantaged in the auction process as a result of their previous efforts to secure the license through the comparative hearing process.  While we cited this circumstance as one of several reasons supporting our decision to use auctions in these cases, it does not mean that we would delve into the financial situation of competing pre-July 1st applicants or otherwise take steps to equalize the particular financial circumstances of the pending applicants.  We, of course, do not foreclose the possibility that, in the event we ultimately adopt bidding credits for small businesses in broadcast auctions, applicants' particular financial circumstances (e.g., gross revenues) would be considered in determining eligibility for such bidding credits in subsequent auctions.      

B.  Filing and Other Procedural Issues  

	1.  Window Filing Approach for FM Translator and AM Services

	27.  Background.  As described in the Notice in this proceeding, 12 FCC Rcd at 22387, the broadcast and secondary broadcast services have traditionally all had differing filing procedures, and none of these procedures was designed to work in conjunction with the auction of mutually exclusive applications.  In the First Report and Order, we replaced these disparate filing procedures for the various services with a uniform window filing approach that would facilitate the efficient determination of groups of mutually exclusive applications for auction purposes.  As explained in the First Report and Order, there would be, under this approach, specific time periods, or auction windows, during which all applicants seeking to participate in an auction must file their applications for new broadcast facilities or for major changes to existing facilities.  Prior to any broadcast auction, the Mass Media and Wireless Telecommunication Bureaus would release a public notice announcing an upcoming auction and specifying when the window for filing to participate in the auction would open and how long it would remain open.  In response to a public notice announcing a window for the filing of broadcast and/or secondary broadcast applications for new stations and for major changes to existing facilities, the First Report and Order determined to require applicants to file only a short-form application (FCC Form 175), along with any engineering data necessary to determine mutual exclusivity in a particular service.  See 13 FCC Rcd at 15972-73.

	28.  The Commission retained the discretion in the First Report and Order to have combined filing windows allowing the submission of applications for several broadcast services, or to have separate filing windows for each type of broadcast or secondary broadcast service.  We also stated that filing windows for the broadcast services would be opened as often as our resources allowed, taking into consideration, inter alia, the Commission's need to maintain orderly processing procedures and the frequency with which broadcast auctions may be efficiently conducted.  In adopting this uniform window filing approach for all broadcast and secondary broadcast services, we stated that this approach best complemented the auction process and, at the same time, provided the staff with a mechanism to control effectively the filing and processing of broadcast applications.  In particular, we felt that adherence to date certain openings and closings of filing windows (rather than first come/first served processing) would enable the Commission to identify more efficiently discrete groups of mutually exclusive applications for auction purposes.  The First Report and Order also noted the "paucity" of substantive comments even addressing our window filing proposal, and concluded that commenters had no strong objections to the replacement of our existing disparate filing procedures with a uniform window filing approach.  13 FCC Rcd at 15973-74.

	29.  Pleadings.  Several petitioners oppose the replacement of the Commission's traditional procedures for the filing and processing of FM translator and AM applications with the uniform window filing approach described above.  These petitioners state that they were unaware that the Commission was anticipating such a drastic change in the procedures applicable to the filing of FM translator and AM applications, and, had they been aware that such a drastic change was contemplated, they would have filed comments to oppose the change.  Because mutually exclusive FM translator applications and AM applications are, according to these petitioners, rarely filed, a window filing procedure makes little sense, but inhibits the functioning of the free market by limiting entrepreneurs from seeking FM translator or AM licenses on a demand basis.  These petitioners argue that the Commission should return to its traditional "cut-off" list procedure for the filing and processing of FM translator and AM applications, and, if competing applications were to be filed under this "cut-off" list approach, then the Commission could resolve such mutual exclusivities by auction.  If, however, the Commission determines to retain its window filing approach for AM applications, one petitioner additionally asserts that, in its rulemaking proceeding to streamline radio technical rules, the Commission should classify as "minor" as many types of changes as possible in the facilities of existing AM stations.  In particular, this petitioner requests that the Commission classify a change in an AM station from daytime only to unlimited time as a "minor" modification.

	30.  Discussion.  Initially, we note that, despite petitioners' asserted lack of awareness, the Commission provided clear notice to interested parties of its proposal to replace the existing disparate filing procedures for the various broadcast services with a uniform window filing approach.  See Notice, 12 FCC Rcd at 22387.  Following consideration of the petitions on this issue, we continue to believe that the application filing procedures for all broadcast and secondary broadcast services, including AM stations and FM translators, should be uniform, given that construction permits for all these services must now be awarded by the same method (i.e., a system of competitive bidding).  As discussed in detail in the First Report and Order, we believe that a uniform window filing method best complements the competitive bidding process, and provides the staff with a sufficiently flexible mechanism to control effectively the filing and processing of broadcast applications for auction purposes.  See 13 FCC Rcd at 15973.  Unlike the traditional broadcast comparative licensing process, in which an individual hearing was conducted for each mutually exclusive group of applications, auctions involve multiple groups of mutually exclusive applications.  Broadcast applications submitted in response to a delineated filing window, rather than solitary "A" or "B" cut-off lists, may be more efficiently consolidated for such auction resolution.  For these reasons, we feel that a window filing system effectively fulfills the unique procedural requirements of an auction environment and will result in the most efficient processing of applications to participate in broadcast service auctions, in accordance with Section 309(j) of the Communications Act. 

	31.  We additionally reject petitioners' implication that a window filing system constitutes a radical transformation of AM spectrum allocation.  AM spectrum will continue to be allotted on a demand basis, whereby individuals identify a need for new or expanded AM service and develop specific proposals to meet that need.  The fundamental nature of AM spectrum allocation will not change in this regard; institution of a window filing approach only alters the timeframe within which those proposals may be filed with the Commission.

	32.  Moreover, with regard to the FM translator and AM services, the Commission recently revised the definitions of "major" and "minor" change in these services.  This rule revision reduced the number of modification applications regarded as "major" and therefore subject to competitive bidding and the associated uniform window filing procedures.  Specifically, the Commission expanded the definition of minor change for the FM translator and AM services to conform more closely to the commercial FM definition, where generally only proposed changes in the community of license and changes to non-adjacent or non-intermediate channels are defined as major changes.  See 47 C.F.R.  73.3573(a)(1).  Changes in power, antenna height and/or antenna location for stations in the FM translator and AM services are now classified as minor changes, provided that FM translator stations proposing antenna location changes continue to provide 1 mV/m service to some portion of their authorized 1 mV/m service areas.  In addition, the Commission now classifies as "minor" any changes to the hours of authorized operation of AM stations or the addition of nighttime service to daytime only AM stations.  See 47 C.F.R.  73.3571(a)(1); 74.1233(a)(1).  Because minor modification applications may be filed at any time and are governed by first come/first served processing procedures (see supra  27 n.39), the relief accorded through this technical rulemaking proceeding should significantly assuage petitioners' concerns about restrictions on the filing of modification applications.  

	2.  Protection of Preferred FM Site Coordinates

	33.  Background.  The Notice in this proceeding proposed that applicants in the FM service would apply by submitting a short-form application (FCC Form 175) for any vacant allotment specified in the public notice announcing the auction filing window.  Applications specifying the same vacant FM allotment would be mutually exclusive, and no supplemental engineering would be necessary to make this determination.  Notice, 12 FCC Rcd at 22390.  Commenters, however, noted that the Commission's proposal would protect from subsequently filed applications (such as minor change applications that may be filed at any time) only the reference points of any vacant allotment.  According to these commenters, the reference point of a vacant allotment and an applicant's actual desired location might be separated by a considerable distance, and they argued that FM applicants should be allowed to submit actual site preferences prior to the auction, emphasizing that the ability to protect a specific tower or site from subsequently filed proposals would be a crucial factor in deciding whether to participate in an auction and how much to bid.  To address these concerns, the Commission determined in the First Report and Order  to give FM applicants the opportunity to submit a set of preferred site coordinates as a supplement to the FCC Form 175.  We also emphasized that FM applicants were not required to submit a set of preferred site coordinates, and could simply indicate on their short-form applications the vacant allotments upon which they intended to bid.  Any specific site indicated by FM applicants would be entered into the Commission's database without determining its ultimate acceptability from a technical standpoint, and the site would be protected from subsequently filed applications (such as minor modification applications) as a full-class facility.  See First Report and Order, 13 FCC Rcd at 15974-75.

	34.  Pleadings.  Two petitioners oppose our determination in the First Report and Order to protect the preferred site coordinates an FM applicant may submit with its short-form application, as well as the reference points of the vacant allotment.  These petitioners assert that such practice will create unnecessary congestion, require significant expenditures of time and resources by Commission staff, and impede the ability of existing licensees and permittees to improve and upgrade their facilities.  Because substantial numbers of short-form applications may be submitted in an auction window, an obligation to protect preferred site coordinates could, according to these petitioners, significantly increase the number of sites that must be protected.  Given the Commission's elimination of the site certification requirement and the liberalization of the rules pertaining to amendment of long-form applications, these petitioners additionally contend that there exists little need for protecting preferred coordinates for every prospective bidder. 

	35.  Discussion.  We affirm our decision allowing for the optional submission of preferred site coordinates as a supplement to the FCC Form 175 when applying for vacant FM allotments.  These specified coordinates submitted by prospective bidders will be entered into the Commission's engineering database and protected from subsequently filed applications, such as minor modification applications.  As described in the First Report and Order, commenters in this proceeding maintained that potential sites would be extensively investigated before an applicant decided whether to apply for a particular FM allotment or determined how much to bid on any vacant allotment.  We agree with commenters that an applicant's ability to protect its preferred FM site will be an important factor in establishing the monetary value of a vacant FM allotment and a key consideration in any applicant's bidding strategy.  Unless an applicant's site preference is protected and "cut-off" from subsequently filed applications, an auction winner may find that, at the conclusion of the auction, its preferred site is no longer available for use.  Given the importance to all applicants of obtaining a desirable site for their proposed FM stations, we believe that affording auction participants temporary "cut-off" protection for their preferred sites is reasonable.     

	36.  Petitioners' apprehension derives from the assumption that potentially large numbers of short- form applications may be filed in auction windows, and that the Commission's assurance to provide protection for preferred coordinates would consequently considerably increase the number of sites which must be protected.  According to petitioners, providing such protection to auction participants would require a significant expenditure of time and resources by Commission staff, and would impede the ability of existing licensees and permittees to upgrade their facilities by filing minor modification applications. 

	37.  We believe petitioners' concerns to be unfounded, and reject their arguments concerning the extent of the burden imposed on Commission staff and the magnitude of the preclusionary impact on existing licensees.  Under our previous window filing system for newly-allotted FM channels, the preferred sites specified by all competing applicants were protected from subsequently filed applications.  Thus, our decision to protect the preferred FM sites submitted with FCC Form 175 applications merely affords the same degree of protection to applicants filing in an auction window that was previously afforded to FM applicants filing under our former system, and causes no greater preclusionary impact on existing licensees.  Moreover, with the advent of electronic filing for Mass Media Bureau application forms, data such as engineering parameters will be electronically submitted and automatically recorded in Commission databases, without significant resource expenditure by Commission staff.  We also anticipate that the auction process will proceed expeditiously, without the delays associated with traditional broadcast comparative licensing proceedings.  Accordingly, the period between the filing of short-form applications and the grant of the winning bidder's long-form application, the interim during which the preferred site coordinates submitted by auction applicants must be protected, will be relatively brief.  We do not believe that the protection of FM preferred site coordinates during this short time period will impose an onerous burden on the Commission, nor unduly impede the ability of existing licensees to modify their existing facilities.    

	3.  Petition to Deny Period

	38.  Background.  The Commission has in the past generally provided a 30-day period for the filing of petitions to deny against broadcast applications.  In Section 3008 of the Budget Act, Congress granted the Commission the authority to shorten the period for filing petitions to deny against applications for authorizations filed by auction winners.  Although Section 3008 permitted the Commission to establish a petition to deny period as brief as five days, the First Report and Order concluded that a petition to deny period of ten days was appropriate for long-form applications for broadcast and secondary broadcast construction permits obtained through the competitive bidding process.  The First Report and Order also concluded that the time for filing oppositions would be five days from the filing date for petitions to deny, and the time for filing replies would be five days from the filing date for oppositions.  13 FCC Rcd at 15985.  These same filing periods were also established for petitions to deny against the long-form applications filed by winning bidders in ITFS auctions.  See 47 C.F.R.  73.5006.

	39.  Pleadings.  One petitioner argues that the filing period for petitions to deny against translator (television and FM) applications should not be reduced as provided in the First Report and Order.  Specifically, the National Translator Association asserts that the Commission should allow a 15-day period for the filing of petitions to deny against translator applications and a 15-day period for the filing of oppositions to petitions to deny.  This petitioner contends that translator licensees need this additional time to file petitions to deny because such licensees typically have other full-time employment and are rarely represented by consulting engineers or attorneys.  

	40.  Discussion.  In establishing the abbreviated 10-day petition to deny period for all auctionable broadcast services, we realized that the brevity of this petition period would require prospective petitioners to act expeditiously.  After further consideration, we conclude that a period as brief as 10 days may indeed present special difficulties for those prospective petitioners in the LPTV and television and FM translator services.  We realize that secondary service applicants and licensees are often not represented by attorneys or consulting engineers and are frequently not even full-time broadcasters.  Thus, we will amend our rules to require that any petition to deny against a long-form application filed by a winning bidder in a secondary broadcast service auction must be filed within 15 days following the issuance of a public notice announcing that the long-form application has been accepted for filing.  We believe that this extension of the petition to deny period is a reasonable accommodation to make for low power television and translator applicants and licensees, and will not unduly delay the commencement of new secondary broadcast service to the public.

	41.  We will also, on our own motion, apply this lengthened 15-day petition to deny period with regard to the long-form applications filed by winning bidders in ITFS auctions.  Given the noncommercial educational nature of the applicants and licensees in ITFS, we believe it appropriate to allow these applicants to also take advantage of the longer petition to deny period.  Accordingly, we will amend our rules, including 47 C.F.R.  73.5006 and 74.912, to reflect this extended period for petitions to deny against the long-form applications filed by ITFS and secondary broadcast service auction winners.
      
	4.  Use of Proprietary Network and Software for Filing Applications Electronically

	42.  Background.  In accordance with the general Part 1 auction rules, the First Report and Order determined that all broadcast and secondary broadcast applicants would be required to file electronically their short-form applications (FCC Form 175) to participate in an auction.  See 13 FCC Rcd at 15977; 47 C.F.R.  1.2105(a), 73.5002(b).  With regard to the long-form applications filed by broadcast service auction winners, the First Report and Order referred to the Commission's then-pending streamlining proceeding, and stated that the Commission may require all winning bidders to file their long-form applications (FCC Forms 301, 346 or 349) electronically, when electronic procedures become available for the submission of broadcast service long-form applications.  See 13 FCC Rcd at 15984-85.  The Commission subsequently determined in that streamlining proceeding to make electronic filing mandatory, on a form-by-form basis, six months after each Mass Media Bureau form becomes available for filing electronically.

	43.  Pleadings.  Three petitioners state that the First Report and Order requires the electronic filing of short-form applications and "implies" that electronic filing of short-forms, as well as any electronic inspection of filed applications, would be solely by means of a proprietary network and software.  Given its prior practice, petitioners assert that the Commission "apparently intends" to limit access to this proprietary network by imposing a toll charge of up to $2.99 per minute.  Although petitioners support electronic filing requirements, they object to utilization of a proprietary network and software, and urge the Commission to adopt an Internet-based approach, which they contend would better serve the public interest and reduce barriers to entry.  Even if the Commission persists in utilizing a proprietary network and software for submission of short-form applications, petitioners argue that the Commission should nonetheless provide access to inspect electronically filed short-form applications by an Internet connection to its World Wide Web server.       

	44.  Discussion.  After consideration, we decline to alter our system for the electronic filing and inspection of short-form applications.  Based on our experience in conducting 20 prior auctions, we believe it appropriate, for several reasons, to continue using our wide area network (WAN) for conducting Commission auctions, including for the filing of short-form applications to participate in an auction.  First, the WAN and associated software provide the highest degree of security for the Commission's electronic auction system, as well as guaranteed accessibility to the system at all times during the progress of an auction and during the period of an auction short-form application filing window.  In addition, we are not persuaded that utilization of our WAN for broadcast auctions presents a barrier to entry of any significance.  The Commission imposes no fee or on-line charge for the electronic filing of short-form applications, and provides all prospective applicants access to the software needed to file such applications via the WAN for no charge.  To inspect the electronically filed short-form applications submitted by other applicants, the Commission does currently impose an on-line charge for access to the WAN of $2.30 per minute.  We believe this on-line access charge presents no significant barrier to entry for auction applicants, as it appears comparable to the expenses that competing applicants generally bear in obtaining hard copies of manually-filed applications, and it may be further reduced in the future.  In sum, we are not inclined to alter the system used successfully by the Commission for the electronic filing and review of short-form applications in numerous previous auctions, as petitioners have not persuaded us that changes in the utilization of our WAN are necessary, or indeed desirable, for the conducting of broadcast service auctions.
        
	5.  Ownership Disclosure Requirements for Transfer and Assignment Applications

	45.  On our own motion, we also address the applicability of Section 1.2112(a) to transfer and assignment applications filed by broadcast licensees and permittees.  This provision, contained in the general Part 1 auction rules, requires the submission of detailed ownership information not only with short-form applications to participate in competitive bidding, but also with various other types of applications, including assignment or transfer of control.  See 47 C.F.R.  1.2112(a).  In the First Report and Order, we stated that we would revisit the issue of applying Section 1.2112(a) to broadcast transfer and assignment applications, in light of the Mass Media Bureau's streamlining initiatives.  See 13 FCC Rcd at 15992 note 215.  After consideration, we believe that it is unnecessary to apply the ownership disclosure requirements contained in Section 1.2112(a) to parties filing applications to transfer or assign broadcast licenses and permits, whether those authorizations were awarded by competitive bidding or other means.  Our broadcast assignment and transfer application forms (FCC Form 314 and Form 315) already require the submission of ownership information, including information concerning the holders of attributable interests in the assignee and transferee and the other broadcast stations in which any party to the application has an attributable interest.  Broadcast licensees and permittees must also, in their Ownership Reports (FCC Form 323), submit detailed ownership information, including information on holders of attributable interests in the licensee and the attributable interests in other broadcast stations held by the licensee and these other attributable parties.  Because broadcast licensees and permittees generally, and those applying to transfer or assign their licenses specifically, are subject to such significant ownership disclosure requirements, we believe it unnecessary to also require broadcast licensees and permittees seeking to assign or transfer their authorizations to submit the ownership information specified in Section 1.2112(a).  Requiring the repetitive submission of similar ownership information serves no clear regulatory purpose and is contrary to the intent of the Commission's recent broadcast streamlining initiatives.  We therefore amend Section 73.5009 of our rules to clarify that the ownership disclosure requirements of Section 1.2112(a) will not apply to applicants seeking consent to assign or transfer control of broadcast construction permits or licenses.  

C.  Competitive Bidding Issues 
	
	1.  Auctioning of LPTV and Television Translator Displacement Applications

	46.  Background.  On June 1, 1998, the Commission received over one thousand LPTV and television translator applications requesting replacement channels due to displacement by new digital television (DTV) stations.  Although displacement applications filed by LPTV and television translator licensees and permittees propose operations on new channels that may be at new locations as well, and thus are akin to applications for new facilities, such applications are technically regarded as minor modification applications under our rules.  See 47 C.F.R.  73.3572(a)(2).  We generally determined in the First Report and Order not to subject minor modification applications to competitive bidding in the rare instances where they can be mutually exclusive.  As with other competing minor modification applications, the First Report and Order stated that we expected these LPTV displacement applicants to use engineering solutions and negotiations to resolve any mutual exclusivities.  But in this unusual situation due to the large number of applications filed on the same day all seeking a limited number of replacement channels, we noted that these applicants may experience greater difficulties in resolving the mutual exclusivities.  Thus, the First Report and Order concluded that if, following a reasonable period after release of a public notice identifying any mutually exclusive LPTV displacement applicants, a significant number of these applicants had been unable to resolve their mutual exclusivities, then the Commission reserved the right to subject these competing displacement applications to competitive bidding.  See 13 FCC Rcd at 15990.

	47.  Pleadings.  The Latin Communications Group Television, Inc. asks for clarification of the statement in the First Report and Order that the Commission reserves the right to subject the competing LPTV displacement applications filed June 1, 1998, to competitive bidding.  This petitioner urges the Commission to first use other methods to resolve mutual exclusivities between the June 1st displacement applications prior to subjecting them to competitive bidding.  Specifically, this petitioner suggests several priorities that the Commission could use to decide between competing displacement applications.  

	48.  Discussion.  Pursuant to the procedures set forth in the First Report and Order, the Commission released on September 2, 1998, a public notice identifying 280 mutually exclusive LPTV and television translator displacement applications that had been filed on June 1, 1998.  The public notice announced an initial 90-day period (subsequently extended) during which these mutually exclusive applicants were encouraged to use engineering solutions to resolve their mutual exclusivities.  If there are competing June 1st displacement applications remaining after the expiration of this extended settlement period, we decline to resolve them by the various priorities suggested by the Latin Communications Group Television, Inc.  The adoption of the comparative criteria proposed by this petitioner would likely be challenged by applicants disadvantaged by such criteria, thereby leading to considerable delays in resolving the June 1st displacement applications.  The adoption and implementation of new comparative criteria for resolving applications in a service previously subject to lottery would also be of doubtful utility, given the applicability of any such criteria only to a very limited (and as yet unidentified) group of June 1st displacement applications that were not resolved during an extended settlement period.  Due to these uncertainties associated with establishing new comparative criteria, and the delays likely to result, we deny this petitioner's proposal.  

	2.  Minimum Opening Bids and Reserve Prices 

	49.  Background.  In the Balanced Budget Act, Congress added a new provision to the Commission's competitive bidding authority, which explicitly directed us to

		prescribe methods by which a reasonable reserve price will be required, or a
		minimum bid will be established, to obtain any license or permit being assigned 
		pursuant to the competitive bidding, unless the Commission determines that such
		a reserve price or minimum bid is not in the public interest.

47 U.S.C.  309(j)(4)(F).  All five auctions conducted since enactment of the Balanced Budget Act have utilized minimum opening bids.  In addition, we employed this mechanism in two earlier auctions.  Given the terms of Section 309(j)(4)(F) and the successful use of minimum opening bids in previous Commission auctions, the First Report and Order delegated to the Wireless Telecommunications Bureau and the Mass Media Bureau (the Bureaus) the authority to seek comment on and, as appropriate, to establish minimum opening bids and/or reserve prices for each auction or group of auctions of broadcast service construction permits.  This grant of joint delegated authority to the Bureaus followed the model employed in the DBS proceeding, where we directed the Wireless Telecommunications Bureau (WTB) and the International Bureau to jointly determine minimum opening bids.  It is also consistent with our Part 1 general competitive bidding rules, which provide for the establishment of minimum opening bids or reserve prices by WTB after public comment is sought prior to specific auctions.  The First Report and Order identified several factors that the Bureaus may consider in establishing these mechanisms in the broadcast context.  See 13 FCC Rcd at 15971.
	
	50.  Pleadings.  Several petitioners assert that imposition of a reserve price or minimum bid requirement does not serve the public interest.  These petitioners argue that the First Report and Order failed to set forth any basis, as required by Section 309(j)(4)(F), for the Commission's conclusion that the public interest would be served by imposition of reserve prices or minimum opening bids.  There are, according to these petitioners, a number of reasons for concluding that imposition of a reserve price or minimum opening bid requirement would disserve the public interest.  Specifically, these petitioners contend that neither the Commission nor its staff has the expertise to determine an appropriate reserve price, so any such determination would be "essentially arbitrary."  Rather, the auction itself should establish the fair market value of the broadcast authorizations to be awarded.  Furthermore, it would not serve the public interest if an authorization was not awarded (and no new service commenced) because an "arbitrary" reserve price was not met in an auction.

	51.  Discussion.  The Balanced Budget Act creates a presumption that reserve prices and minimum opening bids are in the public interest, absent circumstances that convince us to the contrary.  We reject petitioners' assertions that these mechanisms disserve the public interest in the broadcast context and that we should not permit the Bureaus to use them.  Minimum opening bids have been utilized in seven auctions to date in the licensing of a disparate array of services, all without the problems envisioned by petitioners.  For specific auctions, WTB has, for example, found that the use of minimum opening bids advances the public interest objectives contained in Section 309(j) of the Communications Act, including promotion of competition, dissemination of licenses among a variety of applicants, efficient spectrum use, and recovery for the public of a portion of the value of the spectrum.  Petitioners have not shown these presumptive public interest benefits to be overridden by any detriment.  We will therefore leave it to the Bureaus to seek comment on and establish minimum opening bids or reserve prices prior to specific broadcast auctions, unless the Bureaus determine that to do so in particular circumstances would not be in the public interest. 

	3.  "Qualified" Applicants and Grants by Default

	52.  Background.  Under the procedures adopted in the First Report and Order, a prospective bidder in any broadcast auction must, prior to the auction, submit a short-form application (FCC Form 175) that is acceptable for filing and the requisite upfront payment.  Following each auction, a winning bidder must, within ten business days of release of a public notice announcing the close of the auction and identifying the winning bidders, submit its down payment and must, within 30 days of that public notice, file an appropriate long-form application (FCC Form 301, 346 or 349) for each construction permit for which it was the high bidder.  After the winning bidder's long-form application has been accepted for filing, a public notice will be released announcing that fact, thereby triggering the ten-day filing window for petitions to deny.  If the Commission denies or dismisses all petitions to deny (if any are filed), and is otherwise satisfied that the applicant is qualified, a public notice will be issued announcing that the construction permit is ready to be granted.  Auction winners are required to pay the balance of their winning bids in a lump sum within ten business days following the release of this public notice.  See First Report and Order, 13 FCC Rcd at 15983-86; 47 C.F.R.  73.5003, 73.5005, 73.5006.  These broadcast auction procedures follow the Commission's Part 1 auction rules, under which only winning bidders are required to submit long-form applications and petitions to deny are entertained only against the long-form applications of winning bidders.  See 47 C.F.R.  1.2107, 1.2108, 1.2109.

	53.  Pleadings.  Several petitioners contend that Section 309(j)(1) and Section 309(j)(6)(E) show the intent of Congress that authorizations be awarded by competitive bidding only where there exists more than one qualified applicant.  To assure this outcome, these petitioners contend that the Commission should adopt "some" procedure to be applied on a case-by-case basis whereby, upon petition by the winning bidder, it would consider evidence that the winning bidder is the sole qualified applicant and therefore entitled to a "grant by default."  In cases in which such a demonstration is successfully made, the winning bidder should be relieved of its obligation to remit the payment of its winning bid.        

	54.  Discussion.  These petitioners contend that a winning bidder, by an unspecified mechanism, should be able to attempt to demonstrate that their unsuccessful competitors in an auction were in some way "unqualified" and that the winning bidder should be relieved from its payment obligations because, in essence, the construction permit at issue should not have been awarded by competitive bidding due to the absence of "qualified" competing applicants.  We reject the petitioners' argument, as the Commission's well-established auction application and licensing procedures, which the First Report and Order closely follows, are clearly in accord with Section 309(j) and congressional intent.  As described in  52 above, all prospective bidders, to be allowed to participate in any broadcast auction, must submit prior to auction a short-form application that the Commission finds acceptable for filing.  The Commission will conduct competitive bidding for any broadcast permit only where competing applicants have submitted acceptable short-form applications for that permit and have been found qualified to bid.  This application procedure is clearly consistent with the Commission's statutory auction authority.  Section 309(j)(5) provides that "[n]o person shall be permitted to participate in a system of competitive bidding . . . unless such bidder submits such information and assurances as the Commission may require to demonstrate that such bidder's application is acceptable for filing."  47 U.S.C.  309(j)(5) (emphasis added).  Section 309(j)(1), moreover, mandates the use of competitive bidding if "mutually exclusive applications are accepted for any initial license or construction permit."  47 U.S.C.  309(j)(1) (emphasis added).

	55.  Because all prospective bidders are found qualified to bid before being allowed to participate in an auction, we find the adoption of some post-auction procedure that would be utilized to demonstrate that losing bidders were somehow "unqualified" to bid to be unnecessary and, indeed, redundant.  If petitioners are also asserting that broadcast authorizations should be awarded by competitive bidding only where all applicants to participate in an auction are not only shown to be qualified to bid but also qualified to be granted a license, then we reject their position as contrary to the terms of Section 309(j) and the intent of our competitive bidding authority.  Section 309(j)(1) and Section 309(j)(5) do require that licenses be granted via competitive bidding only to qualified applicants, and our procedures ensure this outcome by requiring winning bidders to submit long-form applications that are subject to petitions to deny.  See 47 C.F.R.  1.2107, 1.2108, 73.5005, 73.5006.  These statutory provisions do not, however, require that every auction participant demonstrate its qualifications to be a licensee (rather than to be qualified to bid).  In this regard, Section 309(j)(5) provides that "the Commission shall, by regulation prescribe expedited procedures consistent with the procedures authorized by subsection (i)(2) for the resolution of any substantial and material issues of fact concerning qualifications."  47 U.S.C.  309(j)(5) (emphasis added).  Despite the termination of our lottery authority to award certain types of commercial broadcast licenses, Section 309(i)(2) still accords the Commission discretion to make the determination of basic qualifications to be a licensee with respect to the lottery winner only.  Auction authority was, like lottery authority, granted to avoid the costs and delays of comparative hearings, and the language in Section 309(i) is comparable to Section 309(j)(1) in that both prescribe requirements that must be met before the Commission can award a license, not before it conducts a lottery or auction.  Thus, we conclude that the Commission has clear statutory authority to continue, with respect to broadcast service auctions, its established practice of determining qualifications to be a licensee only with respect to winning bidders.  We accordingly reject the petitioners' position that Section 309(j) requires the creation of some post-auction mechanism by which a winning bidder could attempt to be relieved of its payment obligation by showing that its unsuccessful competing applicants were somehow unqualified to be licensees.

	56.  Indeed, we believe that establishment of the post-auction mechanism supported by these petitioners would be contrary to the purpose of Section 309(j), which is intended to, inter alia, encourage the development and rapid deployment of new services for the public without administrative or judicial delays and to recover for the public a portion of the value of the public spectrum resource available for commercial use.  See 47 U.S.C.  309(j)(3)(A) & (C).  The implementation of such a mechanism could encourage auction winners to claim that their unsuccessful competing bidders were unqualified so as to avoid their obligations to pay their winning bids.  The consideration of claims by winning bidders asserting that their competitors were unqualified would be time-consuming and administratively burdensome for the Commission, and would delay both the ultimate grant of construction permits to auction winners and the commencement of service to the public.  We also remain unclear how such a mechanism would operate in practice; in particular, we are unsure of the basis on which the alleged lack of qualifications of a losing bidder would be determined, as an unsuccessful bidder is not required to submit a long-form application, which is the usual basis for determining any broadcast applicant's qualifications to be a licensee.  We therefore conclude that implementation of the petitioners' suggested post-auction mechanism would be administratively burdensome and inconsistent with the intent of Section 309(j), and consequently deny these petitions.                 

	4.  Anti-Collusion Rule

	57.  Background.  In the First Report and Order, we determined to subject applicants for broadcast auctions to the Commission's Part 1 anti-collusion rule, which provides that, after the short-form filing deadline, applicants generally may not discuss the substance of their bids or bidding strategies with other bidders that have applied to bid on the same licenses or permits.  See 47 C.F.R.  1.2105(c).  The Commission adopted the anti-collusion rule to both prevent and to facilitate the detection of collusive conduct, thereby enhancing the competitiveness of the auction process and post-auction market structure, and we concluded that the rule should generally apply in the broadcast context.  See 13 FCC Rcd at 15980-81.  As noted in the Notice in this proceeding and in the First Report and Order, the terms of the anti-collusion rule would prohibit applicants who file mutually exclusive short-form applications in response to broadcast auction windows from procuring the removal of competing applications by means of either settlement agreements or amendments to any engineering data submitted with their short-form applications following the short-form filing deadline.  See Notice, 12 FCC Rcd at 22393-94; First Report and Order, 13 FCC Rcd at 15981.

	58.  The First Report and Order also determined to apply competitive bidding procedures to mutually exclusive applications for major modifications of existing broadcast facilities, as well as to competing applications for new facilities.  We recognized, however, that competing major modification applications could often be resolved by changes to the engineering proposals submitted by applicants and might raise special considerations where settlements would be particularly appropriate.  We therefore determined to allow applicants who, under the window filing procedures adopted in the First Report and Order, filed either competing major modification applications, or competing major modification and new facility applications, to resolve their mutual exclusivities by means of engineering solutions or settlements during a limited period after the filing of short-form applications but before the start of the auction.  See 13 FCC Rcd at 15927; 47 C.F.R.  73.5002(c) & (d).  The First Report and Order expressly noted that allowing competing major modification applicants to settle following the filing of short-form applications was not consistent with the terms of the general Part 1 anti-collusion rule, which is triggered by the filing of short-form applications.  We stated, however, that the anti-collusion rule was formulated in the context of geographic area licensing, rather than site-specific licensing as in broadcast where determinations of mutual exclusivity could depend on specific technical proposals, which in some instances might be altered so as to allow the grant of several formerly mutually exclusive applications.  We therefore concluded in the First Report and Order to allow parties with competing major modification applications a limited opportunity to settle or otherwise resolve their mutual exclusivities following submission of their short-form applications, in accordance with our statutory directive "to use engineering solutions . . . and other means" to resolve competing applications.  47 U.S.C.  309(j)(6)(E).     	

	59.  Pleadings.  A number of petitioners contend that the Commission should, despite the terms of the general anti-collusion rule, nonetheless allow a discrete period (such as 60 or 90 days) to allow mutually exclusive applicants for new facilities to settle after the filing of short-form applications in a broadcast auction window.  These petitioners note the Commission's past practice of encouraging settlements of competing broadcast applications, and contend that settlements serve the public interest by conserving Commission resources and providing service to the public more quickly.  Also, petitioners assert that applying the anti-collusion rule to preclude settlements after the filing of short-forms is inconsistent with Section 309(j)(6)(E), which provides that nothing in the use of competitive bidding shall be construed to relieve the Commission of the obligation "to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means" to avoid mutual exclusivity.  47 U.S.C.  309(j)(6)(E).  Moreover, petitioners point out that the legislative history of the Budget Act specifically admonished the Commission about its obligations under Section 309(j)(6)(E) by emphasizing that

		notwithstanding its expanded auction authority, the Commission must still ensure
		that its determinations regarding mutual exclusivity are consistent with the
		Commission's obligations under section 309(j)(6)(E).  The conferees are 
		particularly concerned that the Commission might interpret its expanded
		competitive bidding authority in a manner that minimizes its obligations under
		section 309(j)(6)(E), thus overlooking engineering solutions, negotiations, or
		other tools that avoid mutual exclusivity.
		
Conference Report at 572.  These petitioners assert that the Commission has implemented the anti-collusion rule in a manner violating congressional intent, as expressed in legislative history, and the express terms of Section 309(j)(6)(E).

	60.  Additional petitioners argue that application of the anti-collusion rule to preclude settlements or engineering solutions to eliminate mutual exclusivity would disproportionately impact the LPTV and television and FM translator services.  These petitioners similarly contend that, given the terms of Section 309(j)(6)(E) and the Budget Act's legislative history, LPTV and translator applicants for new facilities should be given the right to resolve conflicts between applications and amend applications to eliminate mutual exclusivity after short-forms are filed.  The National Translator Association in particular points out that the Commission's existing rules provide translator applicants "unique flexibility" to resolve mutual exclusivities, which the anti-collusion rule would prevent applicants from utilizing.  Moreover, many translator applicants are counties or other governmental entities or community associations that want to become licensees to bring broadcast service (particularly television) to small rural communities.  Given the nature of translator applicants and licensees, this petitioner contends that, if the anti-collusion rule were to be strictly applied to translators, mutually exclusive translator applicants would not bid at auction, but would merely refile their applications in a subsequent filing window in an effort to avoid mutual exclusivity, thereby delaying commencement of new service to rural areas in contravention of Section 309(j).  

	61.  Discussion.  After consideration, we decline to adopt the wide-ranging exception to the anti-collusion rule that some petitioners support, but we grant reconsideration in part for the secondary broadcast services.  As previously explained, the anti-collusion rule prohibits applicants, after the filing of short-forms, from discussing the substance of their bids and bidding strategies with competing applicants and also precludes the transfer of indirect information that affects, or could affect, bids or bidding strategies.  See First Report and Order, 13 FCC Rcd at 15980.  The Commission continues to believe that such prohibitions are generally necessary to enhance the competitiveness of the auction process and the post-auction market structure.  See Second Report and Order, 9 FCC Rcd at 2386-88.  Permitting competing applicants for new facilities in all broadcast services to engage in discussions concerning settlements or other resolution of their mutual exclusivities following submission of their short-form applications, as some petitioners support, would, we believe, reduce the effectiveness of the anti-collusion rule.  For example, if competing broadcast auction applicants were permitted to engage in discussions concerning settlement or other resolution of mutual exclusivities, these competing applicants would almost inevitably transfer information at least indirectly affecting bids or bidding strategies, thereby adversely impacting the competitiveness of the auction.  Moreover, given our statutory obligation to utilize auctions as a primary licensing tool, "the protection of the integrity of the auction process is of paramount importance," and we are consequently concerned about "actions that compromise the integrity" of the process, particularly "behavior that violates the anti-collusion rule."  The Commission's experience in conducting numerous previous auctions has demonstrated the importance of the anti-collusion rule in preventing and facilitating the detection of collusive conduct.  For these reasons, we are reluctant to adopt the broad exception to the anti-collusion rule urged by some petitioners.            

	62.  We are also not persuaded that any Commission policy traditionally favoring settlements in the broadcast context should alter the applicability of our well-established anti-collusion rule to broadcast auctions.  Although, as petitioners note, the Commission has in the past encouraged the settlement of broadcast applications, we did so in the context of the lengthy and costly comparative hearing process.  Because even routine comparative proceedings can take from three to five years or more to complete after designation of the mutually exclusive applications for hearing, settlements in the comparative hearing context did conserve substantial Commission resources and facilitate the commencement of service to the public.  In the auction context, however, allowing settlements following the filing of short-forms would not conserve significant Commission resources or substantially speed service to the public, because an auction can be commenced shortly after the filing of short-forms and the auction winner quickly licensed.  Thus, allowing post-short-form settlements in the auction context would not serve the same policy goals as settlements in the comparative hearing process.  And, with respect to pre-July 1, 1997 applicants in the frozen comparative cases, we have already afforded multiple settlement opportunities to them, and see no basis for allowing them to enter into post-short-form settlement agreements.

	63.  Finally, we do not believe that Section 309(j)(6)(E) requires the Commission to make an across-the-board exception to the anti-collusion rule in the broadcast context.  Section 309(j)(6)(E) was included in the Commission's original auction authority granted in 1993, and the language of that section was not altered by the 1997 Balanced Budget Act.  As stated in the Budget Act's legislative history, Congress was "concerned that the Commission might interpret its expanded competitive bidding authority in a manner that minimizes its obligations" under the existing Section 309(j)(6)(E).  The Commission, by determining that its well-established anti-collusion rule should preclude competing applicants for new broadcast facilities from discussing settlements or otherwise resolving their mutual exclusivities after the filing of short-forms, has not minimized its obligations under Section 309(j)(6)(E), but has merely continued to apply consistently a rule adopted in 1994 and subsequently applied to every auction conducted by the Commission.  Moreover, we feel that the application and licensing procedures adopted in the First Report and Order are in conformance with the Commission's obligations under Section 309(j)(6)(E) to avoid mutual exclusivity by various means.  For example, the adoption of a uniform window filing approach for all broadcast services -- and the concomitant elimination of "A" and "B" cut-off filing procedures for several services -- may reduce the likelihood of particular applicants becoming mutually exclusive.  The First Report and Order furthermore retained the traditional site- or allotment-specific licensing for the various broadcast services, rather than adopting other licensing schemes, such as one based on pre-defined geographic areas.  We believe this retention of our long-established licensing practices for broadcast may also tend to minimize instances of mutual exclusivity, especially in cases where applicants propose site-specific service areas that are relatively small in size.  Thus, the broadcast application and auction procedures adopted in the First Report and Order are consistent with our obligations under Section 309(j)(6)(E) "to avoid mutual exclusivity in application and licensing proceedings."  47 U.S.C.  309(j)(6)(E).

	64.  Nevertheless, although we are not compelled by statute to allow competing broadcast applicants to resolve their mutual exclusivities by engineering solutions or other means following the submission of short-form applications, we conclude that doing so would serve the public interest in the secondary broadcast services, for several reasons.  The First Report and Order specifically noted that the secondary nature of the LPTV and television and FM translator services would not be altered by the awarding of construction permits for these services by auction (see 13 FCC Rcd at 15961), and, thus, an auction winner in these services may be displaced by a full service licensee or otherwise not permitted to operate.  Given the secondary status, limited coverage areas and restricted power of LPTV and translator stations, no limit has ever been placed on the number of these stations that any person or entity may own, and they are not subject to any of the Commission's broadcast multiple ownership rules, which have the objective of fostering maximum competition in broadcasting.  Furthermore, as specifically noted by one petitioner, secondary broadcast service applicants currently enjoy considerable flexibility in resolving mutual exclusivities by engineering means, and, upon consideration, we are reluctant to circumscribe the existing rights of applicants in these services.  The Commission has moreover consistently made efforts to ameliorate the adverse affect that the development of digital television (DTV) will have on the LPTV and translator services.  Allowing competing LPTV and television translator applicants an opportunity to resolve their mutual exclusivities before auction is a reasonable accommodation to make for these services, whose licensees and permittees are additionally subject to displacement by DTV stations.  Finally, because these secondary services have minor competitive significance in the media marketplace, we believe that the usual role played by the anti-collusion rule in enhancing the competitiveness of auctions and, particularly, of the post-auction market, is less significant with regard to the secondary broadcast services.  An accommodation of our anti-collusion rule to allow competing secondary service applicants an opportunity to resolve their mutual exclusivities prior to auction will not compromise the competitiveness of the broadcasting marketplace.  In sum, we believe it appropriate to continue to allow competing secondary broadcast service applicants for new facilities to use engineering solutions to resolve mutual exclusivities pursuant to our existing rules, and will amend the terms of the anti-collusion rule as it applies to the secondary services to this extent.  

	65.  Thus, we will allow applicants who file competing applications for new facilities in the secondary services to resolve their mutual exclusivities by means of engineering solutions or settlements during a limited period after the filing of short-form applications but before the start of the auction.  Any settlement must comply with all applicable Commission regulations, including the limitations on payments to settling applicants and the prohibition against non-party (or "white knight") settlements.  See 47 C.F.R.  73.3525(a).  Any amendments filed by competing applicants to resolve their mutual exclusivities must be minor, as defined by the rules of the applicable service.  See 47 C.F.R.  73.3572(a); 74.1233(a).  To resolve mutual exclusivities, applicants may also, as permitted under existing Commission rules, file negotiated agreements to accept interference, or demonstrate that, based on terrain shielding, no actual interference will occur.  See 47 C.F.R.  74.703(a); 74.1204(d). 

	66.  We emphasize, however, that this post-short-form settlement period will be available only to secondary service applicants that apply in future auction filing windows.  Pending competing LPTV and translator applicants have already had significant opportunity to resolve their mutual exclusivities, and, indeed, may continue to resolve their mutual exclusivities (by means of engineering solutions or settlements complying with all Commission regulations) at any time prior to the filing of short-form applications to participate in an auction.  Thus, an additional settlement period following the filing of short-form applications is unnecessary and would merely serve to delay the commencement of competitive bidding.  For these same reasons, we also clarify that the post-short-form settlement period adopted in the First Report and Order for competing major modification applications in all broadcast services (see supra  58) will be available only to mutually exclusive major modification applicants that file in future auction windows.    

	67.  We also determine, on our own motion, to permit competing applicants for new facilities in the Instructional Television Fixed Service to resolve their mutual exclusivities by means of engineering solutions or settlements during a limited period after the filing of short-form applications but before the start of an auction.  Similar to the LPTV and television translator services, mutually exclusive ITFS applicants currently have considerable flexibility in resolving mutual exclusivities, and we are reluctant to circumscribe the existing settlement rights of applicants in this service.  Moreover, as discussed in the First Report and Order, ITFS channels are allocated to educational institutions and governmental educational entities, and are intended primarily for the transmission of instructional, cultural and other types of educational material to enrolled students at accredited schools.  See 47 C.F.R.  74.931(a)(1).  Given the instructional nature of this service and the long-standing reservation of ITFS spectrum for noncommercial educational use, we believe that the purpose of the anti-collusion rule -- to enhance the competitiveness of auctions and post-auction market structures -- would not be violated by allowing these noncommercial applicants an opportunity to resolve their mutual exclusivities prior to auction.  Thus, we will allow competing ITFS applicants during a limited period following submission of their short-form applications, to enter into settlement agreements complying with all applicable Commission regulations or to utilize engineering solutions or other means to resolve their mutual exclusivities.  Consistent with existing practice in this service, ITFS applicants will be permitted to file amendments to resolve their mutually exclusive applications, so long as no additional interference results.  See Report and Order in MM Docket No. 93-24, 10 FCC Rcd 2907, 2911 (1995).  This post-short-form settlement period will be available only to ITFS applicants that apply in future auction filing windows, as pending competing ITFS applicants have already been afforded an opportunity for settlement.
    
	5.  Eligibility for and Terms of New Entrant Bidding Credit

	68.  Background.  Section 309(j) of the Communications Act provides that the Commission "ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum-based services."  47 U.S.C.  309(j)(4)(D).  To fulfill our obligations under Section 309(j) and to further our long-standing commitment to promoting the diversification of ownership of broadcast facilities, we adopted in the First Report and Order a tiered "new entrant" bidding credit for auction applicants with no, or very few, other media interests.  See 13 FCC Rcd at 15995-96.  Specifically, the First Report and Order provided for a 35% bidding credit for a winning bidder to lower the cost of its winning bid on any broadcast construction permit, if the winning bidder and/or its owners had no "recognizable" interest (more than 50% or de facto control) in any other media of mass communications.  A 25% bidding credit would be given to a winning bidder if it and/or its owners had a recognizable (i.e., controlling) interest in no more than three mass media facilities.  No bidding credit, however, would be given if any of these commonly owned mass media facilities served the "same area" as the proposed broadcast station.  47 C.F.R.  73.5007.  The First Report and Order defined mass media facilities very broadly to include full service AM, FM and television stations; LPTV and television and FM translator stations; Multipoint Distribution Service (MDS) stations; cable television systems; direct broadcast satellite transponders; and daily newspapers.  47 C.F.R.  73.5008(b).  Such facilities would be regarded as serving the same area as the proposed broadcast or secondary broadcast station, if certain defined areas wholly encompassed, or were encompassed by, the proposed broadcast or secondary broadcast facility's relevant contour.  See 47 C.F.R.  73.5007.

	69.  As explained in the First Report and Order, this new entrant bidding credit was closely modeled on the diversification preference previously given in lotteries for LPTV, television translator and MDS licenses.  In particular, the types of media of mass communications considered relevant in determining eligibility for the new entrant bidding credit, and the standards for determining whether such other mass media facilities served the same area as the broadcast stations proposed by winning bidders, were adopted from the Commission's existing random selection diversification preference.  Perhaps more importantly, the new entrant bidding credit also reflected the existing lottery standards in considering as relevant for determining eligibility only "recognizable" (i.e., controlling) interests held by a winning bidder, and/or its owners, in these other media of mass communications.  Finally, the definition of the "owners" of a winning bidder set forth in the First Report and Order reflected the definition in the existing random selection preference rules.  We note that such definition was unique to the Commission's lottery preference rules and differed from the approach taken in the Commission's general broadcast attribution rules and policies.

	70.  Pleadings.  No petitioners object to the concept of a bidding credit designed to promote the diversification of ownership of broadcast facilities.  Nor do any petitioners generally object to the adoption of a tiered new entrant bidding credit benefitting winning bidders in broadcast auctions who have no, or very few, other media interests.  Several petitioners, however, object to various specific aspects of the above-described new entrant bidding credit.  Specifically, petitioners contend that the Commission should not count LPTV and television and FM translator interests among an applicant's other mass media interests in determining a bidder's eligibility for a bidding credit.  These petitioners point out that low power and translator stations have only secondary status and limited coverage areas, and are not subject to any of the Commission's broadcast multiple ownership rules.  Other petitioners question the standards adopted in the First Report and Order for determining whether an applicant's proposed broadcast station and an existing station serve the "same area," thereby rendering the applicant ineligible for a bidding credit.  These petitioners in particular object to the requirement that a proposed and an existing station would be regarded as in the "same area" only if the relevant contour of the existing station wholly encompasses, or is encompassed by, the proposed station's relevant contour.  As an alternative, one petitioner suggests a more restrictive rule that would render an applicant ineligible for a bidding credit if there is partial overlap of the relevant contours of the applicant's existing and proposed stations.  Other petitioners argue that the new entrant bidding credit rules are ambiguous and open to manipulation and abuse.  Specifically, these petitioners contend that the concept of a "recognizable" interest in other media of mass communications and the term "owners" of a winning bidder are ambiguous and insufficiently defined, and are consistent with neither the broadcast attribution rules nor the attribution rules utilized in previous wireless service auctions.  One petitioner in particular emphasizes that, in adopting these concepts from the LPTV random selection rules, the Commission abandoned in part its established standards for "ownership" under the broadcast attribution rules.  This petitioner generally favors returning to the standards employed in the broadcast attribution rules for determining whether other media interests held by auction applicants should be cognizable in determining an applicant's eligibility for a new entrant bidding credit.

	71.  Discussion.  After careful consideration of the various petitions and of the Commission's goals in adopting the new entrant bidding credit, we conclude that the eligibility standards for the credit should be amended to be consistent with our general broadcast attribution standards, by which we define what constitutes a "cognizable interest" in applying the broadcast multiple ownership rules.  Specifically, the "owners" of a winning bidder will be redefined to include those individuals or entities who have an attributable interest in that winning bidder.  Thus, to determine whose other media interests will be counted in establishing whether a winning bidder qualifies for the bidding credit, we will consider the other media interests held by the winning bidder and by any entity or individual with an attributable interest in the winning bidder.  Similarly, the interests of the winning bidder (and of any individuals or entities with an attributable interest in the winning bidder) in other media of mass communications will be attributable for purposes of the new entrant bidding credit to the same extent that such other media interests are considered attributable for purposes of the broadcast multiple ownership rules.  We realize that the broadcast multiple ownership attribution rules are the subject of a pending rulemaking and revisions to those attribution rules could be made in the near future.  See Further Notice of Proposed Rulemaking in MM Docket Nos. 94-150, 92-51 and 87-154, 11 FCC Rcd 19895 (1996) (Attribution Further NPRM).  For purposes of applying the general broadcast attribution rules to determine eligibility for the new entrant bidding credit in any future auction, we will apply those attribution rules as they exist at the time of the short-form filing deadline for that auction.


	72.  We believe that utilizing our well-established broadcast attribution rules to determine eligibility for the new entrant bidding credit in broadcast service auctions will best promote the goals of the bidding credit.  As we have previously explained, our broadcast attribution rules "seek to identify those interests in or relationships to licensees that confer on their holders a degree of influence or control such that the holders have a realistic potential to affect the programming decisions of licensees or other core operating functions."  Attribution Further NPRM, 11 FCC Rcd at 19896.  Because the interests defined as attributable under our general multiple ownership attribution rules have already been judged to give their holders "a realistic potential" to affect the programming or other core functions of broadcast licensees, we conclude that such interests should also be cognizable in determining whether a winning bidder in a broadcast auction should be given a bidding credit as a true "new entrant."  Given that the multiple ownership rules are designed to promote diversity in programming sources and viewpoints for the broadcast services, which is one of the purposes of the new entrant bidding credit, we find that the same attribution rules should be applied in both contexts.

	73.  Moreover, utilization of the general broadcast attribution rules in the context of the new entrant bidding credit should result in a more clear and consistent application of the eligibility standards for the bidding credit.  Our broadcast attribution rules are well established, and the broadcast industry has considerable familiarity with applying these rules and policies.  We decline, as one petitioner suggests, to utilize these traditional broadcast attribution standards in combination with the differing spousal and kinship attribution standards set forth in Section 1.2110 of the general auction rules, 47 C.F.R.  1.2110.  We believe that attempting to apply a combination of differing sets of attribution rules would create needless confusion for both the broadcast industry and Commission staff, and would likely result in inconsistent application of the eligibility standards for the new entrant bidding credit.  Furthermore, Section 1.2110 sets forth attribution standards for measuring business size for the purpose of small business bidding credits in wireless service auctions, and, thus, does not encompass the interests implicated by the new entrant bidding credit.  We accordingly conclude that utilizing the general broadcast attribution standards, rather than the Section 1.2110 standards, would be more appropriate for determining eligibility for the new entrant bidding credit in broadcast service auctions.    

	74.  In addition to attributing mass media interests for purposes of the new entrant bidding credit to the same extent that such media interests are considered attributable for purposes of the broadcast multiple ownership rules (see supra  71), we will also consider, in a further order in this proceeding, whether to attribute the mass media interests of any individual or entity who holds a significant equity and/or debt interest in a winning bidder claiming new entrant status, even if such an interest is non-voting.  Specifically, this further order will consider the appropriateness of attributing the media interests (if any) held by very substantial investors in a bidder claiming a credit as a new entrant, and, if so, the threshold at which a non-voting equity and/or debt interest in a new entrant should be regarded as attributable.  These determinations will be made based on our further review of the record in the pending broadcast attribution proceeding, which, inter alia, requested detailed comment on similar equity/debt issues.  We expect the order addressing this specific attribution issue to be completed expeditiously, without delaying the commencement of broadcast service auctions. 

	75.  In light of our decision to utilize the general broadcast attribution rules to determine which other media interests of a winning bidder are cognizable for the purpose of qualifying for the new entrant bidding credit, we also believe it is appropriate to reconsider the types of media of mass communications that are relevant in this regard.  Specifically, we agree with petitioners that the attributable interests held by a winning bidder in existing LPTV and television and FM translator stations should not be counted among the bidder's other mass media interests in determining its eligibility for a new entrant bidding credit in any broadcast or secondary broadcast service auction.  Low power television and translator stations are not subject to any of the Commission's broadcast multiple ownership rules, which, as explained above, are intended to promote diversification goals similar to the new entrant bidding credit.  Given the secondary status, limited coverage areas and restricted power of LPTV and translator stations, the Commission has never imposed a limit on the number of LPTV stations or translators that a person or entity may own nationally or in any local market.  For these same reasons, the Commission, in applying the diversification factor in traditional comparative broadcast licensing proceedings, gave little consideration to the existing interests held by competing applicants in LPTV facilities.  We will accordingly amend our new entrant bidding credit rules, as urged by petitioners, so that any interests held by winning bidders in existing LPTV and translator stations are not counted toward the bidders' other mass media interests in determining eligibility for a bidding credit in any broadcast or secondary broadcast service auction.

	76.  We note that the Commission recently issued a notice of proposed rulemaking concerning the creation of a low power radio service.  In this notice, the Commission proposed one class of low power FM that would be a primary service (the "LP1000" service) and that would be subject to strict multiple ownership restrictions.  See Low Power Radio NPRM, FCC 99-6 at  57, 60.  If the Commission were ultimately to approve such a new primary radio service, we believe, consistent with our discussion above, that stations in this service should be counted in determining eligibility for a new entrant bidding credit in any broadcast or secondary broadcast service auction.

	77.  We will, moreover, as urged by petitioners, refine the standards for determining whether an applicant's proposed broadcast station and that applicant's existing station(s) serve the "same area," thereby rendering the applicant ineligible for a bidding credit.  The current standard that a proposed and an existing station are regarded as in the "same area" only if the relevant contour of the existing station wholly encompasses, or is wholly encompassed by, the proposed station's relevant contour, was adopted from the LPTV random selection rules.  The "wholly encompass" standard, as set forth in our previous lottery rules, prevented licensees of existing full service broadcast stations from obtaining a preference in LPTV lotteries because the relevant contour of an existing full service station would be likely to wholly encompass the contour of an LPTV station proposed for that same market, as low power facilities have fairly small service contours.  However, utilization of this standard in broadcast service auctions would not, in many instances, prevent an existing broadcaster from obtaining a bidding credit because it would be relatively unlikely that, for example, the relevant contour of an existing FM station would wholly encompass, or be wholly encompassed by, the relevant contour of a full service television (or AM or FM) station proposed to serve that same market.  As the overlap between the contours of existing and proposed full service broadcast stations serving the same general market would usually be only partial, an auction applicant with a full service broadcast station could nonetheless qualify for a bidding credit in an auction for another full service broadcast facility in that same market.  We believe that this outcome resulting from utilization of the "wholly encompass" standard does not serve the purpose of the bidding credit, which is to promote the entry of truly new entities into the broadcast industry.  Accordingly, after further reflection, we will amend the standard for determining whether an existing and proposed station serve the "same area" to a partial overlap standard.  Specifically, if there is any overlap between the relevant contours of an applicant's existing and proposed stations, then those stations will be regarded as in the "same area," and the applicant will not be eligible for a new entrant bidding credit.  We believe that this partial overlap standard will better limit eligibility for the bidding credit to those true new entrants who have no other media interests serving the same area in which the applicant intends to bid.          

	78.  With regard to which contours are considered relevant for determining whether existing or proposed full service television and radio stations are in the "same area" as other mass media facilities, we believe the contours utilized in the radio and television multiple ownership (i.e., duopoly) rule are appropriate.  As discussed above, the broadcast multiple ownership rules are intended to promote diversification goals similar to the new entrant bidding credit's purpose of "disseminating licenses among a wide variety of applicants."  47 U.S.C.  309(j)(3)(B).  Broadcast licensees, permittees and applicants are also generally familiar with the broadcast multiple ownership rules, and should accordingly be familiar with utilizing the television and radio station contours specified in those rules.  As specifically supported by one petitioner, we will therefore amend the new entrant bidding credit rule to specify the contours set forth in 47 C.F.R.  73.3555(a) & (b) as the relevant contours for determining whether an existing or proposed radio or television station is in the "same area" as another mass media facility.

	79.  With regard to the contour specified in the television duopoly rule specifically, the current rule prohibits common ownership of two television stations with overlapping Grade B contours.  See 47 C.F.R.  73.3555(b).  The Commission has, however, in a pending rulemaking, tentatively concluded to revise the duopoly rule to allow common ownership of television stations that are in separate Designated Market Areas and whose Grade A contours do not overlap.  If the Commission does in the future alter the contour used in the television duopoly rule, then the full service television contour utilized for purposes of the new entrant bidding credit will be changed to be consistent with the duopoly rule. 

   	80.  We finally decline, as one petitioner urges, to "consider the adoption of more significant bidding credits or other advantages to those in [the petitioner's] position."  See supra  9.  To the extent Ferrigno is contending that a separate or greater bidding credit is warranted for an FM applicant who successfully petitioned for the allotment of the channel being auctioned, we deny the reconsideration petition on the grounds clearly set forth in the First Report and Order.  We also decline to increase the size of the new entrant bidding credit generally.  We note that the 35% and 25% tiers established for the new entrant bidding credit are the two highest tiers in the designated entity schedule set forth in the Third Report and Order for small business bidding credits generally, and, in the absence of any persuasive showing to the contrary, we are not inclined to increase the credit amount at this time.  We intend, however, as stated in the First Report and Order, to release a further report and order considering designated entity issues in the broadcast services, following the completion of certain pending evidentiary studies.  See 13 FCC Rcd at 15995.  If, at that time, revisions in our new entrant bidding credit, such as increasing the size of the credit, appear necessary to further the underlying objectives of the bidding credit, we will then have the opportunity to consider such revisions.              

	81.  On our own motion, we also clarify that the new entrant bidding credit will not be applied in any ITFS auction.  As adopted in the First Report and Order, the new entrant bidding credit may be used by a qualified winning bidder "to lower the cost of its winning bid on any broadcast construction permit."  47 C.F.R.  73.5007 (emphasis added).  Eligibility for the new entrant bidding credit, moreover, is determined by the extent of a bidder's interests in various "media of mass communications," which do not, as defined in Section 73.5008, include ITFS stations.  

	82.  We continue to believe that the new entrant bidding credit should not be applied in ITFS auctions, given the nature and purpose of that service.  As explained in the First Report and Order, ITFS is a point-to-point or point-to-multipoint microwave service whose channels are allocated to educational organizations and are intended primarily for the transmission of instructional, cultural and other types of educational materials to enrolled students at accredited schools.  See 13 FCC Rcd at 15999.  Because ITFS is not a general interest consumer medium like the broadcast services, the goals underlying the new entrant bidding credit appear inapplicable to ITFS.  Rather than applying a bidding credit designed to further our long-standing commitment to promoting the diversification of ownership of broadcast facilities, we believe that any bidding credit or other special measures adopted for ITFS auctions should reflect the nature and purpose of this instructional service.  We expect to consider what, if any, special measures would be appropriate for ITFS auctions in our further report and order in this proceeding on designated entities.      
	6.  Unjust Enrichment

	83.  Background.  To fulfill the statutory obligations to prevent unjust enrichment and to ensure that the new entrant bidding credit had the intended effect of aiding eligible entities to participate in broadcast auctions, the First Report and Order followed the general Part 1 auction rules in requiring, under certain circumstances, reimbursement of bidding credits utilized to obtain broadcast licenses.  See 47 C.F.R.  1.2111(d)(1) & (2); 73.5007.  However, if a permittee or licensee who utilized a new entrant bidding credit to obtain a broadcast license simply acquires within the five-year reimbursement period an additional broadcast facility or facilities, such that the licensee would not have been eligible for the new entrant credit, the licensee will not be required to reimburse the government for the amount of the bidding credit.  To require reimbursement in such a situation would, according to the First Report and Order, discourage new entrants from attempting to obtain another broadcast facility and would, in effect, punish the most successful new entrants into the broadcast industry.  The First Report and Order concluded that such a result would be contrary to the basic purpose of the new entrant bidding credit, which was to encourage new entities to not only enter, but to remain and succeed, in the broadcast industry.  See 13 FCC Rcd at 15998.

	84.  Pleadings.  One petitioner asserts that the Commission must limit the ability of licensees to relinquish ownership of a broadcast station during the term of an auction so as to qualify for a new entrant bidding credit, and then to reacquire without penalty that same station after the auction is concluded.  KERM, Inc. argues that, as adopted, the Commission's unjust enrichment provisions -- which allow a winning bidder who utilized a bidding credit to obtain an additional broadcast facility without being subject to unjust enrichment reimbursement requirements -- would fail to prevent such an abuse of the auction process.  Specifically, this petitioner contends that the ability of a winning bidder in a broadcast auction to acquire additional facilities without jeopardizing entitlement to a bidding credit should be limited either to facilities outside the service area of the station that has been acquired through the auction, or else to stations not previously owned by the winning bidder.

	85.  Discussion.  We deny this petition for reconsideration, as we do not believe that the specific conduct described by KERM, Inc. is sufficiently likely to occur to an extent warranting intervention by the Commission at this time.  As we have stated previously, the Commission does not, as a general matter, assume that our permittees, licensees and applicants will fail to comply with our rules.  The Commission cannot, moreover, anticipate in advance every possible way in which a small number of prospective bidders may conceive to try to manipulate our broadcast auction rules in general and any special measures, such as bidding credits, in particular.  Given our past experience with conducting auctions, we are confident that this number of bidders should be quite limited.  Accordingly, we believe it appropriate to address, on a case-by-case basis, any conduct engaged in by auction participants with the evident intention of manipulating the eligibility standards for, or frustrating the purpose of, the new entrant bidding credit.  We will be diligent in taking appropriate enforcement action against any auction participant who has been shown, through the petition to deny process or other means, to have manipulated our auction rules or otherwise abused our processes.  Although we will not attempt, at this time, to adopt specific rules or sanctions against the very particular conduct described by the petitioner, we will, after gaining experience with conducting broadcast auctions and implementing the new entrant bidding credit, consider whether the adoption of specific prohibitions or sanctions against particular types of manipulative or abusive conduct are warranted.   


	III.  PROCEDURAL MATTERS AND ORDERING CLAUSES       

	86.  The Supplemental Final Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, 5 U.S.C.  604, is contained in Appendix B.

	87.  Accordingly, IT IS ORDERED, That the above-referenced reconsideration petitions ARE GRANTED IN PART AND DENIED IN PART, and the Motion for Stay, filed October 9, 1998 by Barbara D. Marmet and Frederick Broadcasting, LLC, IS DISMISSED.

	88.  IT IS FURTHER ORDERED, That pursuant to the authority in Sections 4(i) and (j), 301, 303(f), 303(g), 303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 301, 303(f), 303(g), 303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403, this Memorandum Opinion and Order IS ADOPTED, and Part 73 and Part 74 of the Commission's Rules ARE AMENDED as set forth in the attached Appendix C.

	89.  IT IS FURTHER ORDERED, That the rule amendments set forth in Appendix C WILL BECOME EFFECTIVE 60 days after their publication in the Federal Register, and the information collection contained in these rules will become effective 60 days after publication in the Federal Register, following OMB approval, unless a notice is published in the Federal Register stating otherwise.

	90.  IT IS FURTHER ORDERED, That the Commission's Office of Public Affairs, Reference Operations Division, SHALL SEND a copy of this Memorandum Opinion and Order, including the Supplemental Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.


						FEDERAL COMMUNICATIONS COMMISSION




						Magalie Roman Salas
						Secretary





























	APPENDIX A -- LIST OF PARTIES FILING PLEADINGS  


Bechtel & Cole, Chartered
Benns, David
Beschta, Thomas F.
Bill, Howard G.
Birach Broadcasting Corporation
Bishop, Ronald K.
Breeze Broadcasting Co., Ltd.
Carman, Ruth Payne
Community Broadcasters Association
Damsky, Heidi
Danbeth Communications, Inc.
Davis Television Duluth, LLC and Davis Television Topeka, LLC
Ferrigno, Michael R.
Grant, William B.
Heidelberg-Stone Broadcasting Company
Homewood Radio Co., LLC
Island Broadcasting Company, Inc.
Johnston, Colon
KERM, Inc.
KM Communications, Inc.
Lamprecht, J. Thomas
Latin Communications Group Television, Inc.
Lawson, James W.
Liberty Productions, LP
Marmet, Barbara D. and Frederick Broadcasting LLC
Miller, J. McCarthy and Biltmore Forest Broadcasting FM, Inc.
Monroe-Stephens Broadcasting, Inc.
Montgomery Communications, Inc.
National Translator Association
Orion Communications, Ltd.
Powell, Michael J.
Rio Grande Broadcasting Company
Riverbank Restaurants, Inc. 
Runnels, Dewey Matthew
Sisk, Olvie E.
Snyder Hill Broadcasting, Inc. 












	APPENDIX B

	SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS

	As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.  603, a Final Regulatory Flexibility Analysis (FRFA) was incorporated in Appendix B of the First Report and Order in this proceeding.  The Commission's Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) in this Memorandum Opinion and Order reflects revised or additional information to that contained in the FRFA.  This Supplemental FRFA is thus limited to matters raised in response to the First Report and Order that are granted on reconsideration in the Memorandum Opinion and Order.  This Supplemental FRFA conforms to the RFA, as amended by the Contract with America Advancement Act of 1996.

A.  Need For and Objectives of Action:  The actions taken in this Memorandum Opinion and Order are in response to petitions for reconsideration or clarification of the rules and policies adopted in the First Report and Order to implement provisions of the Balanced Budget Act of 1997 expanding the Commission's competitive bidding authority to include the broadcast services and the Instructional Television Fixed Service (ITFS).  The petitions are denied, with the following exceptions.  The rule changes adopted in the Memorandum Opinion and Order grant in part the petitions objecting to the decision in the First Report and Order to apply the general auction anti-collusion rule to broadcast service auctions.  In response to petitions challenging various aspects of the "new entrant" bidding credit adopted in the First Report and Order for utilization in broadcast service auctions, we refine the standards for applicants to qualify for this bidding credit so as to better promote our goal of disseminating broadcast licenses among a wide variety of applicants.  We also amend our rules with regard to the filing of petitions to deny against the long-form applications filed by winning bidders in the secondary broadcast services and in ITFS so as to allow a longer time period for the filing of such petitions.  Finally, on our own motion, we amend our rules to clarify that certain ownership disclosure requirements set forth in the general Part 1 auction rules will not apply to applicants seeking consent to assign or transfer control of broadcast construction permits or licenses, as broadcast licensees and permittees are already subject to significant ownership disclosure requirements pursuant to existing broadcast rules and policies.  

B.  Significant Issues Raised by Public in Response to Final Regulatory Flexibility Analysis:   
No petitions or comments were received in response to the FRFA.  Small business-related issues were, however, raised indirectly by some petitioners.  For example, a few petitioners contended that application of the anti-collusion rule, which by its terms precludes settlement or other resolution of mutual exclusivities after the filing of short-form applications, would adversely and disproportionately impact low power television (LPTV) and television and FM translator applicants (many of whom are small businesses).  Other petitioners challenged various aspects, including eligibility standards, of the new entrant bidding credit benefitting winning bidders in broadcast auctions who have no, or very few, other media interests (and who would likely be small businesses).  One petitioner argued that the filing period for petitions to deny against translator (television and FM) long-form applications should not be shortened, as provided in the First Report and Order and as authorized by the 1997 Balanced Budget Act. 
 
C.  Description and Estimate of the Number of Small Entities Involved:

1.  Definition of a "Small Business"

	Under the RFA, small entities may include small organizations, small businesses, and small governmental jurisdictions.  5 U.S.C.  601(6).  The RFA, 5 U.S.C.  601(3), generally defines the term "small business" as having the same meaning as the term "small business concern" under the Small Business Act, 15 U.S.C.  632.  A small business is one which:  (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).  Pursuant to 5 U.S.C.  601(3), the statutory definition of a small business applies "unless an agency after consultation with the Office of Advocacy of the SBA and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register."

	In the FRFA, we utilized the definition of "small business" promulgated by the SBA, even though, as discussed in detail in the FRFA, we tentatively believed that the SBA's definition of "small business" overstated the number of radio and television broadcast stations that were small businesses and was not particularly suitable for our purposes.  No petitions or comments were received concerning the Commission's use of the SBA's small business definition for the purposes of the FRFA, and we will therefore continue to employ such definition for this Supplemental FRFA.  

2.  Issues in Applying the Definition of a "Small Business"

	As discussed below, we could not precisely apply the foregoing definition of "small business" in developing our estimates of the number of small entities affected by the revised application and selection procedures adopted in the First Report and Order for the broadcast services and for ITFS.  Our estimates reflect our best judgments based on the data available to us.

	An element of the definition of "small business" is that the entity not be dominant in its field of operation.  We are unable at this time to define or quantify the criteria that would establish whether a specific radio or television station is dominant in its field of operation.  Accordingly, the following estimates of the number of broadcasting stations that constitute small businesses do not exclude any radio or television station from the definition of small business on this basis and are therefore overinclusive to that extent.  An additional element of the definition of "small business" is that the entity must be independently owned and operated.  As discussed further below, we could not fully apply this criterion, and our estimates of small businesses to which the amended application and selection procedures may apply may be overinclusive to this extent.  The SBA's general size standards are developed taking into account these two statutory criteria.  This does not preclude us from taking these factors into account in making our estimates of the numbers of small entities.

	With respect to applying the revenue cap, the SBA has defined "annual receipts" specifically in 13 C.F.R.  121.104, and its calculations include an averaging process.  We do not currently require submission of financial data from licensees that we could use in applying the SBA's definition of a small business.  Thus, for purposes of estimating the number of small entities to which the rules apply, we are limited to considering the revenue data that are publicly available, and the revenue data on which we rely may not correspond completely with the SBA definition of annual receipts.

	Under SBA criteria for determining annual receipts, if a concern has acquired an affiliate or been acquired as an affiliate during the applicable averaging period for determining annual receipts, the annual receipts in determining size status include the receipts of both firms.  13 C.F.R.  121.104(d)(1).  The SBA defines affiliation in 13 C.F.R.  121.103.  In this context, the SBA's definition of affiliate is analogous to our attribution rules.  Generally, under the SBA's definition, concerns are affiliates of each other when one concern controls or has the power to control the other, or a third party or parties controls or has the power to control both.  13 C.F.R.  121.103(a)(1).  The SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists.  13 C.F.R.  121.103(a)(2).  Instead of making an independent determination of whether television stations were affiliates based on SBA's definitions, we relied on the databases available to us to provide us with that information.

3.  Estimates Based on Census Data

	The rules and policies adopted in the First Report and Order will apply to the various broadcast and secondary broadcast services and to ITFS.

	Television Broadcasting Stations.  The SBA defines a television broadcasting station that has no more than $10.5 million in annual receipts as a small business.  Television broadcasting stations consist of establishments primarily engaged in broadcasting visual programs by television to the public, except cable and other pay television services.  Included in this industry are commercial, religious, educational, and other television stations.  Also included are establishments primarily engaged in television broadcasting and which produce taped television program materials.  Separate establishments primarily engaged in producing taped television program materials are classified under another SIC number.  

	There were 1,509 television stations operating in the nation in 1992.  That number has remained fairly steady as indicated by the approximately 1,590 operating television broadcasting stations in the nation as of January 1999.  For 1992, the number of television stations that produced less than $10.0 million in revenue was 1,155 establishments. Thus, of the 1,590 television stations approximately 77%, or 1,224, of those stations are considered small businesses.  As of January 1999, 2136 low power television stations and 4921 television translator stations were also licensed, and we believe the vast majority of these stations are small businesses.  These estimates may overstate the number of small entities since the revenue figures on which they are based do not include or aggregate revenues from non-television affiliated companies.

	Radio Broadcasting Stations.  The SBA defines a radio broadcasting station that has no more than $5 million in annual receipts as a small business.  A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public.  Included in this industry are commercial, religious, educational and other radio stations.  Radio broadcasting stations that primarily are engaged in radio broadcasting and that produce radio program materials are similarly included.  However, radio stations that are separate establishments and are primarily engaged in producing radio program material are classified under another SIC number.  The 1992 census indicates that 96% (5,861 of 6,127) of radio station establishments produced less than $5 million in revenue in 1992.  Official Commission records indicate that 11,334 individual radio stations were operating in 1992.  As of January 1999, official Commission records indicate that 12,496 radio stations were operating.  We conclude that a similarly high percentage (96%) of current radio broadcasting licensees are small entities.  As of January 1999, there were also 3171 FM translator/booster stations licensed, and we believe the vast majority of these stations are small businesses.  These estimates may overstate the number of small entities since the revenue figures on which they are based do not include or aggregate revenues from non-radio affiliated companies.

	ITFS.  In addition, there are presently 2032 ITFS licensees.  All but 100 of these licenses are held by educational institutions.  Educational institutions may be included in the definition of a small entity.  ITFS is a non-pay, non-commercial educational microwave service that, depending on SBA categorization, has, as small entities, entities generating either $10.5 million or less, or $11.0 million or less, in annual receipts.  However, we do not collect, nor are we aware of other collections of, annual revenue data for ITFS licensees.  Thus, we conclude that up to 1932 of these licensees are small entities.

	Pending and Future Applicants Affected by Rulemaking.  The auction selection procedures set forth in the First Report and Order will affect:  (1) any entity with a pending application for a construction permit for a new full service commercial radio or analog television broadcast station, if mutually exclusive applications have been filed; (2) any entity that files an application in the future for a new full service commercial radio or analog television station, if mutually exclusive applications are filed; (3) any entity with a pending application on file, or filing an application in the future, for a new low power television station, or a television or FM translator station, if mutually exclusive applications have been or are filed; (4) any entity that has a pending or future application to make a make a major change in an existing facility in any commercial broadcast or secondary broadcast service, if mutually exclusive applications have been or are filed; and (5) any entity that has filed or files in the future an application for a license for an ITFS station, if mutually exclusive applications have been filed or are filed.

	We estimate that there are currently pending before the Commission the following mutually exclusive applications:

	  approximately 620 mutually exclusive applications for full power commercial radio
	stations, and approximately 165 competing applications for full power
	commercial analog television stations;

	  approximately 275 mutually exclusive applications for low power television stations 
	and television translator stations, and approximately 20 competing applications for
	FM translator stations; and

	  approximately 200 or more mutually exclusive applications for ITFS stations.

	Although applicants for broadcast construction permits have been required to demonstrate sufficient financing to construct and initially operate the proposed broadcast station, we do not require the filing of financial information specifically concerning the entity seeking a construction permit, such as the entity's annual revenues.  Thus, we have no data on file as to whether entities with pending permit applications, which are subject to the new competitive bidding selection procedures adopted for the broadcast services, meet the SBA's definition of a small business concern.  However, we conclude that, given the smaller size of the markets at issue in the pending applications, most of the entities with pending applications for a permit to construct a new primary or secondary broadcast station are small entities, as defined by the SBA rules.

	In addition to the pending applicants that may be affected by the auction procedures adopted for the broadcast services, any entity that applies for a construction permit for a new broadcast station in the future will be subject to these competitive bidding selection procedures if mutually exclusive applications are filed.  It is not possible, at this time, to estimate the number of markets for which mutually exclusive applications will be received, nor the number of entities that in the future may seek a construction permit for a new broadcast station.  Given the fact that fewer new stations (particularly fewer analog television stations) will be licensed in the future and that these stations generally will be located in smaller, more rural areas, we conclude that most of the entities applying for these stations will be small entities, as defined by the SBA rules.     

D.  Description of Projected Reporting, Recordkeeping and Other Compliance Requirements:  
The First Report and Order adopted a number of rules that included reporting, recordkeeping and compliance requirements.  These requirements were described in detail in the FRFA, and generally remain unchanged by the rule amendments adopted in this Memorandum Opinion and Order.  The rules adopted in this Memorandum Opinion and Order do amend the applicability of the general auction anti-collusion rule (see 47 C.F.R.  1.2105(c)) so that mutually exclusive applicants in the secondary broadcast services may discuss settlement or other means of resolving their mutual exclusivities following the short-form application filing deadline.  The Memorandum Opinion and Order also amends our rules to clarify that certain ownership disclosure requirements set forth in Section 1.2112(a) of the general Part 1 auction rules will not apply to applicants seeking consent to assign or transfer control of broadcast construction permits or licenses. 

E.  Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered:  The FRFA described in considerable detail the steps taken in the First Report and Order to minimize significant economic impact on small entities and the alternatives considered.  The rule amendments adopted in this Memorandum Opinion and Order should also serve to minimize the adverse impact of our broadcast auction rules on small entities.  First, the Memorandum Opinion and Order amends the applicability of the general auction anti-collusion rule so that competing LPTV, television and FM translator, and ITFS applicants will have an opportunity to settle or otherwise resolve their mutual exclusivities following the short-form application filing deadline (and thereby avoid the need to go to auction).  However, due to the importance of the anti-collusion rule in preventing collusive conduct and enhancing the competitiveness of the auction process and the post-auction market structure, we decline to extend this exception to the anti-collusion rule to competing applicants for full service AM, FM and television broadcast construction permits.  

As urged by several petitioners, the Memorandum Opinion and Order refines in various ways the eligibility standards for the new entrant bidding credit, which provides a tiered credit for broadcast auction winning bidders with no, or very few, other mass media interests.  To guard against manipulation of the eligibility standards for the new entrant credit, the Memorandum Opinion and Order amends these eligibility standards to be consistent with the Commission's well-established broadcast attribution standards. To aid specifically those prospective bidders whose only existing media interests are in the secondary broadcast services (and who are very likely small businesses), the Memorandum Opinion and Order determines that interests held by a winning bidder in existing LPTV and television and FM translator stations should not be counted among the bidder's other media interests in determining its eligibility for a bidding credit.  And to better limit eligibility for the bidding credit to true "new entrants," the Memorandum Opinion and Order additionally refines the standards for determining whether a winning bidder's proposed broadcast station and the bidder's existing mass media facilities (if any) serve the "same area," thereby rendering the bidder ineligible for a bidding credit.  We decline, however, as one petitioner urged, to increase the size of the bidding credit, either generally or specifically for applicants in the petitioner's position (i.e., for FM applicants who successfully petitioned for the allotment of the FM channel being auctioned).  The First Report and Order expressly determined not to adopt a bidding credit or other special measure for applicants who successfully petitioned for the allotment when a newly-allotted FM channel is auctioned, and we see no reason to alter this decision.  The 35% and 25% levels of the new entrant bidding credit are also consistent with the schedule of bidding credits set forth in the general auction designated entity rules.  We moreover intend, as stated in the First Report and Order, to release a further report and order considering designated entity issues in the broadcast services, following the completion of certain pending evidentiary studies.  If, at that time, revisions in our new entrant bidding credit, such as increasing the size of the credit, appear necessary to further the underlying objectives of the bidding credit, the Commission will then have the opportunity to consider such revisions.  

The Memorandum Opinion and Order also lengthens from 10 to 15 days the period for the filing of petitions to deny against the long-form applications filed by winning bidders in the secondary broadcast services and in ITFS.  One petitioner supported this change, arguing that translator (television and FM) applicants and licensees in particular needed this additional time to file petitions to deny.

Finally, on our own motion, the Memorandum Opinion and Order reduces the burden on all broadcast applicants (including small businesses) seeking consent to assign or transfer control of broadcast construction permits or licenses by clarifying that the ownership disclosure requirements set forth in Section 1.2112(a) of the general auction rules are not applicable to such transactions.  We believe that requiring submission of this ownership information is repetitive and unnecessary, given the significant ownership disclosure requirements imposed by existing broadcast rules and policies.    
  
F.  Report to Congress:  The Commission will send a copy of the Memorandum Opinion and Order, including this Supplemental FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996.  See 5 U.S.C.  801(a)(1)(A).  In addition, the Commission will send a copy of the Memorandum Opinion and Order, including the Supplemental FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.  A copy of the Memorandum Opinion and Order and Supplemental FRFA (or summaries thereof) will also be published in the Federal Register.  See 5 U.S.C.  604(b). 












	APPENDIX C 

Parts 73 and 74 of Title 47 of the Code of Federal Regulations are amended as follows:

PART 73 - RADIO BROADCAST SERVICES

1.  The authority citation for part 73 continues to read as follows:

	Authority:  47 U.S.C. 154, 303, 334, and 336.

2.  Section 73.5002 is amended by revising paragraphs (c) and (d) to read as follows:            

 73.5002 Bidding application and certification procedures; prohibition of collusion.

	* * * * *
(c) Applicants in all broadcast service or ITFS auctions will be subject to the provisions of 47 CFR 1.2105(b) regarding the modification and dismissal of their short-form applications.  Notwithstanding the general applicability of Section 1.2105(b) to broadcast and ITFS auctions, the following applicants will be permitted to resolve their mutual exclusivities by making amendments to their engineering submissions following the filing of their short-form applications:
	(1) applicants for all broadcast services and ITFS who file major modification applications that are mutually exclusive with each other;
	(2) applicants for all broadcast services and ITFS who file major modification and new station applications that are mutually exclusive with each other; or
 	(3) applicants for the secondary broadcast services and ITFS who file applications for new stations that are mutually exclusive with each other.		

(d)  The prohibition of collusion set forth in 47 CFR 1.2105(c), which becomes effective upon the filing of short-form applications, shall apply to all broadcast service or ITFS auctions.  Notwithstanding the general applicability of Section 1.2105(c) to broadcast and ITFS auctions, the following applicants will be permitted to resolve their mutual exclusivities by means of engineering solutions or settlements during a limited period after the filing of short-form applications, as further specified by Commission public notices:
	(1) applicants for all broadcast services and ITFS who file major modification applications that are mutually exclusive with each other;
	(2) applicants for all broadcast services and ITFS who file major modification and new station applications that are mutually exclusive with each other; or 
	(3) applicants for the secondary broadcast services and ITFS who file applications for new stations that are mutually exclusive with each other.  

3.  Section 73.5006 is amended by revising paragraphs (b) and (c) to read as follows:

 73.5006 Filing of petitions to deny against long-form applications.

	* * * * *
(b) Within ten (10) days following the issuance of a public notice announcing that a long-form application for an AM, FM or television construction permit has been accepted for filing, petitions to deny that application may be filed.  Within fifteen (15) days following the issuance of a public notice announcing that a long-form application for a low power television, television translator or FM translator construction permit or ITFS license has been accepted for filing, petitions to deny that application may be filed.  Any such petitions must contain allegations of fact supported by affidavit of a person or persons with personal knowledge thereof.

(c) An applicant may file an opposition to any petition to deny, and the petitioner a reply to such opposition.  Allegations of fact or denials thereof must be supported by affidavit of a person or persons with personal knowledge thereof.  In the AM, FM and television broadcast services, the time for filing such oppositions shall be five (5) days from the filing date for petitions to deny, and the time for filing replies shall be five (5) days from the filing date for oppositions.  In the low power television, television translator and FM translator broadcast services and in ITFS, the time for filing such oppositions shall be fifteen (15) days from the filing date for petitions to deny, and the time for filing replies shall be ten (10) days from the filing date for oppositions.

	* * * * *

4.  Section 73.5007 is revised to read as follows:

 73.5007 Designated entity provisions.

New entrant bidding credit.  A winning bidder that qualifies as a "new entrant" may use a bidding credit to lower the cost of its winning bid on any broadcast construction permit.  Any winning bidder claiming new entrant status must have de facto, as well as de jure, control of the entity utilizing the bidding credit.

(a) A thirty-five (35) percent bidding credit will be given to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, have no attributable interest in any other media of mass communications, as defined in 47 CFR 73.5008.  A twenty-five (25) percent bidding credit will be given to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, have an attributable interest in no more than three mass media facilities.  No bidding credit will be given if any of the commonly owned mass media facilities serve the same area as the proposed broadcast or secondary broadcast station, or if the winning bidder, and/or any individual or entity with an attributable interest in the winning bidder, have attributable interests in more than three mass media facilities.  Attributable interests held by a winning bidder in existing low power television, television translator or FM translator facilities will not be counted among the bidder's other mass media interests in determining eligibility for a bidding credit.

(b) The new entrant bidding credit is not available to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, have an attributable interest in any existing media of mass communications in the same area as the proposed broadcast or secondary broadcast facility.
	(1) Any existing media of mass communications will be considered in the "same area" as a proposed broadcast or secondary broadcast facility if the relevant defined service areas of the existing mass media facilities partially overlap, or are partially overlapped by, the proposed broadcast or secondary broadcast facility's relevant contour.
	(2) For purposes of determining whether any existing media of mass communications is in the "same area" as a proposed broadcast or secondary broadcast facility, the relevant defined service areas of the existing mass media facilities shall be as follows:  
		(i) AM broadcast station--principal community contour (see 47 CFR 73.3555(a)(4)(i));
		(ii) FM broadcast station--principal community contour (see 47 CFR 73.3555(a)(4)(i));
		(iii) Television broadcast station--television duopoly contour (see 47 CFR 73.3555(b));
		(iv) Cable television system--the franchised community of a cable system;
		(v) Daily newspaper--community of publication; and
		(vi) Multipoint Distribution Service station--protected service area (see 47 CFR 21.902(d) or 21.933).
	(3) For purposes of determining whether a proposed broadcast or secondary broadcast facility is in the "same area" as an existing mass media facility, the relevant contours of the proposed broadcast or secondary broadcast facility shall be as follows:
		(i) AM broadcast station--principal community contour (see 47 CFR 73.3555(a)(4)(i));
		(ii) FM broadcast station--principal community contour (see 47 CFR 73.3555(a)(4)(i));
		(iii) FM translator station--predicted, protected contour (see 47 CFR 74.1204(a));
		(iv) Television broadcast station--television duopoly contour (see 47 CFR 73.3555(b)); and
		(v) Low power television or television translator station--predicted, protected contour (see 47 CFR 74.707(a)).

(c) Unjust enrichment.  If a licensee or permittee that utilizes a new entrant bidding credit under this subsection seeks to assign or transfer control of its license or construction permit to an entity not meeting the eligibility criteria for the bidding credit, the licensee or permittee must reimburse the U.S. Government for the amount of the bidding credit, plus interest based on the rate for ten-year U.S. Treasury obligations applicable on the date the construction permit was originally granted, as a condition of Commission approval of the assignment or transfer.  If a licensee or permittee that utilizes a new entrant bidding credit seeks to assign or transfer control of a license or construction permit to an entity that is eligible for a lower bidding credit, the difference between the bidding credit obtained by the assigning party and the bidding credit for which the acquiring party would qualify, plus interest based on the rate for ten-year U.S. Treasury obligations applicable on the date the construction permit was originally granted, must be paid to the U.S. Government as a condition of Commission approval of the assignment or transfer.  The amount of the reimbursement payments will be reduced over time.  An assignment or transfer in the first two years after issuance of the construction permit to the winning bidder will result in a forfeiture of one hundred (100) percent of the value of the bidding credit; during year three, of seventy-five (75) percent of the value of the bidding credit; in year four, of fifty (50) percent; in year five, twenty-five (25) percent; and thereafter, no payment.  If a licensee or permittee who utilized a new entrant bidding credit in obtaining a broadcast license or construction permit acquires within this five-year reimbursement period an additional broadcast facility or facilities, such that the licensee or permittee would not have been eligible for the new entrant credit, the licensee or permittee will generally not be required to reimburse the U.S. Government for the amount of the bidding credit.  

5.  Section 73.5008 is amended by revising paragraphs (b) and (c) to read as follows:

 73.5008 Definitions applicable for designated entity provisions.  

	* * * * * 
(b) A medium of mass communications means a daily newspaper; a cable television system; or a license or construction permit for a television broadcast station, an AM or FM broadcast station, a direct broadcast satellite transponder, or a Multipoint Distribution Service station.  

(c) An attributable interest in a winning bidder or in a medium of mass communications shall be determined in accordance with 47 CFR 73.3555 and Note 2 of that section.   

6.  Section 73.5009 is revised to read as follows:

 73.5009 Assignment or transfer of control.

The reporting requirement contained in 47 CFR 1.2111(a) shall apply to an applicant seeking approval for a transfer of control or assignment of a broadcast construction permit or license within three years of receiving such permit or license by means of competitive bidding.

PART 74 - EXPERIMENTAL RADIO, AUXILIARY, SPECIAL BROADCAST AND OTHER PROGRAM DISTRIBUTIONAL SERVICES

7.  The authority citation for part 74 continues to read as follows:

	Authority:  47 U.S.C. 154, 303, 307, and 554.

8.  Section 74.912 is revised to read as follows:

 74.912 Petitions to deny.

(a) Petitions to deny against the long-form applications filed by winning bidders in ITFS auctions must be filed in accordance with 47 CFR 73.5006.  Petitions to deny against applications for transfers of control of ITFS licensees, or for assignments of ITFS station licenses, must be filed not later than 30 days after issuance of a public notice of the acceptance for filing of the transfer or assignment application.  In the case of applications for renewal of license, petitions to deny may be filed after the issuance of a public notice of acceptance for filing of the applications and up until the first day of the last full calendar month of the expiring license term.  Any party in interest may file a petition to deny any notification regarding a low power ITFS signal booster station, within the 60 day period provided for in 47 CFR 74.985(e).

(b) The applicant or notifier may file an opposition to any petition to deny, and the petitioner a reply to such opposition in which allegations of fact or denials thereof shall be supported by affidavit of a person or persons with personal knowledge thereof.  Except with regard to petitions to deny against the long-form applications of ITFS auction winners, the times for filing such oppositions and replies shall be those provided in  1.45 of this chapter.     

  






















	STATEMENT OF CHAIRMAN WILLIAM E. KENNARD 


	I earlier recused myself from participating in an adjudicatory licensing proceeding involving the license for a new FM station in Biltmore Forest, North Carolina.  However, I declined a request to recuse myself from participating in the general rulemaking proceeding that developed the auction rules that are the subject of the petitions for reconsideration addressed in this order.  Out of an abundance of caution, and although no party has made a further recusal request, I recuse myself from participating in paragraphs 23-26 of this Memorandum Opinion and Order.  These paragraphs address a discrete issue raised in a petition for reconsideration filed by one of the applicants for the Biltmore Forest license that relates solely and specifically to the Biltmore Forest proceeding.