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 Federal  Communications  Commission  FCC  03-  56
 Before  the  Federal  Communications  Commission
 Washington,  D.  C.  20554
 In  the  Matter  of
 Amendment  of  Parts  1,  21,  73,  74  and  101  of  the  Commissions  Rules  to  Facilitate  the  Provision  of
 Fixed  and  Mobile  Broadband  Access,  Educational  and  Other  Advanced  Services  in  the  2150-  2162
 and  2500-  2690  MHz  Bands
 Part  1  of  the  Commission's  Rules  -  Further  Competitive  Bidding  Procedures
 Amendment  of  Parts  21  and  74  to  Enable  Multipoint  Distribution  Service  and  the
 Instructional  Television  Fixed  Service  Amendment  of  Parts  21  and  74  to  Engage  in  Fixed
 Two-  Way  Transmissions
 Amendment  of  Parts  21  and  74  of  the  Commission's  Rules  With  Regard  to
 Licensing  in  the  Multipoint  Distribution  Service  and  in  the
 Instructional  Television  Fixed  Service  for  the  Gulf  of  Mexico
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 WT  Docket  No.  03-  66  RM-  10586
 WT  Docket  No.  03-  67
 MM  Docket  No.  97-  217
 WT  Docket  No.  02-  68  RM-  9718
 NOTICE  OF  PROPOSED  RULE  MAKING  AND  MEMORANDUM  OPINION  AND  ORDER
 Adopted:  March  13,  2003  Released:  April  2,  2003
 Comment  Date:  90  days  after  publication  in  the  Federal  Register  Reply  Comment  Date:  135  days  after  publication  in  the  Federal  Register
 By  the  Commission:  Chairman  Powell,  Commissioners  Abernathy  and  Copps  issuing  separate  statements.
 TABLE  OF  CONTENTS
 Heading  Paragraph  #
 I.  INTRODUCTION  AND  EXECUTIVE  SUMMARY  ...........................................................................  1  II.  BACKGROUND....................................................................................................................................  6
 A.  Establishment  and  Evolution  of  the  Services...................................................................................  6  B.  Spectrum  Allocation  and  Current  Band  Plan  for  the  Services.......................................................  18
 C.  Application  Processing  Freezes  and  Filing  Windows....................................................................  21  D.  Current  Uses  of  the  Band...............................................................................................................  23
 E.  The  Coalition  Proposal  ..................................................................................................................  30
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 III.  DISCUSSION  ......................................................................................................................................  32  A.  Broadband  Policy  Goals  and  Objectives........................................................................................  32
 B.  Spectrum  Policy  Goals  and  Objectives..........................................................................................  36  C.  Problems  with  the  Existing  MDS/  ITFS  Rules  ...............................................................................  44
 D.  Changes  to  2500-  2690  MHz  Band  Plan.........................................................................................  47  1.  Background  .............................................................................................................................  47
 2.  Band  Plan  Alternatives............................................................................................................  49  3.  Response  Channels..................................................................................................................  58
 4.  Utilization  of  Unassigned  ITFS  Spectrum  ..............................................................................  60  a.  Geographic  Area  Licensing  of  Unassigned  ITFS  Spectrum.............................................  62
 (i)  Geographic  Areas  for  Licenses  ..................................................................................  66  (ii)  Bandwidth  for  Licenses..............................................................................................  77
 (iii)  International  Border  Issues.........................................................................................  78  b.  Unlicensed  Use  of  Unassigned  ITFS  Spectrum................................................................  79
 5.  Geographic  Area  Licensing  for  Current  Licensees  .................................................................  83  a.  Geographic  Area  Licensing  for  MDS  BTA  Authorization  Holders  .................................  83
 b.  Geographic  Area  Licenses  for  Site-  Licensed  Incumbents  ................................................  85  c.  Gulf  of  Mexico  Proceeding...............................................................................................  89
 6.  Transition  to  New  Band  Plan  ..................................................................................................  98  7.  ITFS  Eligibility  Restrictions  .................................................................................................  107
 8.  Other  Eligibility  Restrictions.................................................................................................  119  E.  Technical  Issues  ...........................................................................................................................  130
 1.  Signal  Strength  Limits  at  Geographic  Service  Area  Boundaries...........................................  131  2.  Authorization  of  Mobile  Operation.......................................................................................  132
 3.  Power  and  Antenna  Height  Limits  ........................................................................................  133  4.  Emission  Limits.....................................................................................................................  140
 5.  Technology............................................................................................................................  142  6.  Unlicensed  Underlay  Operation.........................................................................................  143
 7.  RF  Safety...............................................................................................................................  149  8.  North  American  Datum  (NAD)  83  Coordinate  Data.............................................................  150
 9.  MDS  Response  Station  Hubs  ................................................................................................  151  10.  2150-  2162  MHz  band............................................................................................................  152
 11.  Radiation  from  Stations  that  are  Not  Engaged  in  Communications......................................  154  F.  Standardization  of  Practices  and  Procedures  ...............................................................................  159
 1.  Consolidation  of  Procedural  Rules  in  Part  1  .........................................................................  159  2.  Consolidation  of  Service  Specific  Rules  in  Part  101.............................................................  160
 3.  Standardization  of  Major  and  Minor  Filing  Requirements  ...................................................  161  4.  Amendments  to  New  and  Modification  Applications  ...........................................................  164
 5.  Assignments  of  Authorization  and  Transfers  of  Control.......................................................  165  6.  Partitioning  and  Disaggregation............................................................................................  171
 7.  License  Renewal....................................................................................................................  173  8.  Special  Temporary  Authority  ................................................................................................  178
 9.  Ownership  Information  .........................................................................................................  181  10.  Regulatory  Status  ..................................................................................................................  182
 11.  Fee  Issues  ..............................................................................................................................  183  12.  Discontinuance,  Reduction  or  Impairment  of  Service...........................................................  186
 13.  Foreign  Ownership  Restrictions............................................................................................  189  14.  Performance  Requirements  ...................................................................................................  190
 15.  Annual  Reports......................................................................................................................  203  G.  Application  Processing  ................................................................................................................  204
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 1.  Returns  and  Dismissals  of  Incomplete  or  Defective  Applications  ........................................  212  2.  ULS  Forms  ............................................................................................................................  215
 3.  Transition  Periods..................................................................................................................  220  4.  Suspension  of  Acceptance  and  Processing  of  Applications  ..................................................  226
 H.  Competitive  Bidding  Procedures  .................................................................................................  230  I.  An  Auction  of  Currently  Unassigned  ITFS  Spectrum  .................................................................  233
 J.  Two-  Sided  Auctions  to  Restructure  Spectrum.............................................................................  241  1.  A  Two-  Sided  Auction  to  Restructure  the  ITFS  Spectrum.....................................................  244
 2.  A  Two-  Sided  Auction  to  Restructure  the  MDS  and  ITFS  Spectrum  ....................................  246  IV.  PROCEDURAL  MATTERS..............................................................................................................  247
 A.  Ex  Parte  Rules    Permit-  But-  Disclose.........................................................................................  247  B.  Comment  Period  and  Procedures.................................................................................................  248
 C.  Initial  Regulatory  Flexibility  Analysis.........................................................................................  253  D.  Initial  Paperwork  Reduction  Analysis  .........................................................................................  254
 E.  Further  Information......................................................................................................................  256  V.  ORDERING  CLAUSES.....................................................................................................................  257
 APPENDIX  A  -  INITIAL  REGULATORY  FLEXIBILITY  ANALYSIS  APPENDIX  B  -PROPOSED  RULES
 APPENDIX  C  -  THE  COALITION  PLAN  APPENDIX  D  -  LIST  OF  PLEADINGS
 I.  INTRODUCTION  AND  EXECUTIVE  SUMMARY
 1.  By  this  Notice  of  Proposed  Rulemaking  and  Memorandum  Opinion  and  Order  (NPRM  &  MO&  O),  we  initiate  a  comprehensive  examination  of  our  rules  and  policies  governing  the  licensing  of  the
 Instructional  Television  Fixed  Service  (ITFS),  the  Multipoint  Distribution  Service  (MDS),  and  the  Multichannel  Multipoint  Distribution  Service  (MMDS)  (collectively,  the  Services)  in  the  2500-  2690  MHz
 band.  1  By  this  action,  the  Commission  seeks  to  promote  competition,  innovation  and  investment  in  wireless  broadband  services,  and  to  promote  educational  services.  Additionally,  the  Commission  also
 seeks  to  foster  the  development  of  innovative  service  offerings  to  consumers  as  well  as  educational,  medical  and  other  institutions,  simplify  the  licensing  process  and  delete  obsolete  and  unnecessary
 regulatory  burdens.  We  believe  that  it  is  appropriate  and  prudent  to  take  this  action  at  this  time  because  the  Services  and  the  potential  uses  for  the  spectrum  allotted  to  them  have  evolved  significantly  since  the
 inception  of  the  Services.  Those  uses  present  a  significant  opportunity  to  provide  alternatives  for  the  provision  of  broadband  services  to  consumers  in  urban,  suburban  and  rural  areas  and  to  improve
 opportunities  for  distance  learning  and  telemedicine  services.  In  addition,  this  proceeding  has  been  prompted,  in  part,  by  the  request  of  a  group  of  representatives  of  licensees  in  the  Services  namely,  the
 Wireless  Communications  Association  International  (WCA),  the  National  ITFS  Association  (NIA)  and  the  Catholic  Television  Network  (CTN)  (collectively,  the  Coalition)  that  we  substantially  change  the
 1  The  terms  MDS  and  MMDS  are  often  used  interchangeably.  The  Commission  coined  the  term  MDS
 at  a  time  when  it  was  making  only  two  channels  available  for  the  service,  at  2150-  2162  MHz.  We  began  using  the  term  MMDS  when  formulating  rules  making  additional  channels  for  the  service  available  in  the  2500-  2690
 MHz  band.  For  the  purposes  of  this  NPRM,  we  will  use  the  term  MDS  to  signify  both  services.  For  the  reasons  discussed  in  paras.  152-  153,  below,  we  do  not  propose  new  rules  affecting  MDS  channels  in  the  2150-  2162  MHz
 band  in  this  notice,  but  we  intend  to  address  requirements  affecting  the  licensees  that  are  presently  assigned  to  those  channels  in  a  further  notice  of  proposed  rulemaking  in  this  proceeding.
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 private  schools,  colleges  and  universities  for  the  formal  education  of  students.  8  It  also  permitted  ITFS  licensees  to  use  the  channels  for  incidental  purposes.  These  incidental  purposes  included  the  transmission
 of  cultural  and  entertainment  material  to  those  receiving  locations;  the  transmission  of  special  training  material  to  selected  receiving  locations  outside  the  school  system  such  as  hospitals,  nursing  homes,
 training  centers,  clinics,  rehabilitation  centers,  commercial  and  industrial  establishments;  the  transmission  of  special  material  to  professional  groups  or  individuals  to  inform  them  of  new  developments  and
 techniques  in  their  fields  and  instruct  them  in  their  use;  and  to  perform  other  related  services  directly  concerned  with  formal  or  informal  instruction  and  training.  9  In  addition,  when  the  ITFS  facilities  were
 not  being  used  for  such  incidental  purposes,  the  licensee  could  use  them  for  administrative  traffic  (e.  g.,  transmission  of  reports,  assignments  and  conferences  with  personnel);  10  however,  individual  stations,  or
 complete  systems  could  not  be  licensed  solely  for  handling  administrative  traffic.  11
 8.  In  an  effort  to  promote  the  development  of  ITFS  during  its  infancy,  the  Commission  in  1963  restricted  the  authorization  of  new  OFS  stations  for  three  years  except  for  modifications  or  expansions  of
 existing  stations,  or  for  the  use  of  the  band  by  OFS  eligible  entities  for  television  transmission  in  accord  with  ITFS  technical  standards.  12  The  Commission  placed  this  restriction  on  new  OFS  stations  because  it
 intended  to  observe  the  amount  of  use  of  these  channels  by  educators  and  determine  what  course  of  action  to  take  to  encourage  the  fullest  development  of  the  2500-  2690  MHz  band  at  the  end  of  the  three-  year
 period.  13  Based  in  part  on  those  observations,  in  1971  the  Commission  designated  twenty-  eight  6-  megahertz  channels  in  this  band  and  the  associated  response  (R)  channels  14  exclusively  for  ITFS  use.  15
 9.  In  1974,  the  Commission  established  MDS  as  a  new  common  carrier  service  and  allotted  the  2150-  2160  MHz  band  for  such  use.  16  The  Commission  anticipated  that  the  MDS  spectrum  would  be  used
 8  See  1983  R&  O,  48  Reg.  Fed.  33873,  33875    9  citing  ETV  Decision,  39  FCC  846,  853    25.
 9  Id.
 10  Id.
 11  Id.
 12  See  1983  R&  O,  48  Fed.  Reg.  33873,  33875    8,  citing  ETV  Decision  39  FCC  846.
 13  Id.  This  review  of  the  use  of  the  band  was  delayed  because  educational  interests  encountered  problems  in
 preparing,  funding,  implementing  and  developing  operational  expertise  with  regard  to  ITFS.
 14  Each  of  the  six  megahertz  channels  in  the  2500-  2690  MHz  band  has  an  associated  125  kilohertz  response
 channel.  The  response  channels  are  narrowband  audio  channels  located  in  the  2686-  2689.875  MHz  segment  of  the  band  and  generally  used  with  the  associated  primary  6-  megahertz  channel  for  two-  way  communications  (e.  g.,
 talk-  back  capability  from  remote  sites  such  as  classrooms).
 15  See  Amendment  of  Parts  2  and  74  of  the  Commission's  Rules  and  Regulations  to  Establish  a  New  Class  of
 Educational  Television  Service  for  the  Transmission  of  Instructional  and  Cultural  Material  to  Multiple  Receiving  Locations  on  Channels  in  the  2500-  2690  MHz  Frequency  Band,  Amendment  of  Parts  81,  87,  89,  91,  and  93,
 Second  Report  and  Order,  Docket  No.  14744,  30  F.  C.  C.  2d  197    12  (1971)  (MDS  2  nd  R&  O).
 16  Amendment  of  Parts  1,  2,  21,  and  43  of  the  Commissions  Rules  and  Regulations  to  Provide  for  Licensing  and
 Regulation  of  Common  Carrier  Radio  Stations  in  the  Multipoint  Distribution  Service,  Report  and  Order,  Docket  No.  19493,  45  FCC  2d  616  (1974),  recon.  denied,  57  FCC  2d  301  (1975)  (1974  R&  O).  See  also  1983  R&  O,  48
 Fed.  Reg.  33873    5.  Amendment  of  Parts  2  and  74  of  the  Commissions  Rules  to  Establish  a  New  Class  of  Educational  Television  Service  for  the  Transmission  of  Instructional  and  Cultural  Material  to  Multiple  Receiving
 (continued.)
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 for  the  common  carrier  distribution  of  television  programming  from  a  central  location  to  numerous  points  selected  by  the  common  carriers'  subscribers,  sometimes  referred  to  as  wireless  cable.  17  The  Commission
 allotted  two  6  MHz  channels  (2150-  2162  MHz)  in  fifty  of  the  largest  metropolitan  areas  (referred  to  as  MDS  Channel  Nos.  1  and  2).  18  In  the  rest  of  the  country,  only  ten  megahertz  of  spectrum  is  allotted  to
 MDS  in  this  band  namely,  Channel  No.  1  (2150-  2156  MHz)  and  Channel  No.  2A  (2156-  2160  MHz).
 10.  In  1983,  in  response  to  the  demand  for  additional  spectrum  for  delivery  of  video  entertainment  programming  to  subscribers,  the  Commission  reallotted  eight  of  the  ITFS  channels  and
 associated  (R)  channels  (E  and  F  Channels)  for  MDS.  19  In  reaching  this  decision,  the  Commission  determined  that  the  ITFS  spectrum  was  underutilized  given  that  there  were  a  substantial  number  of
 unused  ITFS  channels  in  many  areas  of  the  country,  with  several  states  having  no  ITFS  licensees.  20  It  appeared  that,  while  some  growth  in  the  ITFS  service  would  occur,  this  growth  was  unlikely  to  exhaust
 all  of  the  ITFS  spectrum.  21  In  1983,  the  Commission  also  began  allowing  ITFS  licensees  to  lease  excess  capacity  on  their  facilities  to  commercial  entities.  22  Following  that  decision,  there  was  a  significant
 increase  in  the  number  of  applications  filed  for  new  ITFS  facilities.  23  In  1985,  the  Commission  amended  its  rules  to  relax  the  restrictions  governing  the  leasing  of  excess  capacity  to  commercial  providers.  24  For
 example,  the  Commission  reduced  the  educational  obligations  of  ITFS  operators  to  a  minimal  level,
 (Continued  from  previous  page)  Locations  on  Channel  in  the  2500-  2690  MHz  Frequency  Band,  Docket  No.  14744,  Second  Report  and  Order,  30
 F.  C.  C.  2d  197,    8  (1971).
 17  Id.
 18  Amendment  of  Part  21.703(  g),  and  (h)  of  the  Commissions  Rules,  Memorandum  Opinion  and  Order,  47
 F.  C.  C.  2d  957  (1970).
 19  Amendment  of  Parts  2,  21,  74  and  94  of  the  Commission's  Rules  and  Regulations  in  regard  to  frequency
 allocation  to  the  Instructional  Television  Fixed  Service,  the  Multipoint  Distribution  Service,  and  the  Private  Operational  Fixed  Microwave  Service;  Inquiry  into  the  development  of  regulatory  policy  with  regard  to  future
 service  offerings  and  expected  growth  in  the  Multipoint  Distribution  Service  and  Private  Operational  Fixed  Microwave  Service,  and  into  the  development  of  provisions  of  the  Commission's  Rules  and  Regulations  in  regard
 to  the  compatibility  of  the  operation  of  satellite  services  with  other  services  authorized  to  operate  in  the  2500-  2690  MHz  band;  Amendment  of  Part  21  of  the  Commission's  Rules  to  Permit  the  Use  of  Alternative  Procedures  in
 Choosing  Applicants  for  Radio  Authorizations  in  the  Multipoint  Distribution  Service;  Petition  for  Rulemaking  filed  by  Microband  Corporation  of  America  to  amend  Section  21.901  of  the  Commission's  Rules  and  Regulations,
 Report  and  Order,  Gen  Docket  No.  80-  112  and  CC  Docket  No.  80-  116,  94  F.  C.  C.  2d  1203  (1983)  (Allocation  R&  O).
 20  Amendment  of  Parts  2,  21,  74  and  94  of  the  Commission's  Rules  and  Regulations  in  regard  to  frequency
 allocation  to  the  Instructional  Television  Fixed  Service,  the  Multipoint  Distribution  Service,  and  the  Private  Operational  Fixed  Microwave  Service,  Report  and  Order,  94  F.  C.  C.  2d  1203    4  (1980).
 21  Id.
 22  Amendment  of  the  Commissions  Rules  With  Regard  to  the  Instructional  Television  Fixed  Service,  the
 Multipoint  Distribution  Service,  and  Applications  for  an  Experimental  Station  and  Establishment  of  Multi-Channel  Systems,  Report  and  Order,  94  F.  C.  C.  2d  1203  (1983)  (First  Leasing  Decision).
 23  See  paras.  113-  118  for  further  discussion  of  leasing  practices  and  issues.
 24  Amendment  of  Part  74  of  the  Commissions  Rules  and  Regulations  in  Regard  to  the  Instructional  Television
 Fixed  Service,  Second  Report  and  Order,  101  FCC  2d  50,  87    95  (1985).
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 ultimately  allowing  them  to  lease  all  but  a  small  proportion  of  their  capacity  to  commercial  operators.  25  While  the  ITFS  community  requested  that  twenty-  five  percent  be  required  to  be  used  for  educational
 purposes  or  available  for  recapture  for  educational  purposes,  the  Commission  decided  to  allow  ITFS  licensees  to  reserve  only  five  percent  for  educational  purposes.  26  In  1987,  the  Commission  allowed  MDS
 operators  to  elect  non-  common  carrier  (and  non-  broadcast)  status,  leaving  them  subject  to  regulation  pursuant  to  Part  21  of  the  Commissions  Rules  and  the  general  provisions  of  Title  III  of  the
 Communications  Act  of  1934,  which  apply  to  all  radio  station  licensees.  27  The  same  year,  the  Commission  eliminated  the  time-  of-  day  restrictions  on  leasing  ITFS  spectrum  and  authorized  operators  to
 use  automatic  switching  equipment.  28  In  this  same  general  timeframe,  the  Commission  continued  to  relax  requirements  concerning  ITFS  licensees  leasing  spectrum  for  MDS  operations.  29
 11.  For  several  years,  the  International  Telecommunication  Union  (ITU)  has  been  fostering  the  development  of  advanced  wireless  systems,  commonly  referred  to  as  International  Mobile
 Telecommunications-  2000  (IMT-  2000).  It  has  developed  a  series  of  technical  recommendations  and  has  identified  a  number  of  frequency  bands  that  could  be  used  to  implement  IMT-  2000  systems.  The  2000
 World  Radiocommunication  Conference  (WRC-  2000)  identified,  among  other  bands,  the  2500-  2690  MHz  band  for  possible  terrestrial  IMT-  2000  use.  30  WRC-  2000  also  adopted  language  stating  that  a
 country  may  use  any  of  the  bands  identified  for  IMT-  2000,  that  IMT-  2000  bands  may  also  be  used  by  other  services  that  have  allocations  in  those  bands,  and  that  IMT-  2000  services  do  not  have  priority  over
 other  allocated  services.  31  Study  and  implementation  of  IMT-  2000  is  ongoing  within  Working  Party  8F  (WP  8F)  of  the  ITU-  R.
 12.  WP  8F  has  developed  a  revision  to  Recommendation  ITU-  R  M.[  1036-  1]  that  presents  recommended  frequency  arrangements  for  IMT-  2000  in  the  bands  identified  by  the  ITU.  It  is  expected
 that  this  revision  will  be  considered  for  adoption  by  the  upcoming  meeting  of  the  Radio  Assembly  which
 25  See  para.  109,  infra.
 26  See  Amendment  of  Parts  21  and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television  Fixed
 Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  Report  and  Order,  13  FCC  Rcd  19112,  19157    86-  87  (1998).
 27  Multipoint  Distribution  Service  Regulatory  Classification,  Report  and  Order,  52  Fed.  Reg.  27553  (1987)
 (summarizing  FCC  87-  210,  released  July  16,  1987).
 28  Amendment  of  Parts  21,  43,  74,  78,  and  94  of  the  Commission's  Rules  Governing  Use  of  the  Frequencies  in  the
 2.1  and  2.5  GHz  Bands  Affecting:  Private  Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  Instructional  Television  Fixed  Service,  &  Cable  Television  Relay
 Service,  GN  Docket  No.  90-  54,  Order  on  Reconsideration,  6  FCC  Rcd  6764,  6774  (1991).
 29  For  example,  the  Commission  eliminated  the  requirement  that  ITFS  licensees  fulfill  their  minimum  educational
 usage  obligations  by  transmitting  such  content  on  their  own  stations,  allowing  them  the  option  of  transmitting  it  on  other  licensees  ITFS  or  MDS  stations.  See  Two-  Way  R&  O,  13  FCC  Rcd  at  19165-  19166    100-  101.
 30  See  Final  Acts  of  the  World  Radiocommunication  Conference  (Istanbul,  WRC-  2000).  At  WRC-  2000,  the
 United  States  proposed  that  the  698-  960  MHz,  1710-  1885  MHz,  and  2500-  2690  MHz  bands  be  identified  for  the  terrestrial  component  of  IMT-  2000  and  other  advanced  communication  applications.  During  preparations  for
 WRC-  2000,  the  United  States  committed  to  studying  the  feasibility  of  using  all  or  parts  of  these  bands  for  IMT-2000.
 31  Id.  See  also  RR  5.384A  in  the  ITU  Radio  Regulations,  Edition  of  2001,  Geneva.
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 meets  just  prior  to  WRC-  2003.  Concerning  the  2500-  2690  MHz  band,  the  revision  to  the  recommendation  contains  only  scenarios  for  possible  frequency  arrangements,  as  this  band  is  currently
 being  considered  by  some  administrations  for  additional  IMT-  2000  requirements  that  cannot  be  met  in  lower  frequency  bands.
 13.  In  this  regard,  on  November  15,  2002,  the  Electronic  Communications  Committee  (ECC),  of  the  European  Conference  of  Postal  and  Telecommunications  Administrations,  adopted  Decision  6,
 wherein  it  designated  the  2500-  2690  MHz  band  for  IMT-  2000  use.  The  band  is  to  be  made  available  to  IMT-  2000  by  1  January  2008.  Through  a  future  ECC  Decision,  slated  for  the  end  of  2004,  a  detailed
 frequency  arrangement  (band  plan)  is  to  be  developed.  In  ITU  Region  2,  The  Inter-  American  Telecommunication  Commission  (CITEL)  Permanent  Consultative  Committee  III:  Radiocommunications
 (PCC.  III)  has  also  been  developing,  for  the  Americas,  options  for  IMT-  2000  band  pairings  based  on  the  bands  identified  for  IMT-  2000  by  the  ITU.  Since  many  CITEL  Administrations  use  the  2500-  2690  MHz
 band  for  the  fixed  service  and  have  no  plans  to  use  it  for  IMT-  2000,  the  2500-  2690  MHz  band  was  not  included  in  recently  approved  Recommendation  70,  Frequency  Arrangements  For  IMT-  2000  In  The
 Bands  806  To  960  MHz,  1710  To  2025  MHz  And  2110  To  2200  MHz.
 14.  In  1991,  in  an  effort  to  provide  more  spectrum  for  multichannel  video  operations,  the  Commission  reallotted  three  6-  megahertz  channels  in  the  2500-  2690  MHz  band  (H  channels)  from  the
 OFS  for  MDS.  32  The  Commission,  however,  did  reallocate  the  response  channels  associated  with  the  three  H  channels,  as  well  as  the  response  channels  associated  with  the  E3,  E4,  F3,  and  F4  MDS  channels
 to  the  OFS.  33  The  net  result  of  these  reallocations  was  to  provide  an  allocation  of  120  MHz,  or  20  6-  MHz  main  station  channels,  to  ITFS,  and  66  MHz,  or  11  main  station  channels,  to  MDS  in  the  2500-  2690  MHz
 band.  In  addition,  the  MDS  service  has  four  125-  KHz  response  channels  (a  total  of  0.5  MHz),  and  ITFS  has  20  response  channels  (a  total  of  2.5  MHz).  34  As  noted  above,  OFS  has  seven  response  channels  (a
 total  of  0.875  MHz).  The  remaining  spectrum  is  either  allocated  for  the  MDS  Channel  1  (2150-  2156  MHz  associated  response  channel  or  is  unassigned  (2689.875-  2690  MHz)).  Overall,  the  allocation  for
 MDS  amounts  to  66.5  MHz  and  the  allocation  for  ITFS  amounts  to  122.5  MHz.
 15.  The  Commission  added  the  mobile  service  allocation  to  this  band,  to  provide  additional
 32  Amendment  of  Parts  21,  43,  74,  78,  and  94  of  the  Commission's  Rules  Governing  Use  of  the  Frequencies  in  the
 2.1  and  2.5  GHz  Bands  Affecting:  Private  Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  Instructional  Television  Fixed  Service,  and  Cable  Television  Relay
 Service,  Second  Report  and  Order,  Gen  Docket  No.  90-  54,  6  FCC  Rcd  6792  (1991),  recon.  denied,  7  FCC  Rcd  5648  (1992).  In  the  First  Report  &  Order  in  this  proceeding,  the  Commission  made  MDS  operators  eligible  to
 use  microwave  frequencies  in  the  Cable  Television  Relay  Service  (CARS).  Amendment  of  Parts  21,  43,  74,  78  and  94  of  the  Commissions  Rules  Governing  Use  of  the  Frequencies  in  the  2.1  and  2.5  GHz  Bands  Affecting
 Private  Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,  Multi-  Channel  Multipoint  Distribution  Service,  Instructional-  Television  Fixed  Service,  and  Cable  Television  Relay  Service,  Report  and
 Order,  5  FCC  Rcd  6411,  6423  (1990).  CARS  is  primarily  a  service  for  carrying  video.  Amendment  of  Eligibility  Requirement  in  Part  78  Regarding  12  GHz  Cable  Television  Relay  Service,  Report  and  Order,  17  FCC  Rcd  9930,
 9945-  6  (2002).  ITFS  operators  are  not  eligible  for  CARS  licenses,  except  in  very  limited  circumstances.  47  C.  F.  R.    78.13(  e).
 33  Id.  The  specific  response  channels  are  centered  on  2686.9375,  2687.9375,  2688.5625,  2688.6875,  2688.9375,
 2689.5625  and  2689.6875  MHz.  See  47  C.  F.  R.    101.147(  g).
 34  The  response  channels  associated  with  Channels  E3,  E4,  F3,  and  F4  are  allocated  to  the  Private  Operational
 Fixed  Point-  to-  Point  Microwave  Service.  See  47  C.  F.  R.    74.902(  c)  note,  101.147(  g).
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 flexibility  to  make  it  potentially  available  for  advanced  wireless  services,  including  IMT-  2000  and  future  generations  of  wireless  systems.  35  The  Commission  also  said  that  because  incumbent  ITFS  and  MMDS
 licensees  extensively  use  the  band  the  Commission  would  not  relocate  these  licensees  nor  modify  their  licenses.  Instead,  the  Commission  would  rely  on  market  forces  rather  than  making  regulatory  judgments
 about  the  best  use  of  the  band.  36  The  Commission  recognized  that  under  current  technology  and  service  rules,  fixed  and  mobile  sharing  of  this  band  did  not  appear  feasible,  but  committed  to  exploring  service
 rules  to  permit  mobile  operations  in  a  separate  future  proceeding.  37
 16.  ITFS  licenses  are  site-  based  licenses.  Prior  to  1995,  MDS  licenses  were  also  site-  based.  In  1995,  the  Commission  adopted  rules  to  distribute  unused  MDS  spectrum  through  competitive  bidding.  38
 The  licensees  who  acquired  their  spectrum  through  competitive  bidding  are  required  to  protect  pre-existing  site-  based  licensees.  39  Under  current  rules,  if  an  incumbent  site-  based  MDS  license  is  forfeited,
 the  incumbents  service  area  shall  merge  and  become  part  of  the  geographic  area  licensees  service  area.  40  The  BTA  authorization  holder,  however,  cannot  operate  within  that  area  until  it  files  a  long  form
 application  to  operate  a  transmitter  and  the  Commission  grants  that  application.  41
 17.  Recently,  the  Commission  has  provided  MDS  and  ITFS  licensees  with  additional  technical  flexibility.  In  1993,  the  Commission  allowed  ITFS  licensees  to  shift  their  required  educational
 programming  onto  fewer  than  their  authorized  number  of  channels  by  channel  loading,  i.  e.,  an  ITFS  licensee  could  move  all  of  its  ITFS  program  requirements  onto  one  of  its  four  channels  so  that  it  could
 lease  the  remaining  three  channels  on  a  twenty-  four-  hour  basis  to  a  wireless  cable  operator.  42  In  1996,  the  Commission  permitted  MDS  and  ITFS  licensees  to  employ  digital  technologies.  43  In  1998,  the
 35  See  Amendment  of  Part  2  of  the  Commission's  Rules  to  Allocate  Spectrum  Below  3  GHz  for  Mobile  and  Fixed
 Services  to  Support  the  Introduction  of  New  Advanced  Wireless  Services,  including  Third  Generation  Wireless  Systems,  First  Report  and  Order  and  Memorandum  Opinion  and  Order,  ET  Docket  No.  00-  258,  16  FCC  Rcd
 17,222  (2001)  (Mobile  Report  and  Order).
 36  Id.  at  2.
 37  Id.  at  30.
 38  See  Amendment  of  Parts  21  and  74  of  the  Commissions  Rules  with  Regard  to  Filing  Procedures  in  the
 Multipoint  Distribution  Service  and  in  the  Instructional  Television  Fixed  Service,  Report  and  Order,  MM  Docket  No.  94-  131,  10  FCC  Rcd  9589  (1995)  (MDS  Auction  R&  O).  In  March  1996,  the  Commission  completed  an
 auction  of  MDS  licenses  for  unused  spectrum  in  each  of  493  BTAs  and  BTA-  like  areas.  FCC  Fact  Sheet,  Auction  6:  Multipoint/  Multichannel  Distribution  Services,  accessible  on  the  Commissions  web  site  at
 http://  wireless.  fcc.  gov/  auctions/  06/  factsheet.  html.
 39  See  47  C.  F.  R.    21.902(  a)(  3),(  4);  21.938(  b)(  2).
 40  47  C.  F.  R.    21.932(  a).
 41  47  C.  F.  R.    21.925(  c)(  4),  21.932(  c).
 42  Amendment  of  Part  74  of  the  Commissions  Rules  Governing  Use  of  the  Frequencies  in  the  Instructional
 Television  Fixed  Service,  Report  and  Order,  MM  Docket  93-  106,  9  FCC  Rcd  3,360    2.  See  also  47  C.  F.  R.    74.931(  e)(  9).
 43  See  Use  of  Digital  Modulation  by  Multipoint  Distribution  Service  and  Instructional  Television  Fixed  Service
 Stations,  Declaratory  Ruling  and  Order,  11  FCC  Rcd  18,839  (1996)  (Digital  Modulation  Declaratory  Ruling  and  Order).
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 Commission  allowed  MDS  and  ITFS  licensees  to  construct  digital  two-  way  systems  capable  of  providing  high-  speed,  high  capacity  broadband  service,  including  two-  way  Internet  service  via  cellularized
 communication  systems.  44  Later,  the  Commission  established  a  mobile,  except  aeronautical  mobile,  allocation  in  the  2500-  2690  MHz  band.  45
 B.  Spectrum  Allocation  and  Current  Band  Plan  for  the  Services
 18.  In  the  United  States,  the  2500-  2690  MHz  band  is  currently  allocated  to  the  fixed,  mobile  except  aeronautical  mobile,  Broadcast  Satellite  Service  (BSS),  and  Fixed  Satellite  Service  (FSS)  on  a  co-primary
 basis  for  non-  Federal  Government  use.  The  Commission,  however,  recently  proposed  to  delete  the  BSS  and  FSS  allocations  from  the  band  in  order  to  remove  regulatory  uncertainty  from  the  2500-  2690
 MHz  band.  46
 19.  Since  January  2001,  the  Commission  has  been  examining  whether  the  2150-  2162  MHz  band  would  be  appropriate  for  advanced  wireless  services  (AWS).  47  In  2002,  the  Commission  reallocated  the
 2150-  2155  MHz  segment  of  this  band  to  support  new  advanced  wireless  services.  48  The  Commission  stated  that  it  would  identify  relocation  spectrum  for  MDS  licensees  in  a  later,  separate  proceeding,  49  and
 has  asked  commenters  to  address  the  impact  of  reallocating  this  spectrum,  to  identify  other  frequency  bands  that  could  accommodate  MDS  services,  and  to  comment  on  how  the  Emerging  Technologies
 relocation  procedures  would  apply.  50  Subsequently,  on  January  29,  2003,  the  Commission  tentatively  concluded  that  it  should  reallocate  MDS  spectrum  at  2155-  2160/  62  MHz  for  new  fixed  and  mobile
 44  Amendment  of  Parts  21  and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television  Fixed
 Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  MM  Docket  No.  97-  217,  Report  and  Order,  13  FCC  Rcd  19,112  (1998),  recon.,  14  FCC  Rcd  12,764  (1999),  further  recon.,  15  FCC  Rcd  14,566  (2000)  (Two-Way
 Order).
 45  See  Mobile  Report  and  Order,  16  FCC  Rcd  17,222.
 46  See  Amendment  of  Parts  2,  25  and  87  of  the  Commissions  Rules  to  Implement  Decisions  from  World
 Radiocommunication  Conferences  Concerning  Frequency  Bands  Between  28  MHz  and  36  GHz  and  to  Otherwise  Update  the  Rules  in  this  Frequency  Range,  Notice  of  Proposed  Rule  Making,  ET  Docket  No.  02-  305,  17  FCC  Rcd
 19,756  (2002).
 47  Advanced  Wireless  Services  is  the  collective  term  we  use  for  new  and  innovative  fixed  and  mobile  terrestrial
 wireless  applications  using  bandwidth  that  is  sufficient  for  the  provision  of  a  variety  of  applications,  including  those  using  voice  and  data  (such  as  internet  browsing,  message  services,  and  full-  motion  video)  content.
 Although  AWS  is  commonly  associated  with  so-  called  third  generation  (3G)  applications  and  has  been  predicted  to  build  on  the  success  of  such  current-  generation  commercial  wireless  services  as  cellular  and  Broadband  PCS,
 the  services  ultimately  provided  by  AWS  licensees  are  only  limited  by  the  fixed  and  mobile  designation  of  the  spectrum  we  allocate  for  AWS  and  the  service  rules  we  ultimately  adopt  for  the  bands.
 48  See  AWS  Allocation  Order,  17  FCC  Rcd  23,193.
 49  Id.  at  23,212-  23,213    41.
 50  See  Amendment  of  Part  2  of  the  Commission's  Rules  to  Allocate  Spectrum  Below  3  GHz  for  Mobile  and  Fixed
 Services  to  Support  the  Introduction  of  New  Advanced  Wireless  Services,  including  Third  Generation  Wireless  Systems,  ET  Docket  No.  00-  258,  Memorandum  Opinion  and  Order  and  Further  Notice  of  Proposed  Rulemaking,
 16  FCC  Rcd  16,043    40-  41  (2001).
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 services,  including  AWS.  51
 20.  Under  the  MDS/  ITFS  band  plan  for  the  2500-  2690  MHz  band,  there  are  thirty-  one  6-  megahertz  channels,  of  which  twenty-  four  have  associated,  125-  kilohertz  (R)  channels.  Of  the  thirty-  one
 6-  megahertz  channels  in  the  2500-  2690  MHz  band,  the  Commission  has  allocated  twenty  channels  (A,  B,  C,  D,  and  G  channels)  for  ITFS  and  eleven  channels  (E,  F,  and  H  channels)  for  MDS.  (This  does  not
 include  the  two  additional  MDS  channels  at  2150-  2162  MHz.).  The  following  chart  illustrates  the  current  plan.
 1
 2/
 2A  A1  B!  A2  B2  A3  B3  A4  B4  C1  D1  C2  D2  C3  D3  C4  D4  E1  F1  E2  F2  E3  F3  E4  F4  G1  H1  G2  H2  G3  H3  G4  R
 2150  2162  2500  2596  2644  2  686  2  690
 C.  Application  Processing  Freezes  and  Filing  Windows
 21.  In  1993,  the  Commission  suspended  the  ITFS  applications  process  and  announced  plans  to  adopt  a  revised  process  for  handling  such  applications.  52  At  the  same  time,  the  Commission  noted  that  it
 would  continue  to  accept  major  change  proposals  for  ITFS  applications  to  accommodate  settlement  agreements  among  mutually  exclusive  applicants.  53  In  1995,  the  Commission  provided  a  five-  day  filing
 window  for  the  filing  of  applications  for  new  construction  permits  and  for  major  changes  to  existing  ITFS  facilities.  54  In  1996  the  Mass  Media  Bureau  announced  a  sixty-  day  filing  window  for  a  limited  class  of
 applications,  permitting  the  filing  of  ITFS  modification  applications  and  amendments  to  pending  ITFS  applications  proposing  to  co-  locate  with  an  authorized  wireless  cable  facility,  in  order,  inter  alia,  to
 facilitate  marketwide  settlements.  55
 51  See  Amendment  of  Part  2  of  the  Commissions  Rules  to  Allocate  Spectrum  Below  3  GHz  for  Mobile  and  Fixed
 Services  to  Support  the  Introduction  of  New  Advanced  Wireless  Services,  including  Third  Generation  Wireless  Systems,  Third  Report  and  Order,  Third  Notice  of  Proposed  Rulemaking,  and  Second  Memorandum  Opinion  and
 Order,  ET  Docket  No.  02-  258,  FCC  03-  16,  rel.  Feb.  10,  2003.
 52  Amendment  of  Part  74  of  the  Commissions  Rules  with  Regard  to  the  Instructional  Television  Fixed  Service,
 Notice  of  Proposed  Rulemaking,  MM  Docket  No.  93-  24,  8  FCC  Rcd  1275  (1993).
 53  Id.  at  1277  n.  13.  See  also  Amendment  of  Part  74  of  the  Commissions  Rules  with  Regard  to  the  Instructional
 Television  Fixed  Service,  Order  and  Further  Notice  of  Proposed  Rulemaking,  MM  Docket  No.  93-  24,  9  FCC  Rcd  3348,  3354  (1994).  The  Commission  reiterated  this  policy  in  the  Report  and  Order  in  MM  Docket  No.  93-  24,  10
 FCC  Rcd  2907,  2911  (1995).
 54  See  Notice  of  Instructional  Television  Fixed  Service  Filing  Window  From  October  16,  1995,  through  October
 20,  1995,  Public  Notice,  Report  No.  23565A  (rel.  Aug.  4,  1995).
 55  Mass  Media  Bureau  Announces  Commencement  of  Sixty  (60)  Day  Period  for  Filing  ITFS  Modifications  and
 Amendments  Seeking  to  Co-  Locate  Facilities  with  Wireless  Cable  Operations,  Public  Notice,  11  FCC  Rcd  22,422  (1996).
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 22.  The  Balanced  Budget  Act  of  1997  (Budget  Act)  expanded  the  Commission's  competitive  bidding  authority  under  Section  309(  j)  of  the  Communications  Act  by  adding  provisions  governing
 auctions  for  broadcast  and  other  previously  exempt  services.  56  In  a  subsequent  order,  the  Commission  concluded  that  the  legislation  required  that  competing  ITFS  applications  be  subject  to  auction.  57  The
 Commission  expressed  concern  that  Section  309(  j),  as  adopted,  might  not  reflect  Congress'  intent  with  regard  to  the  treatment  of  competing  ITFS  applications.  58  Given  the  instructional  nature  of  the  service
 and  the  reservation  of  ITFS  spectrum  for  noncommercial  educational  use,  the  Commission  thought  it  possible  that  Congress  did  not  intend  its  expansion  of  our  auction  authority  in  the  Budget  Act  to  include
 that  service.  Accordingly,  the  Commission  did  not  proceed  immediately  with  an  auction  of  ITFS  applications  59  but  sought  Congressional  guidance  with  regard  to  auctioning  ITFS  by  proposing  that
 Congress  exempt  ITFS  applications  from  competitive  bidding.  60  To  date,  however,  Congress  has  given  no  indication  that  it  intends  to  exempt  ITFS  applications  from  competitive  bidding.  The  Commission  has
 not  yet  conducted  an  ITFS  auction.
 D.  Current  Uses  of  the  Band
 23.  Operators  are  providing  four  kinds  of  basic  service  offerings  in  the  2500-  2690  MHz  band  today:  (1)  downstream  analog  video;  (2)  downstream  digital  video;  (3)  downstream  digital  data;  and
 (4)  downstream/  upstream  digital  data.  Licensees  have  deployed  or  sought  to  deploy  three  alternative  kinds  of  system  configurations:  high  powered  video  stations,  high  power  fixed  two-  way  systems  and  low
 power,  cellularized  two-  way  systems.
 24.  Traditionally  high  powered  video  stations  consist  of  a  main  transmitter  located  at  or  near  the  center  of  a  35-  mile-  radius  protected  service  area  (PSA)  with  the  possibility  of  operating  a  few  booster
 stations  in  the  same  PSA.  In  1996,  the  Commission  authorized  some  high  powered  video  stations  to  serve  Basic  Trading  Areas  (BTAs)  consisting  of  an  aggregation  of  counties.  61  Homes,  businesses,  and
 institutions  receive  signals  through  outside  antennas  and  microwave  receivers.  This  type  of  system  provides  fixed,  one-  way  video  service,  either  analog  or  digital.  Analog  stations  support  a  maximum  of
 56  47  U.  S.  C.    309(  j).
 57  Implementation  of  Section  309(  j)  of  the  Communications  Act  Competitive  Bidding  for  Commercial  Broadcast
 and  Instructional  Television  Fixed  Services  Licenses,  Reexaminiation  of  the  Policy  Statement  on  Comparative  Broadcast  Hearings,  Proposals  to  Reform  the  Commissions  Comparative  Hearing  Process  to  Expedite  the
 Resolution  of  Cases,  First  Report  and  Order,  MM  Docket  No.  97-  234,  GC  Docket  No.  92-  52,  and  GEN  Docket  No.  90-  264,  13  FCC  Rcd  15920,  15999-  16001  (1998),  recon.  denied,  14  FCC  Rcd  8724,  modified,  14  FCC  Rcd
 12,541  (1999),  affd  sub  nom.  Orion  Communications,  Ltd.  v.  FCC,  213  F.  3d  761  (D.  C.  Cir.  2000).
 58  Implementation  of  Section  309(  j)  of  the  Communications  Act  Competitive  Bidding  for  Commercial  Broadcast
 and  Instructional  Television  Fixed  Service,  First  Report  and  Order,  MM  Docket  No.  97-  234,  13  FCC  Rcd  15920,  16002    204  (1998).
 59  Id.
 60  Section  257  Report  to  Congress,  Report,  15  FCC  Rcd  15376,  15445    183  (2000).
 61  In  preparing  for  the  1996  MDS  auction,  the  Commission  noted  that  the  industry  was  beginning  to  deploy  digital
 rather  than  analog  transmission  facilities  and  that  digital  transmission  would  allow  more  flexibility  to  tailor  signal  coverage  to  geographic  boundaries  using  multiple  transmitting  facilities.  MDS  Auction  Report  and  Order,  10  FCC
 Rcd  9,589,  9,606,    29.  The  Commission  considered  alternative  kinds  of  geographic  service  areas  and  concluded  that  BTAs  most  closely  approximated  the  territories  served  by  MDS  operators.  Id.  at  9604-  9606,    26-  27.
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 thirty-  three  6-  MHz  channels  on  a  combination  of  MDS  and  ITFS  channels,  which  may  be  licensed  to  and  leased  from  multiple  entities;  whereas  digital  stations  can  support  180  or  more  channels  on  the  same
 amount  of  spectrum.  The  WCA  informally  has  estimated  that  120-  130  MDS/  ITFS  systems  are  transmitting  video  programming  to  subscribing  members  of  the  public  and  that  a  few  additional  stations
 deliver  video  programming  exclusively  to  educational  reception  sites  or  to  cable  television  systems  for  retransmission.  62  Both  WCA  and  a  number  of  ITFS  licensees  have  indicated  that  a  majority  of  the
 licensees  operating  these  high-  power  stations  are  actively  exploring  conversion  to  low-  power,  cellularized  operations.  63
 25.  The  high  powered  fixed  two-  way  systems  each  consist  of  one  high-  powered  main  transmitter,  multiple  return-  path  transmitters  and,  in  some  cases,  one  or  more  booster  stations.  This  type  of  system  is
 used  primarily  in  rural  areas  where  population  densities  are  much  lower  than  those  in  urban  areas.  By  September,  2002,  our  Broadband  Licensing  System  showed  about  eighty-  seven  operators  are  deploying
 data-  only  MDS  or  ITFS  services  in  the  U.  S.  We  believe  that  many  of  these  licensees  are  offering  their  services  in  conjunction  with  other  local  licensees  through  integrated  systems.  Thus,  WCA  representatives
 have  estimated  that  there  are  thirty-  to-  forty  markets  in  which  data-  only  services  are  being  marketed,  and  that  all  but  perhaps  five  to  eight  of  them  are  using  high-  power  technology.
 26.  As  discussed  in  further  detail  below,  most  MDS  operators  and  a  substantial  proportion  of  ITFS  operators  would  like  to  deploy  low  power,  cellularized  two-  way  systems,  because  they  are  more
 spectrally  efficient  than  high-  powered  systems,  can  support  provision  of  high-  data-  rate  services  to  a  large  number  of  subscribers,  can  help  overcome  obstacles  to  line-  of-  sight  service,  and  can  more  readily  support
 mobile  or  portable  services.  64  Our  MDS/  ITFS  licensing  database  system  cannot  readily  show  how  many  of  these  systems  are  currently  deployed,  but  we  believe  that  interference  issues  have  severely  limited
 licensees  ability  to  deploy  low  power  services.  WCA  estimates  that  low-  power,  cellularized  MDS/  ITFS  data  services  are  being  offered  in  perhaps  five-  to-  eight  markets.
 27.  By  the  beginning  of  2002,  the  potential  number  of  homes  with  a  serviceable  line-  of-  sight  to  an  MDS  operator's  transmission  facilities  was  about  sixty-  two  million.  Yet,  by  the  third  quarter  of  2002,
 the  number  of  MDS  subscribers  had  declined  to  approximately  490,000  from  700,000  a  year  earlier.  65  Recently,  some  entities  began  using  this  band  to  provide  services  other  than  a  multi-  channel  video  service
 (i.  e.,  two-  way  broadband  services).  The  Coalition  reports  that  Sprint,  for  example,  deployed  two-  way  broadband  services  in  fourteen  cities  over  the  course  of  a  year  beginning  in  March  2000,  and  was  signing
 up  about  2,000  customers  per  month  before  the  company  halted  deployment  to  resolve  technical  problems  that  arose  with  the  first  generation  of  two-  way  technology.  66
 62  In  many  cases,  such  systems  use  channels  held  by  multiple  licensees.
 63  See,  e.  g.,  Joint  Comments  of  ITFS  Parties,  filed  Nov.  14,  2002.
 64  See  sections  III.  C  and  III.  D,  below.
 65  BIA  Financial  Network,  The  MMDS  Industry:  A  Look  Into  the  Industrys  Most  Significant  Operators,  Sept.
 2002,  at  5.
 66  Coalition  Proposal  at  4.  While  operators  have  only  begun  to  provide  mobile  data  services  on  channels
 allocated  to  MDS  and  ITFS,  a  strong  growth  spurt  in  such  services  on  other  bands  suggests  that  there  is  ample  unsatisfied  demand  for  mobile  data.  The  number  of  wireless  data  users  may  have  quintupled  during  2001,  to
 between  eight  and  ten  million  subscribers.  See  Implementation  of  Section  6002(  b)  of  the  Omnibus  Budget  Reconciliation  Act  of  1993,  Annual  Report  and  Analysis  of  Competitive  Market  Conditions  with  Respect  to
 (continued.)
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 28.  By  January  2002,  Sprint  and  WorldCom  had  each  invested  more  than  $2  billion  acquiring  MDS  licensees  covering  about  31  and  30  million  households,  respectively,  and  each  of  those  companies
 had  spent  another  $1  billion  on  system  construction.  67  WorldCom  was  rolling  out  MDS  high-  speed  Internet  access  in  new  markets,  many  of  them  rural.  68  The  third  largest  MDS  company,  Nucentrix
 Broadband  Services,  Inc.,  was  offering  two-  way  high-  speed  Internet  access  service  in  Austin  and  Sherman-  Denison,  Texas,  and  conducting  a  trial  of  the  service  in  Amarillo,  Texas,  and  at  least  twenty-four
 other  companies  offered  fixed  wireless  services  in  approximately  thirty-  three  counties.  69  In  November  2002,  Clearwire  Technologies,  Inc.,  filed  comments  indicating  that  it  had  leased  ITFS
 spectrum  in  more  than  20  markets  and  would  launch  a  wireless  broadband  Internet  access  service  in  the  first  of  those  markets  in  January,  2003.  70
 29.  We  are  not  aware  of  any  current,  comprehensive  source  of  information  on  the  nature  or  extent  of  ITFS  services  other  than  our  license  files.  However,  in  response  to  the  public  notice  seeking  comments
 on  the  Coalition  Proposal,  71  eight  ITFS  licensees  and  related  organizations  provided  quantified  information  on  the  extent  of  their  own  services,  most  of  them  local.  Various  local  branches  of  the  Roman
 Catholic  Church  provide  ITFS  programming  to  153,000  students.  72  The  F  Corporation  and  the  George  Mason  University  (GMU)  Instructional  Foundation  provide  GMU  instructional  programming,  C-  SPAN,
 (Continued  from  previous  page)  Commercial  Mobile  Services,  Seventh  Report,  17  FCC  Rcd  12,985,  13,038  n.  367  (2002)  (Seventh  Report)  citing
 U.  S.  Wireless  Industry  Data  Sub  and  Revenue  Projections,  Interactive  Mobile  Investor,  Kagan  World  Media,  Mar.  31,  2002,  at  3  (7.8  million  wireless  Internet  subscribers  in  the  United  States  at  the  end  of  2001);  Yankee  Group,
 The  Yankee  Group:  Highlights  of  New  Surveys  and  Publications  (visited  Mar.  6,  2002)  http://  www.  yankeegroup.  com/  webfolder/  yg21a.  nsf/  0/
 16AE3A28DBFF8EC85256B19005F8428?  OpenDocument>  (wireless  Internet  adoption  was  rapidly  approaching  10  million  users).
 67  Id.
 68  Id.
 69  Id.
 70  Clearwire  Technologies,  Inc.,  Comments  in  RM-  10586,  at  2  filed  November  14,  2002.  On  January  7,  2003,
 Clearwire  announced  the  availability  of  its  service  in  Jacksonville,  Florida.  News  Release,  Clearwire  Launches  Next-  Generation  Wireless  Broadband  Service,  Jan.  7,  2003  (accessible  online  at
 http://  www.  clearwire.  com/  default.  asp?  NodeId=  967).
 71  Wireless  Telecommunications  Bureau  Seeks  Comment  on  Proposal  to  Revise  Multichannel  Multipoint
 Distribution  Service  and  the  Instructional  Television  Fixed  Service  Rules,  Public  Notice,  17  FCC  Rcd  20526  (WTB  2002)  (MDS/  ITFS  Comment  Public  Notice).  The  due  dates  for  comments  and  replies  were  initially  set  to
 November  14  and  21,  2002,  but  were  later  extended  to  November  21  and  29,  respectively.
 72  See  Archdiocese  of  Los  Angeles  Comments,  filed  Nov.  14,  2002,  at  2  (50,000  Los  Angeles  area  students);  See
 Department  of  Education,  Archdiocese  of  New  York  Comments,  filed  Nov.  14,  2002  (47,000  New  York  area  students);  Catholic  Telemedia  Network  Comments,  at  1-  2,  filed  Nov.  14,  2002,  (38,000  San  Francisco  area
 students);  Diocese  of  Orange  Comments,  at  1,  filed  Nov.  14,  2002,  (18,000  Orange  County  area  students);  see  also,  Diocese  of  Dallas  Comments,  at  1,  filed  Nov.  14,  2002,  (Claims  to  serve  more  than  600,000  constituents
 but  does  not  indicate  how  many  use  or  have  access  to  its  ITFS  channels).  Forty-  seven  ITFS  licensees  filed  joint  comments  that  did  not  include  quantified  information  on  the  extent  of  their  operations.  Joint  Comments  of  ITFS
 Parties,  filed  Nov.  14,  2002.
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 and  open  meetings  of  the  Commission  on  analog  ITFS  and  MDS  channels.  73  Network  for  Instructional  TV,  Inc.,  and  its  affiliates  distribute  educational  programming  and  services  to  students  and  teachers
 through  a  network  of  twenty-  three  ITFS  stations  and  over  the  Internet.  74  The  Illinois  Institute  of  Technology  uses  seven  of  its  eight  ITFS  channels  to  provide  masters  degree  programs,  certificate
 programs,  and  courses  in  engineering  and  the  sciences,  business  and  law.  75  Stanford  University  transmits  hundreds  of  engineering  and  science  courses  each  year  to  enrolled  university  students  over  five  ITFS
 channels.  It  also  provides  for-  credit  course  work  to  enrolled  students  at  business  sites  throughout  the  Bay  Area  and  non-  credit  instructional  programming  to  several  thousand  more  students.  76  The  Commissions
 database  as  of  November  6,  2000,  showed  that  at  least  one  ITFS  station  operates  in  most  areas  of  the  United  States  and  that  only  in  the  least  populated  areas  of  the  country  is  ITFS  spectrum  not  currently
 occupied.  77  At  that  time,  the  database  also  showed  that  in  49  of  the  50  largest  metropolitan  areas  that  all  thirty-  one  ITFS/  MDS  channels  are  licensed  within  100  miles  of  the  cities  considered.  78
 E.  The  Coalition  Proposal
 30.  On  October  7,  2002,  the  Coalition  submitted  a  paper  entitled  A  Proposal  for  Revising  the  MDS  and  ITFS  Regulatory  Regime  (  Coalition  Proposal)  concerning  recommendations  for  changing
 the  rules  governing  the  2500-  2690  MHz  band.  79  In  general,  the  Coalition  argues  that  the  band  is  not  being  used  to  the  extent  possible  80  and  that  rule  changes  are  necessary  to  allow  new  services  to  develop.
 The  Coalition  envisions  this  band  being  used  to  provide  new  wireless  two-  way  broadband  services  (e.  g.,  provide  commercial  service  to  portable,  nomadic  and  mobile  laptops,  Personal  Digital  Assistants  (PDAs)
 and  other  non-  stationary  devices)  where  the  network  architecture  is  based  on  a  low  power  cellular  concept.  The  Coalition  contends  that  the  explosive  growth  of  802.11b-  compliant  hot  spots
 demonstrates  that  there  is  demand  for  this  sort  of  service  and  that  this  band  could  be  used  to  provide  ubiquitous  service,  not  just  at  hot  spots.  It  points  out  that  several  MDS  licensees  are  currently  test
 73  F  Corp.  Informal  Comments,  dated  Nov.  8,  2002  (Provide  programming  to  more  than  1,750  offices,  government
 agencies,  law  firms,  trade  associations,  schools  and  universities  in  more  than  540  buildings  throughout  metropolitan  Washington,  D.  C.,  Maryland,  and  Virginia.
 74  Network  for  Instructional  TV,  Inc.  and  North  Carolina  Assn.  of  Community  College  Presidents  Comments,  at  1
 n.  1,  filed  Nov.  14,  2002.
 75  Illinois  Institute  of  Technology  Comments,  at  3,  filed  Nov.  21,  2002.
 76  Stanford  University  Comments,  at  1-  2,  filed  Nov.  14,  2002.
 77  Final  Report:  Spectrum  Study  of  the  2500-  2690  MHz  Band    The  Potential  for  Accommodating  Third
 Generation  Mobile  Systems,  FCC  Staff  Report,  March  30,  2001  at  34-  35  (3G  Final  Report)  (accessible  on  the  Commissions  web  site  at  http://  hraunfoss.  fcc.  gov/  edocs  public/  attachmatch/  DOC-  211542A1.  doc).
 78  Id.  at  32.
 79  A  detailed  summary  of  the  Coalition  Plan  is  attached  as  Appendix  C.
 80  For  example,  the  Coalition  contends  that  it  has  become  clear  that  the  growth  of  DBS  and  cable  systems  has
 closed  the  window  of  opportunity  for  wireless  cable  in  all  but  a  relatively  few  markets  where  wireless  cable  has  gained  a  foothold.  Coalition  Proposal  at  2.  In  regard  to  two-  way  services,  the  Coalition  states  because  of
 problems  associated  with  first  generation  two-  way  technology  many  in  the  industry  have  decided  to  halt  deployment  of  additional  first  generation  systems  until  those  problems  can  be  resolved.  Coalition  Proposal  at  4.
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 marketing  this  new  two-  way  broadband  service.  81  It  asserts,  however,  that  a  radical  reworking  of  the  MDS  and  ITFS  regulatory  structure  is  needed  for  such  new  services  to  develop  and  flourish  in  this
 band.  82
 31.  The  Coalition  suggests  a  number  of  proposals  that  it  believes  will  promote  new  uses  of  this  band.  A  detailed  summary  of  the  Coalition  Plan  is  attached  as  Appendix  C.  For  example,  it  proposes
 establishing  a  new  band  plan  to  facilitate  advanced  low  power  two-  way  broadband  systems  while  at  the  same  time  protecting  existing  high-  power  systems  (e.  g.,  video  operations).  The  core  of  its  proposal
 segregates  high-  power  and  low-  power  systems  into  separate  segments  of  the  band  to  avoid  mutual  interference.  The  Coalition  proposal  divides  the  band  into  three  major  segments  and  three  smaller
 segments.  The  three  major  segments  would  consist  of  the  Lower  Band  Segment  (LBS)  with  twelve  5.5-  megahertz-  wide  channels  extending  from  2500-  2566  MHz,  the  Mid  Band  Segment  (MBS)  with  seven  6-
 megahertz  wide  channels  extending  from  2572-  2614  MHz  and  the  Upper  Band  Segment  (UBS)  with  twelve  5.5-  megahertz  wide  channels  extending  from  2620-  2686  MHz.  83  Low  powered  operations  would
 use  the  LBS  and  UBS  while  high  power  video  operations  would  operate  in  the  MBS.  The  three  minor  segments  would  consist  of  the  I  band  at  2686-  2690  (narrowband  auxiliary  channels)  and  two  transition
 bands  or  guard  bands  (J  and  K),  one  located  between  the  LBS  and  MBS  and  one  located  between  the  MBS  and  the  UBS.  The  Coalition  also  proposes  (1)  eliminating  unnecessary  regulatory  burdens  imposed
 by  site-  by-  site  licensing,  84  (2)  revising  the  technical  rules  to  make  them  less  complex,  85  (3)  establishing  a  market-  by-  market  mechanism  for  transitioning  to  the  new  band  plan  and  (4)  eliminating  outdated
 81  Coalition  Proposal  at  5-  7.
 82  See  Letter  from  the  Coalition  to  Thomas  J.  Sugrue,  Chief,  Wireless  Telecommunications  Bureau,  Federal
 Communications  Commission  dated  Oct.  7,  2002  (accompanied  the  Coalition  Proposal).
 83  The  Coalition  does  not  fully  explain  why  it  narrowed  the  channels  in  the  LBS  and  UBS  to  5.  5
 megahertz.  The  Coalition  explains  that
 [a]  lthough  the  channels  in  the  LBS  and  the  UBS  will  be  5.5  MHz  wide  rather  than  6  MHz  wide  and  the  channels  in  the  Transition  Band  will  be  1.  5  MHz  wide,  no  change  in  the
 current  rules  affording  licensees  the  flexibility  to  subchannelize  and  superchannelize  is  proposed.  Therefore,  even  after  the  transition  licensees  can  continue  to  utilize  6  MHz  channels  in  the  LBS,
 the  UBS,  and  the  Transition  Bands,  provided  that  appropriate  consents  are  achieved.
 Coalition  Proposal  at  13,  n.  32.
 84  For  example,  the  Coalition  contends  that  under  the  current  licensing  model,  it  will  take  substantially
 more  applications  to  license  a  populated  market  for  second  generation  MDS  service  (e.  g.,  low  power,  two-  way  broadband  service).  It  estimates  that  it  could  take  close  to  two  thousand  applications  under  the  current  licensing
 approach  to  fully  license  the  band  for  a  second  generation  system  in  just  one  major  market.  This  licensing  model,  according  to  the  Coalition,  results  in  substantial  transaction  costs  and  delays  of  providing  service.  See  Coalition
 Proposal  at  7-  8.
 85  For  example,  the  Coalition  argues  that  an  applicant  is  required  by  the  complex  Appendix  D
 interference-  prediction  methodology  to  assume  in  conducting  analyses  that  each  and  every  one  of  its  subscribers  is  located  at  the  very  point  most  likely  to  cause  interference  to  a  neighbor.  In  other  words,  an  applicant  proposing  to
 provide  service  on  a  given  channel  to  1000  subscribers  simultaneously  is  required  to  assume  that  all  1000  subscribers  will  be  at  the  very  spot  most  likely  to  cause  interference.  Unfortunately,  these  hypothetical
 assumptions,  for  all  practical  purposes,  preclude  system  operators  from  serving  substantial  portions  of  their  authorized  territories.  See  Coalition  Proposal  at  3.
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 regulations.  On  October  17,  2002,  the  Commission  put  the  Coalition  Proposal  out  on  Public  Notice.  86
 Coalition  Band  Plan
 Channel  Designatio
 n  Lower  Frequenc  y  Upper  Frequenc  y  A1  2500.000
 0  2505.500  0  A2  2505.500  0  2511.000  0
 A3  2511.000  0  2516.500  0  B1  2516.500
 0  2522.000  0  B2  2522.000  0  2527.500  0
 B3  2527.500  0  2533.000  0  C1  2533.000
 0  2538.500  0  C2  2538.500  0  2544.000  0
 C3  2544.000  0  2549.500  0  D1  2549.500
 0  2555.000  0  D2  2555.000  0  2560.500  0
 D3  2560.500  0  2566.000  0
 LOW
 POWER
 Channels  can  be  used  for  TDD  or
 Upstream  FDD
 J  2566.000  0  2572.000  0  Guard  Band  A4  2572.000
 0  2578.000  0  B4  2578.000  0  2584.000  0
 C4  2584.000  0  2590.000  0  D4  2590.000
 0  2596.000  0  E4  2596.000  0  2602.000  0
 F4  2602.000  0  2608.000  0  G4  2608.000
 0  2614.000  0
 HIGH
 POWER
 Channels  can  be  used  for  high-power
 operations  like  existing  ITFS
 TV.
 K  2614.000  0  2620.000  0  Guard  Band  E1  2620.000
 0  2625.500  0  E2  2625.500  0  2631.000  0
 E3  2631.000  0  2636.500  0  F1  2636.500
 0  2642.000  0  F2  2642.000  0  2647.500  0
 F3  2647.500  0  2653.000  0  H1  2653.000
 0  2658.500  0  H2  2658.500  0  2664.000  0
 LOW
 POWER
 Channels  can  be  used  for  TDD  or
 Downstream  FDD
 86  MDS/  ITFS  Comment  Public  Notice.  Fifty-  three  entities  filed  comments  and  eight  filed  reply
 comments.  A  list  of  commenting  parties  is  provided  in  Appendix  D.
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 H3  2664.000  0  2669.500  0  G1  2669.500
 0  2675.000  0  G2  2675.000  0  2680.500  0
 G3  2680.500  0  2686.000  0  I  2686.000
 0  2690.000  0
 III.  DISCUSSION
 A.  Broadband  Policy  Goals  and  Objectives
 32.  This  proceeding  provides  us  with  another  opportunity  to  help  meet  our  statutory  duty  to  "encourage  the  deployment  on  a  reasonable  and  timely  basis  of  advanced  telecommunications  capability
 to  all  Americans  (including,  in  particular,  elementary  and  secondary  schools  and  classrooms).  .  ."  87  This  proceeding  also  provides  us  with  the  opportunity  to  further  our  goal  to  establish  regulatory  policies  that
 promote  competition,  innovation,  and  investment  in  broadband  services  and  facilities  while  monitoring  progress  toward  the  deployment  of  broadband  services  in  the  United  States  and  abroad.  88  Broadband
 technologies,  which  encompass  all  evolving  high-  speed  digital  technologies  that  provide  consumers  integrated  access  to  voice,  high-  speed  data,  video-  on-  demand,  and  interactive  delivery  services,  are  a
 fundamental  component  of  the  communications  revolution.  89  Fully  evolved  broadband  will  virtually  eliminate  geographic  distance  as  an  obstacle  to  acquiring  information  and  dramatically  reduce  the  time  it
 takes  to  access  information.  90  We  intend  for  this  proceeding  to  accomplish  the  following  objectives:
 33.  Promote  availability  of  broadband  to  all  Americans,  including  broadband  technologies  for  educators.  In  recent  years,  the  MDS  industry  has  invested  several  billion  dollars  to  develop  broadband
 fixed  wireless  data  systems  in  this  band,  including  high-  speed  access  to  the  Internet  for  residential  customers,  small  and  medium  businesses,  and  educational  institutions.  91  Such  systems  offer  a  significant
 opportunity  to  provide  competition  to  cable  and  (Digital  Subscriber  Line)  DSL  services  in  the  provision  of  broadband  services  in  urban  and  rural  areas.  In  this  proceeding  we  are  seeking  comment  on  how  best
 to  configure  the  2500-  2690  MHz  band  to  enable  the  development  of  broadband  service  in  the  2500-  2690  MHz  band.  Broadband  technologies  hold  some  promise  not  only  for  residential  and  business
 communities,  but  also  for  American  students.  The  American  classrooms  are  increasingly  wired,  but  access  to  broadband  technologies  is  still  far  from  ubiquitous.  With  access  to  broadband  technologies  our
 students  and  teachers  will  have  more  powerful  tools  with  which  to  learn.  ITFS  can  and  should  play  a  role  in  making  broadband  more  common  in  our  students  educational  experience.
 34.  Clarify  and  stabilize  the  regulatory  treatment  of  similar  spectrum-  based  services.  Broadband  services  should  exist  in  an  environment  that  eliminates  regulations  that  deter  investment  and  innovation
 87  See  Telecommunications  Act  of  1996,  Pub.  L.  104-  104,    706(  a),  110  Stat.  56  (1996);  47  U.  S.  C.    157.
 88  See  Spectrum  Policy  Report.
 89  Id.
 90  Id.
 91  Coalition  Proposal  at  ii.  See  also,  Interim  Report  at  ii.
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 and  recognizes  rules  that  promote  competition  and  minimize  harmful  interference.  92  We  note  that  broadband  providers  are  delivering  or  planning  to  deliver  broadband  service  over  any  combination  of
 licensed  spectrum,  such  as  700  MHz,  cellular,  broadband  PCS,  Part  101  millimeter  wave,  MDS/  ITFS,  and  unlicensed  spectrum,  such  as  902-  928  MHz,  2.4  GHz,  and  5  GHz.  93  As  stated  above,  we  seek  to  stabilize
 the  regulatory  regime  of  the  2500-  2690  MHz  band  by  seeking  comment  on  whether  consolidating  the  Services  in  Part  101  of  the  Commissions  Rules  to  provide  regulatory  parity  for  similar  wireless  services
 will  advance  the  public  interest  in  more  ubiquitous  availability  of  broadband,  particularly  for  educational,  telemedicine,  and  medical  purposes.
 35.  Facilitate  development  of  possible  alternative  broadband  residential  facilities-  based  providers.  In  the  Declaratory  Ruling,  the  Commission  noted  that  [  t]  hroughout  the  brief  history  of  the
 residential  broadband  business,  cable  modem  service  has  been  the  most  widely  subscribed  to  technology,  with  industry  analysts  estimating  that  approximately  68%  of  residential  broadband  subscribers  today  use
 cable  modem  service  .  .  .  29%  of  residential  broadband  subscribers  use  DSL  service,  and  about  3%  of  subscribers  use  various  radio-  based  technologies.  94  As  we  noted  above,  wireless  broadband  service  in
 the  2500-  2690  MHz  band  may  offer  consumers  another  broadband  alternative,  which  may  lead  to  reduced  prices  and  more  competition  in  the  delivery  of  high-  speed  internet  access.  95  We  believe  that  the  changes
 that  we  are  proposing  to  make  in  this  proceeding,  streamlining  the  application  process,  implementing  geographic  area  licensing,  modifying  technical  rules,  and  proposing  rules  to  allow  mobile  operation  in  the
 2500-  2690  MHz  band  will  enable  the  flexible  use  of  the  spectrum.  These  changes  will  allow  for  the  operation  of  market  forces,  which  in  turn,  may  stimulate  the  development  of  wireless  broadband  services;
 thus  giving  consumers  more  choice  in  broadband  providers.
 B.  Spectrum  Policy  Goals  and  Objectives
 36.  Pursuant  to  the  Communications  Act,  a  benchmark  of  national  communications  policy  is  to  encourage  the  provision  of  new  technologies  and  services  to  the  public.  96  Based  on  the  evolution  of  the
 Services  and  recent  trends  in  consumer  demand,  this  proceeding  provides  us  with  an  opportunity  to  further  our  spectrum  management  goal  to  encourage  the  highest  and  best  use  of  spectrum  domestically
 and  internationally  in  order  to  encourage  the  growth  and  rapid  deployment  of  innovative  and  efficient  communications  technologies  and  services.  97  The  promise  of  emerging  technologies  could  mean
 ubiquitous,  mobile  broadband  connections.  98  We  believe  that  it  is  necessary  for  us  to  take  certain  actions,  as  described  in  further  detail  below,  to  foster  the  continued  development  and  deployment  of  the  Services
 by  encouraging  licensees  in  the  2500-  2690  MHz  band  to  migrate  to  more  technologically  and  economically  efficient  uses  of  the  spectrum.  We  believe  that  providing  these  licensees  with  additional
 flexibility  of  use  would  serve  the  public  interest  and  allow  licensees  to  provide  new  and  innovative
 92  High-  Speed  Access  to  the  Internet  Over  Cable  and  Other  Facilities,  GN  Docket  No.  00-  185,  Declaratory
 Ruling  and  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  4798,  4802    5  (2002)  (Declaratory  Ruling).
 93  License-  Exempt  Alliance  Comments  at  3  to  Spectrum  Policy  Report.
 94  Declaratory  Ruling,  17  FCC  Rcd  at  4803-  4804    9.
 95  See  para.  33,  supra.
 96  See  47  U.  S.  C.    157(  a).  See  also  47  U.  S.  C.    309(  j)(  4)(  C)(  iii).
 97  Federal  Communications  Commission,  Strategic  Plan  FY  2003-  FY  2008  at  5  (2002)  (Strategic  Plan).
 98  Id.  at  14.
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 services,  consistent  with  the  requirements  of  Section  303(  y)  of  the  Communications  Act.  99  Moreover,  we  believe  that  our  proposals  address  the  strong  desire  for  a  revamping  of  the  services  as  expressed  by
 representatives  of  the  MDS  and  ITFS  communities.  In  this  connection,  we  intend  for  this  proceeding  to  accomplish  the  following  spectrum  management  objectives:
 37.  Meet  Increasing  Demand  for  Spectrum-  Based  Services.  In  recent  years,  we  have  seen  strong  demand  for  mobile  telephone  and  mobile  data  services.  In  2001,  the  mobile  telephony  sector  generated
 more  than  $65  billion  in  revenues,  increased  subscribership  from  109.5  million  to  128.5  million,  and  produced  a  nationwide  penetration  rate  of  roughly  forty-  five  percent.  100  Estimates  of  the  number  of
 mobile  Internet  users  at  the  end  of  2001  ranged  from  approximately  eight  to  ten  million,  up  from  2  to  2.5  million  at  the  end  of  2000.  101  In  recent  years,  the  MDS  industry  has  invested  several  billion  dollars  to
 develop  broadband  fixed  wireless  data  systems  in  this  band,  including  high-  speed  access  to  the  Internet  for  residential  customers,  small  and  medium  businesses,  and  educational  institutions.  102  Such  systems
 offer  a  significant  opportunity  to  provide  competition  to  cable  and  Digital  Subscriber  Line  (DSL)  services  in  the  provision  of  broadband  services  in  urban  and  rural  areas.
 38.  We  are  also  cognizant  that  spectrum-  based  services  can  improve  the  ability  of  educators  to  serve  Americas  students.  The  Commission  is  committed  to  exploring  ways  in  which  these  bands  can  be
 used  to  advance  the  public  interest  in  broadband  services  for  all  Americans,  and  therefore  reaffirms  our  goal  of  ensuring  that  educational  and  medical  institutions  continue  to  have  access  to  spectrum.  In  this
 proceeding,  we  hope  to  grant  educators  additional  rights  to  make  it  easier  for  them  to  use  our  national  spectrum  resource.
 39.  Afford  Greater  Flexibility  to  Licensees.  When  we  allow  increased  flexibility  in  the  use  of  radio  spectrum,  we  allow  market  forces  and  educational  needs  to  move  spectrum  to  its  highest  valued
 use.  103  In  doing  so,  however,  we  must  carefully  calibrate  the  extent  of  flexibility  that  is  compatible  with  avoiding  harmful  interference.  Thus,  we  endeavor  to  allow  the  maximum  extent  of  flexibility  possible
 that  would  not  impair  the  rights  of  others  to  offer  valued  services  in  the  band.
 40.  Promote  Increased  Access  to  Spectrum.  Our  rules  do  not  allow  profit-  making  entities  to  hold  ITFS  licenses,  but  they  do  allow  commercial  MDS  operators  to  finance,  build,  operate,  and  obtain  leased
 use  of  ITFS  transmission  facilities    and  provide  the  vast  majority  of  the  programming  carried  over  them.  104  We  undertake  this  proceeding  to  determine  whether  there  are  rules  that  impede  the  full
 development  of  the  2500-  2690  MHz  band.
 41.  Create  regulatory  policies  that  treat  similar  services  similarly.  In  these  Services  where  ITFS  and  MDS  licensees  are  subject  to  different  regulations,  although  they  offer  similar  services,  we  believe
 99  47  U.  S.  C.    303(  y).
 100  Federal  Communications  Commission,  Seventh  Annual  CMRS  Competition  Report  (FCC  02-  179,  rel.  July  3,
 2002)  at  5.
 101  Id.
 102  Coalition  Proposal  at  4  See  also,  3G  Final  Report  at  13.
 103  See  FCC  Staff  Report,  Spectrum  Policy  Task  Force  Report  in  ET  Docket  No.  02-  135,  released  Nov.  2002
 (Spectrum  Policy  Report).
 104  47  C.  F.  R.    74.931.
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 that  regulatory  parity  will  promote  more  efficient  use  of  the  spectrum  allocated  for  each  service.  Consequently,  we  propose  to  consolidate  the  ITFS  rules  in  Parts  73  and  74  and  the  MDS  rules  in  Part  21
 into  Parts  27  or  101  to  foster  consistency  among  similar  wireless  services.
 42.  Facilitate  grouping  similar  spectrum  uses.  One  of  the  challenges  presented  in  managing  spectrum  is  to  promote  incentives  for  spectrum  licensees  to  be  good  neighbors,  i.  e.,  not  cause  harmful
 interference  to  adjacent  systems.  The  Commission  may  accomplish  this  objective  by  creating  an  incentive  for  spectrum-  based  systems  or  devices  to  migrate  to  compatible  bands  based  on  marketplace
 forces.  We  note  that  the  current  configuration  of  the  2500-  2690  MHz  band  in  which  high-  power  ITFS  channels  are  interleaved  with  MDS  channels,  may  inhibit  the  development  of  low  power  cellularized
 broadband  uses  of  the  MDS  channels.  Thus,  in  this  proceeding  we  are  seeking  comment  on  reconfiguring  the  2500-  2690  MHz  band  to  separate  low  power  uses  from  high  power  uses  and  thereby  promote  the  most
 efficient  use  of  the  2500-  2690  MHz  band.
 43.  Conduct  effective  and  timely  licensing  activities  that  encourage  efficient  use  of  the  spectrum.  To  ensure  that  licensing  of  the  2500-  2690  MHz  band  occurs  in  a  rapid,  routine,  and  ordinary  manner,  we
 propose  to  greatly  streamline  the  application  process  for  the  Services,  including  migrating  licensees  to  the  ULS.  Also,  we  are  proposing  other  licensing  approaches,  such  as  licensing  by  geographic  area,  that  will
 give  licensees  increased  flexibility  while  greatly  reducing  the  administrative  burdens  on  both  licensees  and  the  Commission.
 C.  Problems  with  the  Existing  MDS/  ITFS  Rules
 44.  The  Coalition  has  identified  some  of  the  problems  with  the  existing  MDS  and  ITFS  rules.  The  Coalition  Plan  focuses  primarily  on  engineering  issues    accommodating  the  needs  of  two
 incompatible  types  of  users  that  presently  share  a  single  band:  one-  way,  relatively  high-  powered  stations  and  operators  that  seek  to  maximize  spectral  efficiency  by  deploying  low-  powered  cellular  systems.  The
 Coalition  also  identifies  certain  areas  where  the  Commission  could  act  to  reduce  administrative  burdens  on  licensees  and  make  the  MDS/  ITFS  licensing  process  more  efficient.  In  addition,  the  Coalition
 proposes  ways  to  eliminate  unnecessary  paperwork  requirements  that  would  otherwise  impose  a  near-impossible  burden  on  low-  power  operators.
 45.  Both  the  Coalitions  perception  of  the  problems  and  its  proposed  solutions  are  broadly  consistent  with  the  conclusions  reached  in  a  major  report  our  staff  completed  in  2001,  the  3G  Final
 Report.  105  The  most  important  conclusion  reached  in  the  3G  Final  Report  is  that  traditional  MDS/  ITFS  stations  and  third  generation  cellular  systems  are  not  compatible  with  each  other  when  they  are  operating
 on  the  same  frequencies.  Their  service  area  borders  must  be  separated  by  distances  exceeding  100  miles  to  ensure  that  MDS/  ITFS  transmitters  will  not  cause  harmful  interference  to  Third  Generation  (3G)
 receivers.  106  Moreover,  the  report  concludes  that  existing  MDS/  ITFS  systems  preclude  operation  of  3G  systems  in  forty-  nine  of  the  fifty  largest  cities  in  the  U.  S.,  because  all  thirty-  one  of  the  MDS  and  ITFS
 channels  in  the  2500-  2690  MHz  band  are  licensed  within  100  miles  of  those  forty-  nine  cities.  107  The  authors  of  the  3G  Final  Report  recognize  that  it  would  be  infeasible  to  move  the  incumbent  licensees  to  a
 different  band.  Instead,  they  recommend  segmenting  the  band  into  separate  high-  and  low-  power
 105  The  definition  of  3G  is  discussed  at  note  47,  supra.
 106  Id.  at  31.
 107  Id.  at  32.
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 Existing  MDS/  ITFS  Band  Plan
 Existing  Channel
 Designation  Lower  Frequency  Upper  Frequency  A1  2500.  0000  2506.  0000
 B1  2506.  0000  2512.  0000  A2  2512.  0000  2518.  0000
 B2  2518.  0000  2524.  0000  A3  2524.  0000  2530.  0000
 B3  2530.  0000  2536.  0000  A4  2536.  0000  2542.  0000
 B4  2542.  0000  2548.  0000  C1  2548.  0000  2554.  0000
 D1  2554.  0000  2560.  0000  C2  2560.  0000  2566.  0000
 D2  2566.  0000  2572.  0000  C3  2572.  0000  2578.  0000
 D3  2578.  0000  2584.  0000  C4  2584.  0000  2590.  0000
 D4  2590.  0000  2596.  0000  E1  2596.  0000  2602.  0000
 F1  2602.  0000  2608.  0000  E2  2608.  0000  2614.  0000
 F2  2614.  0000  2620.  0000  E3  2620.  0000  2626.  0000
 F3  2626.  0000  2632.  0000  E4  2632.  0000  2638.  0000
 F4  2638.  0000  2644.  0000  G1  2644.  0000  2650.  0000
 H1  2650.  0000  2656.  0000  G2  2656.  0000  2662.  0000  ITFS
 H2  2662.  0000  2668.  0000  MDS  G3  2668.  0000  2674.  0000  ITFS
 H3  2674.  0000  2680.  0000  MDS  G4  2680.  0000  2686.  0000  ITFS
 I1-  I31  2686.  0000  2689.  8750  MDS/  ITFS/  OFS
 ITFS
 MDS
 segments  and  requiring  both  incumbents  and  new  applicants  to  conform  with  the  new  technical  rules.  108  While  the  3G  Final  Report  focuses  on  one  particular  type  of  new  technology,  its  conclusions  may  apply
 with  respect  to  any  low-  powered  two-  way  service  that  seeks  to  achieve  spectral  efficiencies  through  a  cellular-  style  configuration.
 46.  As  discussed  below,  we  believe  that  the  Coalitions  proposals  are  a  major  step  forward  as  we  examine  this  band.  However,  we  believe  that  significant  progress  will  also  require  a  discussion  of
 ownership  and  eligibility  issues,  transition  timetables,  and,  perhaps,  a  more  thorough  resolution  of  engineering  issues  as  well.  Specifically,  we  seek  comment  on  the  possibility  of  expanding  the  ITFS
 eligibility  criteria  to  include  commercial  entities,  and  we  address  the  possibility  of  merging  MDS  and  ITFS  into  a  single  Broadband  Communications  Service.  We  also  seek  comment  on  establishing  specific
 deadlines  for  completion  of  the  transition  process,  and  we  inquire  whether  we  should  establish  a  timetable  for  conversion  of  the  entire  2500-  2690  MHz  band  to  low-  power  operations  compatible  with  two-  way,
 broadband  cellular  services.  We  do  not  propose  to  reclaim  licenses  from  any  incumbent  operators  that  have  complied  with  our  existing  rules  and  continue  to  comply  with  our  rules  when  we  change  them  or
 adopt  new  ones.
 D.  Changes  to  2500-  2690  MHz  Band  Plan
 1.  Background
 47.  ITFS  and  all  but  two  of  the  MDS  channels  are  located  in  the  2500    2690  MHz  band.  As  shown  in
 the  chart  below,  ITFS  currently  has  twenty  6-  MHz  channels,  while  MDS  has  eleven  6-  MHz  channels  in  the
 2500    2690  MHz  band.  The  channels  are  usually  licensed  in  groups  of  four,  but  the  channels  in  each
 group  are  not  contiguous.  The  chart  below  depicts  the  arrangement.  This  band  plan  was  designed  primarily  to
 promote  wireless  cable  and  educational  television  services.  When  ITFS  was  created,  ITFS  reception
 equipment  could  not  receive  adjacent  channels  without  interference.  109  Thus,  the  Commission  interleaved  the  A
 block  channels  with  the  B  block  channels,  the  C  block  channels  with  the  D  block  channels,  the  E  block
 channels  with  the  F  block  channels  and  the  G  block  channels  with  the  H  block  channels.
 48.  This  channelization  framework  was
 108  Id.  at  40-  41.
 109  Coalition  Proposal  at  1.
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 appropriate  for  first  generation  technology  when  the  Commission  created  ITFS  and  MDS,  but  is  not  optimal  for  digital  two-  way  services.  The  Coalition  notes  that  the  existing  band  plan    which  provides
 licensees  with  multiple  interleaved  6  MHz  channels  rather  than  contiguous  spectrum    was  established  in  the  early  1960s  when  television  technology  precluded  the  use  of  adjacent  channels,  and  has  remained
 essentially  unchanged  since  that  time.  110  The  Coalition  asserts  that  the  rationale  for  the  interleaved  band  plan  is  long  gone,  because  MDS  and  ITFS  systems  have  been  demonstrating  the  ability  to  use  adjacent
 channels  for  the  past  20  years.  111  An  interleaved  channelization  scheme  is  especially  awkward  when  one  licensee  seeks  to  operate  at  low  power  while  another,  contiguous  licensee  continues  operating  at  high-power,
 because  low-  power  services  are  especially  susceptible  to  interference  from  high-  power  transmissions  on  adjacent  channels.  The  Coalition  contends  that  the  current  interleaved  band  plan,
 coupled  with  the  current  adjacent  channel  interference  protection  rules,  effectively  precludes  any  licensee  from  providing  broadband  service  unless  consent  is  received  from  the  licensee  of  the  interleaved  channel
 group  (i.  e.  the  licensee  of  the  A  Group  cannot  deploy  two-  way  services  without  consent  from  the  licensee  of  the  B  Group,  and  vice  versa).  112  This  hampers  the  ability  of  individual  MDS  and  ITFS  licensees  to
 deploy  broadband  services  by  giving  adjacent  channel  licensees  veto  power  over  any  such  offering.  113  Another  consideration  is  that,  especially  when  using  spread-  spectrum  techniques  to  avoid  interference,
 service  providers  can  operate  more  efficiently  when  they  have  access  to  large  blocks  of  contiguous  spectrum.  At  the  very  least,  therefore,  any  plan  that  we  adopt  should  address  the  need  to  avoid
 incompatible  power  levels  on  adjacent  channels,  and  ideally,  it  would  provide  a  means  by  which  licensees  could  consolidate  their  channels  into  contiguous  blocks.
 2.  Band  Plan  Alternatives
 49.  There  are  two  basic  ways  to  resolve  the  incompatibility  between  high-  power  one-  way  services  and  low-  power  cellular  services:  separate  them  into  separate  band  segments  or  require  an  across-the-
 board  reduction  in  signal  strengths  at  system  boundaries.  Either  approach  would  facilitate  the  provision  of  low-  power  cellular  services,  which  could  include,  but  need  not  be  limited  to,  provision  of
 two-  way  voice  or  high-  speed  data  services  to  mobile  users.  114  We  discuss  each  approach  in  turn.
 50.  The  Coalition  proposes  to  split  the  2500-  2690  MHz  into  three  segments,  with  the  middle  segment  being  reserved  for  high-  powered  MDS  and  ITFS  stations  and  the  two  segments  above  and  below
 it  reserved  for  low  power  operations.  The  Coalition  proposes  that  every  MDS  and  ITFS  licensee  be  assigned  a  geographic  service  area.  Existing  circular  protected  service  areas  would  be  converted  to
 geographic  service  areas  with  signal  strength  limits  applied  at  their  boundaries.
 110  Id.,  citing  Amendment  of  Parts  2  and  74  of  the  Commissions  Rules  and  Regulations  to  Establish  a  New  Class
 of  Educational  Television  Station  of  the  Transmission  of  Instructional  and  Cultural  Material  to  Multiple  Receiving  Locations  on  Channels  in  the  1990-  2110  Mc/  S  or  2500-  2690  Mc/  S  Frequency  Band,  FCC  63-  722  (rel.  July  30,
 1963),  on  recon.  2  Rad.  Reg.  2d  1619  (P&  F  1964);  Amendment  of  Sec.  74.902  of  the  Rules  Governing  Instructional  Television  Fixed  Stations  to  Assign  Alternate  Channels  to  Stations  Operating  in  the  Same  Area
 Instead  of  Every  Sixth  Channel,  2  Rad.  Reg.  2d  1615  (P&  F  1964).
 111  Coalition  Proposal  at  9.
 112  Id.
 113  Id.  at  10.
 114  The  service  provider  would  not  necessarily  know,  and  might  not  need  to  know,  whether  a  new  subscriber  was
 seeking  to  obtain  mobile  or  fixed  two-  way  data  service.  A  laptop  computer  might  be  fixed  part  of  the  time  and  mobile  at  other  times.
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 Coalition  Band  Plan
 Lower  Band  (LBS)  J  Band  Middle  Band  (MBS)  K  Band  Upper  Band  (UBS)  I  Band
 2500  2566  2572  2614  2620  2686  2690
 51.  The  Coalition  proposes  that  the  LBS  be  designated  as  the  mobile  station  transmit  band  and  that  the  UBS  be  designated  as  the  base  station  transmit  band.  Such  a  designation  would  protect  the
 passive  band  at  2690-  2700  MHz  band.  We  seek  comment  on  this  alternative.  115
 52.  The  3G  Final  Report  discusses  two  other  types  of  band  segmentation  plans.  116  Under  the  first  type  of  band  plan,  there  would  be  alternating  bands  for  low  power  services  and  high  power  services,
 respectively,  with  guard  bands  in  between  the  two  45  megahertz  frequency  blocks  for  low  power  services.  The  chart  below  is  a  pictorial  representation  of  such  a  band  plan:
 Low  Power  Operations  Guard  Band  High  Power  Operations  Guard  Band  Low  Power  Operations  Guard  Band  High  Power  Operations
 A  benefit  of  this  option  is  that  it  would  allow  both  types  of  operations  to  provide  frequency  separation  between  paired  channel  blocks  for  both  3G  and  ITFS/  MDS  operations  for  frequency  division
 duplex  (FDD)  technology.  Just  as  important,  the  ability  to  implement  time  division  duplex  (TDD)  systems  is  not  precluded  by  this  segmentation  plan.  An  operator  may  implement  TDD  technology  on  any
 spectrum  block  for  which  it  is  licensed.
 53.  Another  option  would  be  to  separate  the  band  into  one  block  for  low  power  operations  and  one  block  for  high  power  operations,  separated  by  a  guard  band.  Such  a  band  plan  would  look  like  this:
 Low  Power  Operations  Guard  Band  High  Power  Operations
 Such  a  band  plan  would  provide  a  large  block  of  contiguous  spectrum  for  both  types  of  operations.  As  noted  in  the  3G  Final  Report,  such  a  band  plan  would  be  particularly  well  suited  to  TDD
 technology.  117
 54.  We  seek  comment  on  various  band  plans  or  other  plans  that  would  separate  the  band  into  high  power  and  low  power  operations.  Commenters  should  address  such  issues  as  (1)  the  appropriate
 channelization  plan,  (2)  the  justification  for  and  appropriate  size  of  any  guard  bands,  and  what  types  operations  could  be  permitted  in  such  bands,  (3)  whether  tighter  out-  of-  band  emission  limitations  could
 serve  as  an  alternative  to  guard  bands;  (4)  whether,  and  under  what  circumstances,  licensees  may  disaggregate  or  aggregate  channels,  (5)  any  special  rules  to  apply  in  a  particular  band  segment  or  channel,
 115  We  also  seek  comment  on  amending  the  Table  of  Allocations  to  adopt  a  US  footnote  listing  the  radio
 observatories  that  use  2655-  2690  MHz  on  a  secondary  basis  and  2690-  2700  MHz  on  a  primary  basis.
 116  3G  Final  Report  at  37-  57.
 117  Id.  at  42.
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 (6)  whether  every  market  requires  a  uniform  band  plan,  or  whether  different  band  plans  would  be  appropriate  for  different  markets,  and  (7)  whether  any  plan  is  inconsistent  with  the  educational  mission  of
 ITFS  or  fails  to  recognize  the  unusual  challenges  faced  by  nonprofit  educational  institutions.  With  regard  to  the  latter  concern,  we  note  that  our  Spectrum  Policy  Report  raises  the  possibility  of  allowing  licensees
 in  uncongested  rural  areas  to  operate  at  higher  power  levels,  provided  they  do  not  thereby  generate  unacceptable  interference  in  urban  areas.  118
 55.  The  other  basic  approach  would  be  to  avoid  any  segmentation  of  the  band  by  applying  an  across-  the-  board  limit  on  signal  strengths  sufficient  to  accommodate  low  power  cellularized  operations  on
 all  channels  throughout  the  2500-  2690  MHz  band.  The  Coalition  Plan,  or  any  other  band  segmentation  plan,  would  require  extensive,  mandatory  re-  shuffling  of  channel  assignments  to  avoid  leaving  high
 power  channels  adjacent  to  low  power  channels,  to  avoid  adjacent  channel  interference.  119  By  contrast,  applying  an  across-  the-  board  limitation  on  signal  strengths  could  make  de-  interleaving  a  less  urgent
 necessity  and,  perhaps,  make  it  possible  for  acquisitions,  channel  trades,  and  other  voluntary  market  processes  to  effectuate  any  needed  consolidation  of  channels.  We  seek  comment  on  the  extent  to  which
 such  a  rule  would  reduce  the  need  to  apply  mandatory  channel  reassignments  or  whether  it  would  interfere  with  future  uses  of  this  spectrum  by  educators.
 56.  If  we  were  to  adopt  an  across-  the-  board  reduction  in  signal  strengths,  we  anticipate  that  we  would  adopt  a  transition  period  during  which  existing  high  power  operations  could  continue  to  operate.
 At  the  end  of  the  transition  period,  absent  an  agreement  with  affected  licensees,  we  would  require  high  power  licensees  to  comply  with  new  interference  protection  criteria.  Alternative  mechanisms  for
 encouraging  or  requiring  transitions  to  a  new  band  plan  are  discussed  in  section  III(  D)(  5),  below.  To  the  extent  that  parties  file  comments  on  these  issues,  we  ask  them  to  discuss  the  differing  considerations  that
 might  apply  depending  upon  whether  we  adopt  a  high-  power/  low-  power  band  segmentation  plan  or  an  across-  the-  board  reduction  in  power  levels  that  would  not  require  segmentation  of  the  band.
 57.  From  a  broader  perspective,  we  note  that  Coalition  members  appear  to  believe  that  the  predominant  future  use  of  this  band  will  be  low  power  mobile  services.  On  that  basis,  we  seek  comment
 on  whether  it  will  be  necessary  to  reserve  a  portion  of  this  band  in  the  long  term  to  accommodate  high  power  services.  We  particularly  seek  comment  from  licensees  who  are  currently  engaging  in  high  power
 operations  as  to  their  plans  for  the  spectrum.  We  seek  comment  on  the  technical  feasibility  and  cost  involved  in  complying  with  technical  rules  that  may  require  licensees  to  lower  substantially  their  signal
 strength  outside  their  protected  service  areas.  Based  upon  all  of  those  considerations,  we  inquire  whether  a  uniform  reduction  in  power  levels  throughout  the  2500-  2690  MHz  band  would  be  warranted.  We
 inquire  to  what  extent  such  a  plan  would  disrupt  existing  high-  powered  operations,  and  to  what  extent  it  would  produce  offsetting  advantages  by  making  more  channels  available  for  low-  power  operations.
 3.  Response  Channels
 58.  In  1991,  we  allocated  the  seven  125  kHz  response  channels  (part  of  the  R  channels  under  the  Coalition  band  plan)  associated  with  MDS  channels  E3,  E4,  F3,  F4,  H1,  H2,  and  H3  to  the  POFS.  120  The
 Coalition  proposes  to  return  these  channels  for  MDS  use.  121  We  believe  the  proposal  has  merit  because,
 118  Spectrum  Policy  Report  at  58-  60.
 119  We  address  the  complex  transitional  issues  implicated  by  that  process  in  section  III.  D.  6.
 120  MDS  Second  R&  O,  6  FCC  Rcd  at  6795.
 121  Coalition  Proposal  at  12,  n.  30
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 as  the  Coalition  notes,  there  are  no  OFS  licensees  currently  on  these  channels,  probably  because  they  are  too  narrow  to  be  usable  by  themselves.  We  ask  for  comment  on  this  proposal.  We  also  seek  comment  on
 how  to  assign  this  spectrum,  if  reallocated.  For  example,  should  we  automatically  give  the  channels  to  the  geographic  area  licensee  of  the  corresponding  6-  megahertz  main  channel?  The  Coalition  favors  this
 approach.  Another  option  would  be  to  license  the  channels  on  a  geographic  area  basis  and  allow  any  eligible  entity  to  apply  for  these  channels.  If  we  received  mutually  exclusive  applications,  we  would  hold
 an  auction.  122
 59.  The  Coalition  recommends  that  operation  on  the  response  (R)  channels  be  secondary  to  operation  on  the  LBS,  MBS,  and  UBS  channels.  In  other  words,  they  would  have  us  provide  that
 operation  on  the  response  channels  must  not  cause  harmful  interference  to  operations  on  the  LBS,  MBS,  and  UBS  channels  and  the  R  channel  licensee  must  accept  any  interference  caused  by  an  LBS,  MBS,  or
 UBS  licensee  operating  in  accordance  with  our  Rules.  The  MMDS  Licensee  Coalition  opposes  this  recommendation  and  states  that  response  channels  should  receive  equal  status.  123  We  seek  comment  on
 this  issue.
 4.  Utilization  of  Unassigned  ITFS  Spectrum
 60.  Under  our  rules,  MDS  and  ITFS  licensees  and  applicants  must  apply  to  license  each  transmitter  site  in  the  area  they  wish  to  serve  (i.  e.,  site-  based  licensing).  124  In  addition,  we  license  MDS
 BTA  channels  on  a  geographic  area  basis.  125  The  Coalition  argues  that  elimination  of  site-  by-  site  licensing  and  adoption  of  a  geographic  area-  licensing  concept  for  low-  power  operations  will  promote
 deployment  of  advanced  low-  power  systems  because  a  site-  by-  site  licensing  system  is  cumbersome  and  the  transaction  costs  are  too  high  to  permit  competitive  businesses  to  flourish  using  next  generation
 technology.  126  The  Coalition  contends,  however,  that  a  site-  by-  site  licensing  approach  will  continue  to  be  necessary  for  high-  powered,  one-  way  operations,  though  they  state  that  such  operations  could  benefit
 from  a  streamlined  site-  by-  site  licensing  approach.  127
 61.  In  general,  there  are  two  types  of  flexible,  market-  oriented  approaches  to  spectrum  allocation    the  exclusive  use  model,  and  the  commons  model.  128  Under  the  exclusive  use  model,  a  licensee
 has  exclusive  and  transferable  rights  to  the  use  of  specified  spectrum  within  a  defined  geographic  area,  with  flexible  use  rights  that  are  governed  primarily  by  technical  rules  to  protect  spectrum  users  against
 interference.  129  Under  the  commons  model,  spectrum  is  available  to  all  users  that  comply  with  established  technical  etiquettes  or  standards  that  set  power  limits  and  other  criteria  for  potential
 122  See  para.  22,  supra.
 123  MMDS  Licensee  Coalition  Comments  at  8.
 124  See  47  C.  F.  R.    74.910,  74.  911.
 125  See  MDS  Auction  Report  and  Order,  10  FCC  Rcd  9607.
 126  See  Coalition  Proposal  at  19.
 127  Id.
 128  Spectrum  Policy  Report  at  35.
 129  Id.
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 operation  of  unlicensed  devices  to  mitigate  potential  interference.  130  These  models  suggest  two  types  of  approaches  for  allowing  use  of  the  unassigned  ITFS  spectrum    geographic  area  licensing  and  unlicensed
 operation  pursuant  to  Part  15  of  the  Commissions  Rules  on  a  primary  basis.  We  seek  comment  on  whether  one  or  the  other  of  these  models  is  the  best  means  of  ensuring  the  maximum  and  efficient  use  of
 the  ITFS  spectrum.
 a.  Geographic  Area  Licensing  of  Unassigned  ITFS  Spectrum
 62.  One  means  of  seeking  to  increase  the  intensity  and  efficiency  of  use  of  the  ITFS  spectrum  would  be  to  license  the  unassigned  ITFS  spectrum  using  geographic  area  licensing.  In  other  bands  where
 we  contemplated  allowing  the  development  of  mobile  or  other  wide-  area  services,  we  concluded  that  licensing  based  on  pre-  defined  service  areas  (e.  g.,  geographic  area  licensing)  poses  significant  advantages
 over  site-  based  licensing  because  of  the  greater  operational  flexibility  it  gives  licensees  and  the  greater  ease  of  administration  for  consumers,  licensees,  and  regulators.  131  For  example,  geographic  area  licensing
 reduces  administrative  burdens  and  operating  costs  by  allowing  licensees  to  modify,  move,  and  add  to  their  facilities  within  specified  geographic  areas  without  prior  Commission  approval.  132  Our  experience
 has  been  that  wide-  area  licensing  (as  opposed  to  site-  by-  site  licensing)  affords  licensees  substantial  flexibility  to  respond  to  market  demand  and  may  result  in  significant  improvements  in  spectrum
 utilization.  133  In  particular,  geographic  area  licensing  allows  licensees  to  coordinate  usage  across  an  entire  geographic  area  to  maximize  the  use  of  spectrum  in  areas  of  highest  demand.  Geographic  area
 licenses  also  provide  licensees  the  flexibility  to  adjust  spectrum  usage  depending  upon  market  demands.  Such  adjustments  may  be  significantly  more  difficult  under  a  site-  by-  site  licensing  regime  where  prior
 Commission  approval  is  needed  before  a  licensee  can  address  growth  or  changes  in  demand.
 63.  The  facts  that  both  ITFS  and  MDS  channels  in  the  same  communications  system  and  that  many  MDS  licensees  already  have  geographic  area  licenses  may  provide  an  additional  reason  for
 130  Id.
 131  Implementation  of  Sections  309(  j)  and  337  of  the  Communications  Act:  Promotion  of  Spectrum  Efficient
 Technologies  on  Certain  Part  90  Frequencies  and  Establishment  of  Public  Service  Radio  Pool  in  the  Private  Mobile  Frequencies  Below  800  MHz,  Notice  of  Proposed  Rulemaking,  14  FCC  Rcd  5206,  5238    63  (1999);
 Amendment  of  Parts  2,  15,  and  97  of  the  Commissions  Rules  to  Permit  Use  of  Radio  Frequencies  Above  40  GHz  for  New  Radio  Applications,  Second  Report  and  Order,  12  FCC  Rcd  10,571,  10,599    63  (1997);  Revised
 Competitive  Bidding  Authority  to  Implement  Sections  309(  j)  and  337  of  the  Communications  Act  of  1934,  as  Amended  by  the  Balanced  Budget  Act  of  1997,  64  Fed.  Reg.  23571-  01  (1999).
 132  See  Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act  and  Amendment  of  Part  90  of  the
 Commissions  Rules  to  Facilitate  Future  Development  of  SMR  Systems  in  the  800  MHz  Frequency  Band,  Third  Report  and  Order,  PR  Docket  Nos.  89-  553,  93-  144,  GN  Docket  No.  93-  252,  9  FCC  Rcd  7988,  8044.  See  also,
 Amendment  of  the  Commissions  Rules  Regarding  Multiple  Address  Systems,  WT  Docket  No.  97-  81,  Report  and  Order,  15  FCC  Rcd  11956  (2000).  See  also,  Reallocation  and  Service  Rules  for  the  698-  746  MHz  Spectrum
 Band  (Television  Channels  52-  59),  Report  and  Order,  17  FCC  Rcd  1,022  (2002)  (Lower  700  MHz  Band  R&  O).
 133  See,  e.  g.,  Amendment  of  Part  90  of  the  Commission's  Rules  to  Facilitate  Future  Development  of  SMR  Systems
 in  the  800  MHz  Frequency  Band,  PR  Docket  No.  93-  144,  First  Report  and  Order,  Eighth  Report  and  Order,  and  Second  Further  Notice  of  Proposed  Rule  Making,  11  FCC  Rcd  1463  (1995)  (restructuring  licensing  framework  for
 800  MHz  Specialized  Mobile  Radio  Service  and  adopting  wide-  area  licensing).  See  also  Gregory  L.  Rosston  &  Jeffrey  S.  Steinberg,  Using  Market-  Based  Spectrum  Policy  to  Promote  the  Public  Interest,  50  Fed.  Comm.  L.  J.  87,
 94  (1997).
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 providing  ITFS  operators  with  geographic  area  licenses  as  well.  We  seek  comment  on  whether  both  the  public  and  the  Commission  would  benefit  from  a  consistent  licensing  approach  across  the  entire  band.
 We  note  that  this  licensing  approach  is  consistent  with  the  operational  flexibility  we  have  afforded  other  entities  that  use  spectrum  to  provide  services  such  as  24  GHz,  39  GHz,  PCS,  700  MHz  commercial  band
 and  SMR  licensees.  134
 64.  We  also  seek  comment  on  the  possible  disadvantages  of  licensing  unassigned  ITFS  spectrum  on  a  geographic  area  basis.  Would  geographic  area  licensing  make  it  more  difficult  for  educational
 institutions  and  nonprofit  educational  organizations  to  obtain  access  to  spectrum?  Would  licensing  ITFS  spectrum  on  a  geographic  area  basis  result  in  the  underutilization  of  spectrum  because  ITFS  users  are
 interested  in  operating  in  small,  discrete  areas?
 65.  If  we  decide  to  license  unassigned  ITFS  spectrum  via  a  geographic  area  overlay  license,  we  must  address  three  issues:  what  geographic  areas  to  use  for  licenses,  how  much  bandwidth  should  be
 associated  with  each  license,  and  how  to  address  interference  issues  near  international  borders.  We  address  each  of  these  issues  below.
 (i)  Geographic  Areas  for  Licenses
 66.  Assuming  that  we  use  a  GSA  approach  to  license  this  band,  we  must  determine  the  appropriate  size(  s)  of  service  areas  on  which  licenses  should  be  based.  Traditionally,  in  establishing  a
 service  the  Commission  attempts  to  adopt  optimal  spectrum  block  size(  s)  and  optimal  GSAs,  while  at  the  same  time  allowing  parties  to  aggregate  initial  licenses  and  then  adjust  their  licenses  through  secondary
 market  mechanisms  such  as  partitioning  and  disaggregation,  if  such  fine-  tuning  is  necessary.
 67.  Ideally,  the  size(  s)  of  the  initial  GSAs  would  match  the  business  plans  of  the  initial  licensees.  Our  approach  to  determining  optimum  size(  s)  attempts  to  accommodate  the  likely  range  of  applicant
 desires  by  balancing  efficiency  with  the  policy  goal  of  disseminating  licenses  among  a  wide  variety  of  applicants.  135  We  also  wish  to  foster  service  to  rural  areas  136  and  tribal  lands,  and  to  promote  investment
 in  and  rapid  deployment  of  new  technologies  and  services.  137  Large  license  areas  may  be  preferred  by  incumbent  providers  to  facilitate  build-  out  of  existing  large-  area  systems.  Large  license  areas  also
 provide  carriers  with  greater  flexibility  in  the  build-  out  of  their  services,  since  they  are  less  constrained  by  geographical  license  limits  and  entail  coordination  with  fewer  adjacent  service  providers.  In  this  regard,
 we  seek  comment  on  whether  any  problems  associated  with  the  operations  of  other  service  providers  may  be  better  addressed  by  licensing  this  spectrum  in  larger  areas  where  there  may  be  less  of  a  need  for
 complicated  protection  agreements.  On  the  other  hand,  small  license  areas  may  favor  smaller  entities  with  regional  business  plans  and  no  interest  in  providing  large-  area  service.  Rural  and  smaller  carriers
 134  See  Part  20  (Commercial  Mobile  Radio  Services),  Part  22  (Public  Mobile  Services),  Part  24  (Personal
 Communications  Services),  Part  26  (General  Wireless  Communications  Service),  Part  27  (Miscellaneous  Wireless  Communications  Services),  and  Part  90  (Private  Land  Mobile  Radio  Services)  of  our  rules.
 135  See  47  U.  S.  C.    309(  j)(  3)(  B),  (4)(  C).
 136  See  47  U.  S.  C.    309(  j)(  3)(  A).
 137  See  47  U.  S.  C.    309(  j)(  4)(  C)(  iii).
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 may  prefer  licensing  based  on  small  geographic  areas.  138
 68.  We  note  that  our  simultaneous  multiple  round  and  combinatorial  (or  package)  auction  designs  generally  may  offer  bidders  the  opportunity  to  aggregate  smaller  regional  licenses  to  cover  larger
 geographic  areas,  to  aggregate  smaller  spectrum  blocks,  and  to  pair  unpaired  spectrum.  139  Such  aggregation  at  auction  of  smaller  spectrum  blocks  and  licenses  may  provide  bidders  with  greater
 flexibility  to  implement  their  business  plans,  as  compared  with  the  traditional  approach  of  defining  optimal  size.  Thus,  in  discussing  the  issues  of  spectrum  block  size,  geographic  area,  and  pairing  of
 spectrum,  commenters  are  requested  to  take  into  consideration  the  various  available  auction  designs.  For  example,  if  a  commenter  advocates  a  nationwide  geographic  area  license,  the  commenter  may  also  wish
 to  comment  on  whether  the  auction  of  smaller  licenses  would  allow  bidders  to  aggregate  licenses  to  create  a  nationwide  footprint.  Commenters  should  also  discuss  whether  a  particular  band  plan  serves  the
 Commissions  spectrum  management  goals,  including  flexible  and  efficient  spectrum  use.  140  We  are  also  aware  that  some  licensees  may  need  smaller  service  areas,  since  the  most  desirable  or  efficient  scale  of
 service  area  may  vary  according  to  the  business  plan  of  the  potential  licensee,  in  light  of  the  variety  of  potential  services  that  we  envision  will  use  these  bands,  including  emerging  technologies  or  next-generation
 applications.  Thus,  in  discussing  these  issues,  commenters  should  also  take  into  consideration  the  possibility  that  we  would  permit  post-  auction  partitioning  of  licenses  for  bidders  whose  business  plans
 require  different  size  geographic  areas  than  we  ultimately  adopt.
 69.  In  the  past  the  Commission  has  licensed  spectrum  using  a  wide  variety  of  GSAs,  including  nationwide  licensing,  regional  licensing,  local  licensing,  or  some  combination  of  these  approaches:
 138  See,  e.  g.,  Service  Rules  for  the  746-  764  and  776-  794  MHz  Bands,  and  Revisions  to  Part  27  of  the
 Commissions  Rules,  WT  Docket  No.  99-  168,  First  Report  and  Order,  15  FCC  Rcd  476,  499    55  (2000)  (Upper  700  MHz  First  Report  and  Order).
 139  Package  bidding  may  take  many  forms.  Under  the  design  that  the  Wireless  Telecommunications  Bureau
 developed  for  the  700  MHz  band  auction  (Auction  No.  31),  bidders  were  not  restricted  to  placing  bids  on  individual  licenses,  but  were  allowed  to  place  all-  or-  nothing  bids  on  packages  of  licenses.  Auction  of  Licenses  in
 the  747-  762  and  777-  792  MHz  Bands  Scheduled  for  September  6,  2000;  Procedures  Implementing  Package  Bidding  For  Auction  No.  31,  Public  Notice,  15  FCC  Rcd  11,526  (2000)  (describing  package  bidding  procedures);
 see  also  Auction  of  Licenses  on  the  747-  762  and  777-  792  MHz  Bands  Scheduled  for  June  19,  2002,  Round  Results  Process  and  Results  Replication,  Public  Notice,  17  FCC  Rcd  8,128  (2002).  Under  this  approach,  for
 example,  a  bidder  desiring  to  inaugurate  a  nationwide  service  could  bid  on  a  package  of  licenses  that  covers  the  entire  nation,  and  not  face  the  risk  of  winning  only  some  of  the  desired  licenses  and  paying  more  than  the  bidder
 values  those  licenses  by  themselves  (without  the  other  licenses  needed  to  provide  nationwide  coverage).
 140  See  47  U.  S.  C.    309(  j)(  3)(  D).
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 Number  of  Licenses  Description  of  areas  Examples
 1  Nationwide  Narrowband  PCS  141  ,  1.6  GHz  band  142
 5  Narrowband  PCS  Regional  Narrowband  PCS  143
 6  Economic  Area  Groupings  (EAG)  220  MHz,  144  Blocks  A/  B/  D/  E,  Lower  700  MHz  145
 12  Regional  Economic  Area  Groupings  (REAG)  Wireless  Communication  Service  (WCS)  146
 51  (see  note  below)  A  &  B-  Block  PCS  147
 51  or  52  Major  Economic  Areas  (MEA)  WCS,  148  929/  931  MHz  Paging  149
 175  Economic  Areas  (EA)  220  MHz,  150  800  MHz  SMR,  151  Paging,  152  Multiple  Address  Systems  153
 493  (see  note  below)  C/  D/  E/  F-  Block  PCS  154
 734  306  Metropolitan  Statistical  Areas  (MSA)  plus  428  Rural  Service  Areas  (RSA)  Cellular,  155  Block  C,  Lower  700  MHz  156
 141  See  47  C.  F.  R.    24.102(  a).
 142  See  47  C.  F.  R.    27.6(  f).
 143  See  47  C.  F.  R.    24.102(  b).
 144  See  47  C.  F.  R.    90.7,  90.761(  b).
 145  See  47  C.  F.  R.    27.6(  c)(  1).
 146  See  47  C.  F.  R.    27.6(  a).
 147  See  47  C.  F.  R.    24.202(  a).  These  fifty-  one  areas  were  used  under  licenses  issued  by  Rand  McNally  &
 Company  for  certain  specific  radio  services,  not  including  AWS,  and  are  therefore  not  available  for  consideration  in  this  proceeding.  See  Copyright  Liabilities,  Public  Notice,  11  FCC  Rcd  22,429  (MMB  1996).
 148  See  47  C.  F.  R.    27.6(  a).  WCS  MEA  number  52  consists  of  the  Gulf  of  Mexico.
 149  See  47  C.  F.  R.    22.503(  b)(  2),  (3).  The  fifty-  one  paging  MEAs  do  not  include  the  Gulf  of  Mexico.
 150  See  47  C.  F.  R.    90.7,  90.761(  a).
 151  See  47  C.  F.  R.    90.7,  90.681.
 152  See  47  C.  F.  R.    22.503(  b)(  2),  (3).
 153  See  47  C.  F.  R.    101.1315.
 154  See  47  C.  F.  R.    24.202(  b).  These  493  areas  were  used  under  licenses  issued  by  Rand  McNally  &  Company  for
 certain  specific  radio  services,  not  including  AWS.  See  Copyright  Liabilities,  Public  Notice,  11  FCC  Rcd  22,429  (MMB  1996).
 155  See  47  C.  F.  R.    22.909.
 156  See  47  C.  F.  R.    27.6(  c)(  2).
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 70.  We  seek  comment  on  these  and  other  possible  approaches  as  applied  to  the  2500-  2690  MHz  band.  As  indicated  in  the  chart  above,  options  include:
 71.  Licensing  these  bands  on  a  nationwide  basis.  Nationwide  licensing  provides  the  maximum  advantages  of  large-  area  licenses,  and  it  may  disadvantage  applicants  interested  in  limited  service  areas.
 We  seek  comment  on  the  extent  to  which  nationwide  licenses  maximize  the  opportunity  to  provide  the  widest  array  of  services  and  business  plans.  We  also  seek  comment  on  whether  nationwide  licensing
 provides  the  necessary  incentives  for  fostering  the  growth  of  existing  technologies  while  encouraging  the  development  of  new  applications.  In  addition,  we  seek  comment  on  whether  the  adoption  of  nationwide
 licensing  provides  potential  savings  to  the  time  and  cost  of  developing  applications  and  manufacturing  equipment  to  operate  in  the  spectrum  at  issue  in  this  proceeding.  We  seek  comment  as  to  whether
 nationwide  licensing  would  affect  educational,  telemedicine  or  medical  institutions  located  in  particular  geographic  areas.
 72.  Licensing  this  spectrum,  or  a  subset  of  this  spectrum,  using  local  area  licenses.  Under  this  approach,  the  Commission  could  license  this  spectrum,  or  some  part  of  this  spectrum,  using  BTAs  or
 aggregations  of  counties  that  approximate  BTAs.  The  most  compelling  argument  for  that  approach  is  that  we  used  BTAs  when  auctioning  unused  MDS  spectrum  in  1996.  A  similar  approach  when  auctioning
 unused  ITFS  spectrum  would  be  consistent  and  would  arguably  make  it  easier  for  licensees  to  aggregate  spectrum  derived  from  MDS  with  spectrum  derived  from  ITFS.  We  seek  comment  on  whether  local  area
 licenses  are  preferable  to  nationwide  or  regional  licenses,  and  if  so  which  local  area  licensing  scheme  is  preferable.  We  also  seek  comment  on  how  local  area  licenses  would  affect  educational,  telemedicine  or
 medical  institutions  seeking  ITFS  service.
 73.  Licensing  these  bands  using  large,  regional  licenses.  We  could  license  these  bands  using  areas  comparable  to  the  six  large,  regional  Economic  Area  Groupings  (EAGs),  the  twelve  slightly  smaller
 Regional  Economic  Areas  (REAs),  or  the  fifty-  two  Major  Economic  Areas  (MEAs).  To  ensure  consistency  with  our  previous  MDS  auction,  it  may  be  best  to  choose  boundaries  aligned  with  BTA
 boundaries,  i.  e.,  to  fashion  large  regional  GSAs  comprised  of  multiple  BTAs.  While  we  are  aware  of  interest  in  BTA-  sized  licenses,  we  seek  comment  on  whether  there  is  any  demand  for  regional  licenses.
 We  seek  comment  on  what  specific  large  regional  licensing  areas  would  be  appropriate  if  we  choose  to  follow  that  approach.  We  also  seek  comment  on  whether  the  opportunity  to  aggregate  regional  licenses
 would  be  sufficient  for  those  seeking  to  build  a  nationwide  footprint.  We  also  seek  comment  on  how  the  use  of  large  regional  licenses  would  affect  educational,  telemedicine  or  medical  institutions  seeking  ITFS
 service.
 74.  Licensing  a  portion  of  this  spectrum  using  a  nationwide  or  regional  approach,  and  the  remaining  portion  using  smaller  geographic  areas.  Commenters  supporting  this  approach  should  indicate
 which  spectrum  in  these  bands  should  be  licensed  on  a  nationwide  or  regional  basis  and  which  spectrum  should  be  licensed  using  small  geographic  areas.  In  addition,  if  commenters  support  licensing  based  on
 service  areas  other  than  those  discussed  above,  they  should  discuss  why  other  designations  are  more  appropriate.  We  seek  comment  on  how  such  an  approach  would  affect  educational,  telemedicine  or
 medical  institutions  seeking  ITFS  service.
 75.  We  point  out  here  that  Rand  McNally  is  the  copyright  owner  of  the  Basic  Trading  Area  and  Major  Trading  Area  Listings,  which  list  the  counties  embodied  in  each  BTA,  as  contained  in  Rand
 McNallys  Commercial  Atlas  &  Marketing  Guide.  157  Both  the  WCA  and  the  Commission  have
 157  See  Rand  McNally  2003  Commercial  Atlas  &  Marketing  Guide  at  40-  43.
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 agreements  with  Rand  McNally  to  use  Rand  McNallys  copyright  MTA/  BTA  listings  and  maps.  158  These  agreements  authorize  the  conditional  use  of  Rand  McNallys  copyright  material  by  Commission  MDS
 licensees  and  requires  interested  persons  using  this  material  to  include  a  legend  on  reproductions  indicating  Rand  McNallys  ownership,  and  provides  for  payment  of  a  one  time  license  fee  to  Rand
 McNally.  159  Under  the  terms  of  the  WCA  license  agreement,  license  fees  are  to  be  paid  within  ten  business  days  after  the  date  that  MDS  BTA  authorization(  s)  are  issued  by  the  Commission.
 76.  These  agreements  do  not  explicitly  address  ITFS  channels  that  the  Commission  does  not  license  as  a  result  of  the  MDS  Auction  R&  O.  160  Thus,  if  we  select  Rand  McNallys  BTAs  as  the  service
 definition  for  ITFS  geographic  area  licenses,  a  question  arises  as  to  whether  an  ITFS  licensee  would  have  to  obtain  a  copyright  license  (either  through  a  blanket  license  agreement  or  some  other  agreement)  from
 Rand  McNally.  161  We  are  concerned  that  an  ITFS  geographic  area  licensee  might  not  be  able  to  rely  on  the  grant  of  a  BTA-  based  authorization  from  the  Commission  as  a  defense  against  any  claim  of  copyright
 infringement  brought  by  Rand  McNally  against  such  grantee.  Accordingly,  we  seek  comment  on  whether  BTAs  are  appropriate  for  ITFS.
 (ii)  Bandwidth  for  Licenses
 77.  We  also  seek  comment  on  the  appropriate  size  of  the  spectrum  block  or  blocks  to  assign  to  ITFS  geographic  area  licensees.  The  individual  channels  for  MDS  and  ITFS  spectrum  in  the  2500-  2690
 MHz  band  are  six  megahertz  wide.  One  option  would  be  to  issue  a  single  geographic  area  license  for  all  unencumbered  ITFS  spectrum  in  a  given  market,  region,  or  nationwide.  In  the  case  of  MDS,  the
 Commission  awarded  a  single  BTA  license  covering  all  unencumbered  MDS  channels.  162  A  second  option  would  be  to  issue  separate  licenses  for  each  individual  channel.  A  third  option  would  be  to  divide
 the  band  into  24  MHz  blocks,  based  upon  the  fact  that  many  licensees  are  licensed  for  blocks  of  four  six  MHz  channels.  In  reaching  our  determination,  our  intent  is  to  maximize  licensee  flexibility,  provide  ITFS
 geographic  area  licensees  with  the  spectrum  they  need  to  offer  technologically  advanced  and  innovative  services,  and  ensure  the  most  efficient  utilization  of  the  spectrum.
 (iii)  International  Border  Issues
 78.  In  the  Canadian  and  Mexican  border  areas,  availability  of  this  band  may  be  restricted  by  a  border  agreement  or  treaty.  163  As  a  result,  certain  segments  of  the  band  may  not  be  available  in  border
 158  See  Letter  from  P.  Sinderbrand  to  W.  Caton,  Acting  Secretary,  FCC,  Jan.  11,  1996.  The  Commission
 incorporated  the  WCA/  Rand  McNally  agreement  by  reference  in    2(  a)(  iii),  dated  November  29,  2000.  On  September  18,  1995,  Rand  McNally  reached  an  agreement  with  the  WCA  for  a  blanket  copyright  license  for  the
 conditional  use  of  the  copyrighted  material  in  MDS.
 159  Mass  Media  Bureau  Reminds  Licensees  that  Issuance  of  a  BTA  Authorization  Triggers  Copyright
 Responsibilities,  Public  Notice,  11  FCC  Rcd  22,429  (1996)  (BTA  PN).
 160  See  MDS  Auction  R&  O,  10  FCC  Rcd  at  9608.
 161  See,  e.  g.,  Revision  of  Part  22  and  90  of  the  Commission's  Rules  to  Facilitate  Future  Development  of  Paging
 Systems,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  2732,  2735  n.  3  (1997);  BTA  PN,  11  FCC  Rcd  at  22,429.
 162  MDS  Auction  R&  O,  10  FCC  Rcd  9589.
 163  See  e.  g.,  Interim  Arrangement  Concerning  the  Use  of  the  Frequency  Bands  2150    2162  MHz  and  2500    2690
 MHz  by  MCS  and  MDS  Stations  Near  the  Canada/  United  States  of  America  Border  (dated  Jun.  25,  2002).
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 areas  or  licensees  may  need  to  comply  with  limitations  on  power,  antenna  height  and  use  which  may  make  geographic  area  licenses  in  these  areas  less  attractive.  In  other  services  where  we  have
 implemented  geographic  area  licensing,  we  did  not  distinguish  between  border  areas  and  non-  border  areas.  164  We  propose  to  license  all  geographic  areas  on  a  uniform  basis  without  regard  to  whether  all  or
 part  of  the  geographic  area  is  in  a  border  area.  Geographic  area  licensees  could  use  any  authorized  ITFS  channels  subject  to  the  relevant  rules  and  international  agreements  governing  this  band.  We  will  review
 existing  agreements  to  see  if  it  would  be  useful  to  initiate  discussions  with  Canada  and  Mexico  concerning  renegotiating  current  agreements  in  the  future  to  provide  greater  flexibility  than  what  is
 allowed  by  the  existing  agreements.  We  believe  that  applicants  are  in  the  best  position  to  assess  the  effects  of  any  limitations  on  the  use  of  ITFS  channels.
 b.  Unlicensed  Use  of  Unassigned  ITFS  Spectrum
 79.  Another  possible  means  of  ensuring  utilization  of  the  unassigned  ITFS  spectrum  would  be  to  allow  unlicensed  operation  in  the  unassigned  ITFS  spectrum  on  a  primary  basis.  165  Unlicensed
 transmitters  may  be  operated  under  the  provisions  of  Part  15  of  the  Commissions  Rules.  166  Part  15  transmitters  generally  operate  on  frequencies  shared  with  authorized  services  and  at  relatively  low  power.
 Operation  of  a  Part  15  transmitter  is  subject  to  the  conditions  that  the  device  not  cause  interference  to  authorized  services,  and  that  the  device  must  accept  any  interference  received.  167  Part  15  transmitters
 may  not  operate  in  certain  restricted  bands,  including  2655-  2690  MHz.  168
 80.  The  use  of  unlicensed  spectrum  has  grown  substantially  in  the  past  several  years.  The  innovation  allowed  by  the  unlicensed  approach  has  led  to  an  explosion  in  802.11(  b)  wireless  local  area
 networks,  for  example,  which  has  benefited  consumers.  The  Spectrum  Policy  Task  Force  recognized  that  the  Commissions  dedication  of  some  lower  band  spectrum  to  unlicensed  uses,  e.  g.  2.4  GHz,  is  yielding
 significant  technological  and  economic  benefits  in  the  form  of  low-  power  short-  distance  communications  and  emerging  mesh  network  technologies  that  should  be  further  encouraged.  169
 81.  The  characteristics  of  the  ITFS  spectrum  may,  depending  on  the  choices  we  make  in  this  proceeding,  make  it  an  attractive  choice  for  unlicensed  use.  The  presence  of  intense  unlicensed
 operations  at  2.4  GHz  may  mean  that  equipment  efficiencies  could  be  realized  for  operators  that  engage  in  operations  in  both  bands.  The  intense  utilization  of  unlicensed  technologies,  such  as  wireless  LANs,
 by  educational,  telemedicine  or  medical  institutions  today  may  mean  that  ITFS  and  unlicensed  technologies  can  provide  educations  with  a  useful  hybrid  spectrum-  based  teaching  tool.
 164  See  e.  g.,  Amendment  of  Parts  2  and  90  of  the  Commissions  Rules  to  Provide  for  the  Use  of  200  Channels
 Outside  the  Designated  Filing  Areas  in  the  896-  901  MHz  and  the  935-  940  MHz  Bands  Alloted  to  the  Specialized  Mobile  Radio  Pool,  PR  Docket  No.  89-  553,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed
 Rule  Making,  10  FCC  Rcd  6884,  6908  (1995).
 165  For  further  discussion  concerning  unlicensed  operation  in  the  2500-  2690  MHz  band,  including  discussion  of
 the  current  rules  relating  to  unlicensed  operation  in  these  bands,  see  Section  III.  E.  6,  infra.
 166  See  47  C.  F.  R.  Part  15.
 167  See  47  C.  F.  R.    15.5.
 168  47  C.  F.  R.    15.205.
 169  Spectrum  Policy  Report  at  40.
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 82.  We  therefore  seek  comment  on  the  advantages  and  disadvantages  of  allowing  unlicensed  technologies  to  operate  in  current  white  space  in  the  ITFS  spectrum,  and  where  ITFS  licenses  are  returned
 to  the  Commission,  on  a  primary  basis.  Would  allowing  unlicensed  use  of  the  ITFS  spectrum  on  a  primary  basis  provide  educators  with  a  useful  new  tool?  Is  it  possible  to  allow  unlicensed  operation
 without  undermining  current  ITFS  operations  (including  educational,  telemedicine  or  medical  uses)?  If  so,  what  rules  and  technical  requirements  would  be  necessary  to  ensure  sufficient  interference  protection
 to  existing,  licensed  ITFS  facilities?  Should  any  antenna  requirements  be  imposed?  What  would  be  the  appropriate  power  and/  or  field  strength  limits  for  unlicensed  transmitters  operating  on  such  a  basis?
 Could  GPS  or  other  location  techniques  be  incorporated  into  an  unlicensed  device  so  it  could  determine  its  precise  location  and  identify  licensed  users  in  its  vicinity  by  accessing  a  database?  Would  such  an
 approach  be  reliable,  and  could  it  be  combined  with  other  methods  to  prevent  interference  to  licensed  services?  If  we  ultimately  revise  the  band  plan  for  the  2500-  2690  MHz  band,  particularly  in  a  fashion
 segmenting  low  power  and  high  power  operations,  is  unlicensed  use  preferable  in  one  portion  but  not  the  other?
 5.  Geographic  Area  Licensing  for  Current  Licensees
 a.  Geographic  Area  Licensing  for  MDS  BTA  Authorization  Holders
 83.  Under  the  current  rules,  qualified  auction  winners  were  granted  licenses  for  BTAs.  A  BTA  authorization  holder  may  provide  service  within  its  BTA,  excluding  the  PSA  of  incumbent  stations  and
 previously  proposed  MDS  and  ITFS  facilities.  170  A  BTA  authorization  holder,  however,  must  also  apply  for  an  individual  station  license  for  each  transmitter  within  its  BTA.  171  In  other  services  utilizing
 geographic  area  licensing,  however,  a  geographic  area  licensee  may  generally  construct  a  new  transmitter  within  its  licensed  area  and  on  a  channel  covered  by  its  geographic  area  license  so  long  as  (1)  the
 construction  complies  with  the  Commissions  interference  and  other  rules,  (2)  an  environmental  assessment  is  not  required,  (3)  international  coordination  is  not  required,  or  (4)  the  proposed  transmitter
 would  not  affect  a  radiofrequency  quiet  zone.  172  We  believe  that  this  approach  results  in  efficient  service  to  the  public  and  fewer  unnecessary  regulatory  burdens  upon  licensees  and  the  Commission.  For  the
 reasons  noted  above,  we  believe  that  MDS  BTA  authorization  holders  should  not  be  required  to  obtain  individual  station  licenses  for  transmitters.  We  also  see  no  basis  for  treating  MDS  BTA  authorization
 holders  differently  than  ITFS  geographic  area  licensees.  173  Accordingly,  we  tentatively  conclude  that  MDS  BTA  authorization  holders  should  be  allowed  to  place  transmitters  anywhere  within  their  service
 area  without  prior  authorization  so  long  as  the  operation  complies  with  the  applicable  service  rules  and  that  do  not  affect  radiofrequency  quiet  zones  or  require  environmental  review  or  international
 coordination.  We  seek  comment  on  this  tentative  conclusion.
 84.  We  also  propose  to  modify  the  procedures  that  apply  when  an  incumbent  license  within  a  BTA  is  forfeited.  Under  current  rules,  if  an  incumbent  site-  based  MDS  license  is  forfeited,  the
 incumbents  service  area  shall  merge  and  become  part  of  the  surrounding  BTA  service  area.  174  The  BTA
 170  47  C.  F.  R.    21.924(  c).
 171  47  C.  F.  R.    21.925(  b).
 172  See,  e.  g.,  47  C.  F.  R.    90.663,  101.525(  a),  101.1009.
 173  See  paras.  62  -65  supra,  regarding  geographic  area  licensing  for  unassigned  ITFS  spectrum.
 174  47  C.  F.  R.    21.932(  a).
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 authorization  holder,  however,  cannot  operate  within  that  area  until  it  files  a  long  form  application  to  operate  a  transmitter  and  the  Commission  grants  that  application.  175  In  other  wireless  services,
 frequencies  associated  with  cancelled  or  forfeited  incumbent  authorizations  automatically  revert  to  the  geographic  license  holder.  176  We  believe  that  requiring  geographic  area  licensees  to  obtain  a  separate
 authorization  prior  to  operating  within  the  area  of  a  cancelled  or  forfeited  incumbent  license  is  an  unnecessary  regulatory  burden  and  causes  delays  in  service.  Consistent  with  the  approach  we  have  taken
 in  other  wireless  services,  we  tentatively  conclude  to  modify  the  rules  to  provide  that  in  the  case  where  an  incumbent  license  cancels  or  is  forfeited,  the  right  to  operate  would  automatically  revert  to  the  licensee
 that  holds  the  BTA  license.  177
 b.  Geographic  Area  Licenses  for  Site-  Licensed  Incumbents
 85.  In  tandem  with  our  proposal  to  use  geographic  areas  to  license  ITFS  spectrum,  we  must  assess  the  potential  impact  of  this  proposal  on  incumbent  ITFS  licensees  that  have  site-  based  licenses.
 Previously,  when  implementing  geographic  area  licensing  for  spectrum  that  had  incumbents,  the  Commission  traditionally  has  used  an  overlay  licensing  approach  where  the  Commission  grandfathered
 (protected)  existing  constructed  and  operating  stations  178  or  provided  for  specified  relocation  periods.  While  an  overlay  approach  has  worked  well  in  the  past,  the  Coalition  contends  that  there  are  inherent
 difficulties  with  an  approach  that  allows  incumbents  to  remain  in  place  indefinitely  because  high-  power  video  and  low-  power  cellular  systems  will  share  this  band.  179  The  Coalition  believes  these  difficulties
 could  hinder  the  implementation  of  new  advanced  services  in  this  band  because  most  geographic  area  licensees  and  incumbents  would  probably  use  the  band  to  provide  a  low-  power  two-  way  service,  180  while
 some  incumbent  licensees  are  using  the  band  to  provide  high-  power  video  operations  (educational  or  commercial  wireless  cable).
 86.  Since  we  are  proposing  to  protect  incumbent  operations  on  current  ITFS  channels,  we  must  define  the  protected  areas.  The  Coalition  proposes  to  give  each  existing  site-  based  MDS  and  ITFS
 licensees  a  GSA,  based  on  the  current  rules.  181  In  this  regard,  we  note  that  applicants  for  new  stations  on  ITFS  channels  must  provide  protection  to  incumbents  based  on  PSAs.  182  We  note  that  MDS  incumbents
 175  47  C.  F.  R.    21.925(  c)(  4),  21.932(  c).
 176  See,  e.  g.,  47  C.  F.  R.    101.1331  (MAS):  Amendment  of  the  Commissions  Rules  Regarding  the  37.0-  38.6  GHz
 and  38.6-  40.0  GHz  Bands,  ET  Docket  No.  95-  183,  12  FCC  Rcd  18600,  18637-  8    79  (39  GHz  Report  and  Order).
 177  See,  e.  g.,  39  GHz  Report  and  Order,  12  FCC  Rcd  at  18637-  8,    79.
 178  (e.  g.,  geographic  area  licensees  must  protect  existing  co-  channel  stations  located  within  their  geographic
 service  area)  See  Amendment  of  the  Commissions  Rules  Regarding  Multiple  Address  Systems,  WT  Docket  No.  97-  81,  15  FCC  Rcd  11,956  (2000);  See  MDS  Auction  R&  O,  10  FCC  Rcd  9589.
 179  Coalition  Proposal  at  10.
 180  Other  licensees  agree  that  many  existing  ITFS  licensees  will  move  or  are  contemplating  moving  away  from
 traditional  one-  way  high-  power  video-  based  operations.  See  Joint  Comments  of  ITFS  Parties  at  2.
 181  Coalition  Proposal  at  20.
 182  47  C.  F.  R.    74.903,  21.902(  d).  Beginning  on  September  15,  1995,  the  initial  service  boundaries  were  frozen,
 i.  e.,  the  circular  PSA  boundaries  were  not  to  be  changed  regardless  of  whether  or  not  the  licensee  subsequently  (continued.)
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 that  obtained  their  licenses  prior  to  our  1996  MDS  BTA  auction  have  35-  mile  PSAs  around  their  main  stations.  183  Except  with  respect  to  situations  where  MDS  and  ITFS  PSAs  overlap,  we  have  not  received
 many  significant  expressions  of  concern  over  electrical  interference  resulting  from  this  approach.  Therefore,  we  propose  to  provide  each  incumbent  on  a  current  ITFS  channel  and  each  MDS  incumbent
 with  a  PSA  based  on  a  circle  with  a  35-  mile  radius  around  its  main  station,  subject  to  the  exceptions  discussed  below.  We  ask  for  comments  on  this  proposal  and,  in  addition,  we  inquire  whether  we  should
 change  the  name  of  such  areas  from  PSAs  to  GSAs.  A  benefit  of  making  this  change  would  be  to  allow  incumbents  to  change  the  location  of  their  transmitters  without  prior  Commission  approval.
 87.  In  discussing  the  issue  of  protected  areas  for  incumbents,  the  Coalition  points  out  that  the  rules  defining  protected  areas  have  changed  over  the  years.  As  a  result,  the  PSAs  assigned  to  co-  channel
 incumbent  MDS  and  ITFS  licensees  can  overlap.  184  The  Coalition  argues  that  since  none  of  the  licensees  with  service  areas  that  overlap  can  satisfy  the  interference  protection  criteria  in  the  overlap  area,  no  one
 can  operate  in  these  areas.  185  According  to  the  Coalition,  the  MDS/  ITFS  industry  has  informally  developed  a  method  for  handling  this  problem.  The  Coalition  notes  that  the  general  method  for  dividing
 the  overlap  area  is  to  draw  a  straight-  line  (chord)  beginning  and  ending  at  the  two  points  where  the  protected  service  areas  intersect.  186  This  approach  has  the  effect  of  drawing  a  boundary  along  the  line
 connecting  the  ends  of  the  football-  shaped  overlap  area,  with  the  licensees  on  either  side  agreeing  to  limit  the  interference  they  generate  outside  their  boundaries.  The  Coalition  proposes  that  we  codify  this
 approach.
 88.  The  boundary-  splitting  proposal  described  above  could  leave  some  reception  sites  marooned  on  the  wrong  side  of  the  line  relative  to  ITFS  stations  from  which  they  have  been  receiving  service.
 Based  on  that  concern,  and  on  the  fact  that  some  registered  reception  sites  fall  outside  a  35-  mile  radius,  the  Coalition  proposes  that  we  grandfather  certain  ITFS  reception  sites  located  outside  the  PSA.  187  Under
 the  Coalitions  proposal,  ITFS  licensees  would  be  required  to  provide  technical  information  to  co-  channel  and  adjacent  channel  licensees  concerning  the  reception  sites  within  twenty-  one  days  of  a  request.  188
 Generally,  however,  we  do  not  protect  sites  outside  the  established  protected  areas  in  other  services  where
 (Continued  from  previous  page)  moved  its  transmitter.  Id.  An  ITFS  licensees  PSA  includes  the  area  within  a  35-  mile  radius  of  its  transmitter  site
 plus  any  reception  sites  beyond  that  radius  that  were  registered  with  the  Commission  on  September  17,  1998.
 183  See  47  C.  F.  R.    21.902(  d),  21.933(  a).
 184  Effective  September  15,  1995,  the  Commission  expanded  the  PSAs  of  incumbent  site-  based  MDS  and  ITFS
 licensees  from  fifteen  miles  to  thirty-  five  miles.  See  Amendment  of  Parts  21,  43,  74,  78,  and  94  of  the  Commissions  Rules  Governing  Use  of  the  Frequencies  in  the  2.1  and  2.5  GHz  Bands  Affecting:  Private
 Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  Instructional  Television  Fixed  Service,  &  Cable  Television  Relay  Service,  Second  Report  and  Order,
 Gen.  Docket  Nos.  90-  54  and  80-  113,  10  FCC  Rcd  7074  (1995).  In  doing  so,  it  created  a  number  of  overlaps  between  licensees  whose  PSAs  had  not  overlapped  before  the  standard  PSA  radius  was  increased.
 185  Coalition  Proposal  at  20-  21  (e.  g.,  the  rule  changes  have  created  a  no  mans  land).
 186  See  Coalition  Proposal  Appendix  C  for  a  detailed  explanation.
 187  Coalition  Proposal  at  35.
 188  ITFS  licensees  must  identify  the  location  of  such  receive  sites,  the  antenna  make  and  model  and  the  antenna
 height  above  ground  and,  if  known,  the  adjacent  channel  D/  U  ratio  that  can  be  tolerated.  See  Coalition  Proposal  at  35-  36.
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 we  have  implemented  geographic  area  licensing.  189  Requiring  licensees  to  provide  such  additional  technical  information  is  contrary  to  our  goal  of  reducing  regulatory  burdens.  We  are  also  concerned  that
 providing  continued  protection  to  out-  of-  area  reception  sites  could  confuse  the  definition  of  GSAs  for  site-  licensed  incumbents,  whether  or  not  we  choose  to  allow  continued  high-  power  operations  in  part  of
 the  band.  We  invite  comment  on  the  costs  versus  benefits  of  continuing  to  protect  reception  sites  that  fall  outside  the  35-  mile  service  areas  of  incumbents,  or  beyond  boundaries  established  mathematically  by
 splitting  areas  of  overlap.  Commenters  supporting  the  Coalitions  position  on  this  issue  should  provide  information  on  how  many  receive-  only  sites  are  located  outside  the  PSAs  of  stations  from  which  they
 have  been  receiving  service.  We  seek  comment  on  alternative  ways  of  addressing  this  problem.
 c.  Gulf  of  Mexico  Proceeding
 89.  Background.  In  the  MDS  Report  and  Order,  the  Commission  adopted  a  licensing  plan  under  which  it  assigned,  through  a  simultaneous  multiple  round  bidding  process,  one  MDS  authorization  for
 each  of  the  487  BTAs  and  six  additional  geographic  areas.  190  A  BTA  authorization  holder  may  construct  facilities  to  provide  service  over  any  usable  MDS  channels  within  the  BTA.  191  A  MDS  channel  is  usable
 if  the  proposed  station  design  is  in  compliance  with  the  Commissions  interference  standards.  192
 90.  The  signals  of  a  BTA  authorization  holder  cannot  interfere  with  any  other  BTA  authorization  holders  signals.  193  In  addition,  BTA  authorization  holders  cannot  interfere  with  the  PSAs  of  incumbent
 MDS  operators  and  ITFS  licensees  within  their  BTAs.  194  However,  the  BTA  authorization  holder  may  negotiate  interference  rights  with  BTA  authorization  holders  and  incumbents.  195
 91.  On  May  21,  1996,  the  Gulf  Coast  MDS  Service  Company  (Gulf  Coast)  filed  a  Petition  for  Rulemaking  requesting  that  the  Commission  amend  its  rules  to  permit  licensing  of  MDS  and  ITFS
 spectrum  in  the  Gulf  of  Mexico.  196  Specifically,  Gulf  Coast  sought  to  have  the  Commission  treat  the  Gulf  of  Mexico  as  one  service  area  and  to  hold  an  auction  to  license  service  in  the  area.  On  November  23,
 1998,  PetroCom  License  Corporation  (PetroCom),  successor  in  interest  to  Gulf  Coast,  amended  the
 189  Examples  of  services  where  service  areas  are  defined  exclusively  on  the  basis  of  signal  strength  limits  at
 geographic  borders  include  the  lower  700  MHz  band  (47  C.  F.  R.    27.55(  a)(  2)),  broadband  PCS  (47  C.  F.  R.    24.236),  Part  27  services  in  the  2305-  2320  and  2345-  2360  MHz  bands  (47  C.  F.  R.    27.55(  a)(  1)),  and  Part  27
 services  in  the  1390-  1395  and  1432-  1435  MHz  bands  (47  C.  F.  R.    27.55(  a)  (3)).
 190  See  MDS  R&  O,  10  FCC  Rcd  at  9608-  09;  see  also  Gulf  Notice,  17  FCC  Rcd  at  8448    7.  Rand  McNally  defined
 487  BTAs  in  the  1992  Commercial  Atlas  and  Marketing  Guide.  Because  Rand  McNally  did  not  include  some  geographic  areas  that  were  the  subject  of  the  MDS  auction,  those  areas  were  added  to  Rand  McNally's  list,  bringing
 the  total  number  for  auctioning  to  493  authorizations.  The  six  additional  areas  are  American  Samoa,  Guam,  Northern  Mariana  Islands,  San  Juan,  Puerto  Rico;  Mayaguez/  Aguadilla-  Ponce,  Puerto  Rico;  and  the  United  States  Virgin
 Islands.  Id.  at  8447  n.  4.  See  also  47  C.  F.  R.    21.924(  b).
 191  See  MDS  R&  O,  10  FCC  Rcd  at  9615-  18;  see  also  Gulf  Notice,  17  FCC  Rcd  at  8448    7.
 192  See  MDS  R&  O,  10  FCC  Rcd  at  9615-  18;  see  also  Gulf  Notice,  17  FCC  Rcd  at  8448    7.
 193  See  47  C.  F.  R.    21.902.
 194  See  47  C.  F.  R.    21.933.
 195  See  Gulf  Notice,  17  FCC  Rcd  at  8448    8.
 196  Petition  for  Rulemaking  of  Gulf  Coast  MDS  Service  Company  (Gulf  Coast  Petition)  (May  21,  1996).
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 petition.  197  PetroCom  requested  that  the  Commission  authorize  two  licenses  in  the  Gulf  of  Mexico  and  adopt  eligibility  restrictions  to  avoid  excessive  concentration  of  licenses.  198  Additionally,  PetroCom
 asked  the  Commission  to  establish  a  service  area  in  the  Gulf  similar  to  the  service  areas  established  in  the  MDS  Report  and  Order.  199  On  August  11,  1999,  the  Commission  sought  comment  on  PetroComs
 Amended  Petition.  200  On  May  3,  2002,  the  Commission  issued  the  Gulf  Notice  seeking  comments  on  PetroComs  amended  petition.  201
 92.  In  the  Gulf  of  Mexico  MDS  NPRM,  the  Commission  proposed  to  establish  a  GSA  in  the  Gulf  of  Mexico  (  Gulf  Service  Area).  202  The  Commission  proposed  to  adopt  the  same  rules,  with  certain
 limitations,  as  those  service  areas  established  in  the  MDS  Report  and  Order.  The  Commission  solicited  comment  on  the  technical  and  economic  effects  of  implementing  the  proposals.  203
 93.  Discussion.  Generally,  commenters  support  creation  of  a  Gulf  Service  Area.  However,  they  express  concern  over  the  timing  of  the  adoption  of  rules  for  the  service  area.  204  The  commenters  seek  to
 delay  the  licensing  of  MDS  in  the  Gulf  of  Mexico  until  after  the  Commission  establishes  mobile  service  rules,  205  as  well  as  until  we  address  the  Coalitions  proposals.  206  We  note  that  we  are  proposing  mobile
 service  rules  in  this  proceeding.  207  We  believe  that  by  addressing  the  use  of  MDS  in  the  Gulf  simultaneously  with  the  consideration  of  other  MDS  flexibility  issues  that  we  decrease  any  attendant
 delay  in  the  provision  of  service  in  the  Gulf  of  Mexico.  Accordingly,  we  disagree  with  the  commenters  that  we  should  defer  consideration  of  all  of  the  issues  involving  the  Gulf  of  Mexico  until  after  adoption  of
 197  Amended  Petition  for  Rulemaking  of  PetroCom  License  Corporation  (Amended  Petition)  (Nov.  23,  1998).
 198  See  Pleading  Cycle  Established  for  Comments  on  Amended  Petition  for  Rulemaking  to  Amend  Parts  21  and  74
 of  the  Commissions  Rules  to  Permit  Licensing  in  the  Multipoint  Distribution  Service  and  the  Instructional  Television  Fixed  Service  for  the  Gulf  of  Mexico,  Public  Notice,  14  FCC  Rcd  13,322  (1999)  (Amended  Petition
 PN).  PetroCom  also  requested  that  the  Commission  set  aside  one  of  the  licenses  for  small  businesses,  streamlining  of  the  licensing  process,  modification  of  the  two-  way  rules  for  stations  operating  in  the  Gulf.  Id.
 199  Amended  Petition  at  4.
 200  Id.  The  WCA  opposed  the  Amended  Petition  while  PetroCom,  Bachow/  Coastel,  L.  L.  C.  (Bachow/  Coastel)  and
 RIG  Telephones  Inc.  d/  b/  a  Datacom  (DataCom)  each  filed  comments  on  September  10,  1999.  See  reply  comments  on  September  27,  1999.  Bachow/  Coastel,  WCA  and  DataCom  filed  reply  comments.  Finally,  on  October  8,  1999
 and  November  10,  1999,  WCA  and  PetroCom  filed  comments  in  the  form  of  a  letters.  These  letters  were  not  authorized  pleadings  pursuant  to  our  rules;  however,  in  order  to  develop  a  full  and  complete  record,  they  were
 incorporated  as  part  of  the  record  in  this  proceeding.
 201  Gulf  Notice,  17  FCC  Rcd  8446.
 202  See  Gulf  Notice,  17  FCC  Rcd  at  8447    2.
 203  Id.
 204  PetroCom  Comments  at  3-  5;  Stratos  Offshore  Services  Company  Comments  at  2-  3  (Stratos  Offshore);  WCA
 Comments  at  4;  PetroCom  Reply  Comments  at  1-  4.
 205  See  PetroCom  Comments  at  3-  5;  PetroCom  Reply  Comments  at  1-  4.
 206  See  WCA  Comments;  Stratos  Offshore  Comments  at  2-  3.
 207  See  para.  132,  infra.
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 mobile  service  rules.  Resolving  the  primary  issue  of  whether  to  establish  a  Gulf  Service  Area  is  a  preliminary  step  that  does  not  have  to  wait  for  the  adoption  of  final  rules  in  this  proceeding.  As  no
 commenter  opposed  the  establishment  of  a  Gulf  Service  Area,  we  adopt  the  proposal  to  create  a  Gulf  service  area.  The  parties  who  asked  the  Commission  to  establish  a  Gulf  Service  Area  state  that
 establishing  such  a  service  area  would  allow  specialized  businesses  that  operate  in  the  Gulf  of  Mexico  to  obtain  advanced  communications  services  that  are  currently  unavailable  to  them  and  that  would  allow
 these  businesses  to  operate  more  efficiently.  208  The  Commission  has  also  noted  in  other  services  that  creating  a  service  area  for  the  Gulf  of  Mexico  region  will  help  meet  the  growing  communications  needs
 of  businesses  operating  in  the  Gulf.  209
 94.  We  note  that  we  have  incorporated,  as  WCA  asks,  the  Gulf  of  Mexico  proceeding  into  this  comprehensive  review  of  the  entire  band.  210  Although  the  Commission  proposed  to  create  a  Gulf  Service
 Area  for  MDS  operations,  the  Commission  proposed  to  exclude  all  ITFS  channels  from  licensing  in  a  Gulf  Service  area.  211  The  Commission  indicated  that  ITFS  licensees  have  not  expressed  an  interest  in
 obtaining  licenses  in  the  Gulf  of  Mexico,  the  area  most  likely  has  little  need  for  educational  service,  and  the  requested  commercial  use  does  not  require  the  full  bandwidth  available  in  the  2500-  2690  MHz
 band.  212  No  commenter  specifically  addressed  the  Commissions  proposal  to  exclude  ITFS  channels.  213  In  order  to  ensure  that  we  have  a  full  and  complete  record,  we  seek  further  comment  on  whether  we
 should  reallocate  ITFS  channels  in  the  Gulf  Service  Area  for  other  uses.  We  specifically  seek  comment  on  whether  we  should  consider  unlicensed  uses.
 95.  Unlike  BTAs  established  by  Rand  McNally,  the  Gulf  Service  Area  does  not  have  a  significant  population  center  and  is  based  primarily  on  the  geographic  confines  of  the  Gulf  and  on  the  commonality
 of  commercial  interests  of  the  potential  users  of  any  service  provided.  214  Thus,  the  Commission  proposed  to  use  the  same  boundary  definitions  for  this  Gulf  Service  Area  as  adopted  in  the  WCS  R&  O.  215  As  a
 result,  the  Commission  proposed  that  land-  based  license  regions  abutting  the  Gulf  of  Mexico  will  extend  to  the  limit  of  the  territorial  waters  of  the  United  States  in  the  Gulf  of  Mexico,  which  is  the  maritime  zone
 that  extends  approximately  twelve  nautical  miles  from  the  United  States  coastline.  216  Beyond  that  line  of  demarcation,  the  Commission  created  a  Gulf  Service  Area,  which  extended  from  that  line  outward  to  the
 208  See  Gulf  Coast  Petition  at  4.
 209  See,  e.  g.,  Amendment  of  the  Commissions  Rules  to  Establish  Part  27,  the  Wireless  Communications  Service
 ("  WCS"),  GN  Docket  No.  96-  228,  Report  and  Order,  12  FCC  Rcd  10785,  10816    59  (1997)  (WCS  R&  O).
 210  See  WCA  Comments  at  7.
 211  See  Gulf  Notice,  17  FCC  Rcd  at  8450    13.
 212  Id.  at  8450    13.
 213  We  note  that  PetroComs  Comments  and  Reply  Comments  refer  to  MDS/  ITFS  spectrum.  PetroCom  Comments
 at  5;  PetroCom  Reply  Comments  at  2.
 214  See  Gulf  Notice,  17  FCC  Rcd  at  8452    16.
 215  Id.  at  8453    18.
 216  Id.
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 geographic  limits  consistent  with  international  agreements.  217
 96.  Although  WCA  supports  the  Commissions  proposal  to  establish  the  demarcation  line  of  the  Gulf  Service  Area  at  twelve  nautical  miles  from  the  coastline,  218  PetroCom  maintains  that  the  better
 approach  is  to  employ  the  boundaries  used  for  cellular  service  in  the  Gulf.  219  In  the  Gulf  Cellular  Order,  the  Commission  established  the  Gulf  Service  Area  boundary  as  the  land-  water  line.  PetroCom  argues  that
 because  current  MDS  and  ITFS  licensees  are  providing  fixed  services  that  they  do  not  require  protection  beyond  the  shore.  220  Additionally,  PetroCom  asserts  that  allowing  land  based  MDS/  ITFS  operations  to
 extend  into  the  Gulf  of  Mexico  will  create  interference  issues  for  Gulf  operations  and  discourage  Gulf  licensees  from  fully  developing  their  systems.  221  Moreover,  PetroCom  asserts  that  this  definition  of  the
 inner  boundary  of  the  Gulf  Service  Area  is  consistent  with  our  Rules,  which  base  BTA  boundaries  on  market  areas  defined  by  Rand  McNally,  which  follow  county  lines.  222  We  seek  comment  on  where  to
 establish  the  demarcation  line  for  the  Gulf  Service  Area.
 97.  For  the  most  part,  commenters  to  this  proceeding  did  not  address  the  Commissions  proposals  with  regard  to  licensing  MDS  in  the  Gulf  of  Mexico.  Instead,  commenters  focused  their  remarks  on
 requesting  a  delay  in  the  consideration  of  the  issues  presented  in  the  Gulf  of  Mexico  MDS  NPRM  until  after  the  Commission  considered  the  Coalitions  proposal  to  transform  the  service.  Accordingly,  we  do
 not  believe  the  record  has  developed  satisfactorily  to  resolve  issues  concerning  the  amount  of  spectrum  to  license  in  the  Gulf  Service  Area,  competitive  bidding,  partitioning  and  disaggregation,  interference
 protection  requirements,  construction  period,  and  license  term.  We  invite  commenters  to  address  these  issues  in  the  broader  context  of  this  comprehensive  proceeding.  However,  where  differences  exist  with
 regard  to  the  treatment  of  Gulf  licenses,  commenters  should  explain  those  differences  and  expound  upon  the  rationale  for  the  different  treatment.
 6.  Transition  to  New  Band  Plan
 98.  An  important  issue  relating  to  the  adoption  of  any  new  band  plan  is  the  mechanism  to  use  to  transition  existing  licensees  to  a  new  band  plan.  There  are  four  alternative  kinds  of  transition  mechanisms
 that  are  relevant  in  this  context:  223  expanded  rights  overlay  licenses  combined  with  mandatory  relocation  of  incumbents;  expanded  rights  overlay  licenses  with  grandfathering  of  incumbents;  expanded  rights
 overlay  licenses  combined  with  voluntary  band-  clearing  restructuring  incentives  for  incumbents;  and  expanded  rights  granted  to  incumbent  licensees  under  existing  licenses.  224  The  Coalitions  proposal  most
 217  Id.
 218  WCA  Comments  at  6.
 219  PetroCom  Comments  at  5-  6  citing  Cellular  Service  and  Other  Commercial  Mobile  Radio  Services  in  the  Gulf
 of  Mexico,  Report  and  Order,  17  FCC  Rcd  1209  (2001)  (Gulf  Cellular  Order);  PetroCom  Reply  Comments  at  4-  6  citing  Gulf  Cellular  Order,  17  FCC  Rcd  at  1219    31.
 220  PetroCom  Comments  at  6.
 221  PetroCom  Reply  Comments  at  5.
 222  PetroCom  Comments  to  the  Amended  Petition  at  4.
 223  Spectrum  Policy  Report  at  49.
 224  Id.
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 nearly  resembles  the  second  of  those  four  approaches,  though  it  reflects  elements  of  the  fourth  approach  as  well.
 99.  The  Coalition  proposes  that  we  rely  on  a  combination  of  regulatory  and  market  forces  to  effect  the  transition  to  its  proposed  band  plan.  The  Coalition  recommends  a  market-  by-  market  transition
 process  to  the  new  band  plan  that  allows  MDS  and  ITFS  licensees  to  continue  to  operate  pursuant  to  the  current  rules  until  an  MDS  or  ITFS  licensee  or  lessee  (called  a  proponent)  triggers  the  transition
 process.  225  In  general,  the  Coalition  would  require  the  Proponent  to  fund  any  conversion  costs  incurred  by  ITFS  operators  but  would  require  MDS  operators  to  pay  their  own  conversion  costs.  226  In  addition,
 any  party  offering  a  commercial  service  using  MDS  or  ITFS  channels  would  be  required  to  reimburse  the  Proponent  for  its  pro  rata  share  of  the  cost  of  transitioning  the  facilities  that  it  uses  and  the  cost  of
 transitioning  facilities  associated  with  any  overlapping  transition  impact  area.  227  A  Proponent  would  be  permitted,  at  its  sole  discretion  and  at  any  time,  to  trigger  the  transition  process  with  respect  to  any  MDS
 or  ITFS  licensee  that  has  a  GSA  located  in  whole  or  in  part  within  150  miles  of  any  portion  of  its  GSA.  228  At  any  time  during  the  transition  planning  period,  the  Proponent  would  be  permitted,  in  its  sole
 discretion,  to  decide  not  to  proceed  with  the  transition  process  in  whole  or  in  part.  229  The  Coalition  plan  would  require  the  Commission  to  enact  detailed  rules  concerning  the  mechanisms  of  the  transition  process
 and  set  forth  nine  safe  harbors  describing  proposals  that  licensees  subject  to  transition  would  have  to  accept  from  proponents.  230  The  Coalition  does  not  recommend  that  we  set  any  fixed  deadlines.
 100.  We  seek  comment  on  whether  we  should  impose  a  date  certain  for  completing  the  transition  process  if  we  adopt  a  process  resembling  that  proposed  by  the  Coalition.  The  Coalition
 recognizes  that  the  absence  of  specific  deadlines  in  its  proposal  could  leave  hold-  out  licensees  in  a  position  to  obstruct  the  re-  channelization  process,  but  urges  that  we  adopt  a  very  detailed  list  of  criteria
 defining  what  sorts  of  proposals  ITFS  licensees  must  accept  if  Proponents  offered  to  implement  them  or  pay  for  their  implementation.  231  This  proposal  resembles  the  process  we  have  applied  for  clearing
 incumbents  from  the  upper  200  channels  in  the  800  MHz  band  to  make  way  for  Specialized  Mobile  Radio  operators  licensed  to  Economic  Areas.  232  However,  the  Coalition  proposes  a  far  more  detailed  set  of
 criteria  for  mandatory  negotiations  between  MDS  and  ITFS  operators,  and  does  not  provide  for  reimbursement  of  MDS  operators  undergoing  involuntary  conversion  to  lower  signal  strengths.
 101.  As  an  alternative,  we  ask  whether  we  should  impose  a  date  or  dates  certain  by  which  all  licensees  must  comply  with  our  new  interference  rules.  In  that  regard,  an  ad  hoc  group  of  MMDS
 licensees  has  expressed  concern  that  the  detailed  transition  rules  that  the  Coalition  proposes  as  an  alternative  to  specific  deadlines  would  be  cumbersome.  These  licensees  view  the  plan  as  requiring
 225  A  detailed  description  of  the  Coalition  transition  process  is  contained  in  Appendix  C.
 226  Coalition  Plan,  Appendix  B  at  5.
 227  Id.,  Appendix  B  at  28-  29.
 228  Id.,  Appendix  B  at  13.
 229  Id.,  Appendix  B  at  14.
 230  Id.,  Appendix  B  at  21-  28.
 231  The  Coalition  does  not  propose  that  any  MDS  licensees  receive  compensation  from  Proponents.
 232  See  47  C.  F.  R.    90.699.
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 complex  reimbursement  schemes,  150-  mile  daisy  chains  and  other  complications  resulting  from  the  voluntary  market-  by-  market  approach.  233  They  assert  that  the  net  result  of  adopting  the  Coalition  Plan
 would  be  to  delay  the  transition  rather  than  to  expedite  it  because  the  parties  would  be  embroiled  in  constant  bickering  over  the  terms  of  transition  and  who  should  be  responsible  for  what  costs.  234
 102.  Another  alternative  would  allow  incumbents  to  bargain  freely  for  the  best  inducements  they  can  obtain  from  Proponents  to  convert  their  operations  prior  to  a  deadline  for  conformance  with  the
 new  band  plan,  while  requiring  incumbents  to  fund  their  own  conversions  if  they  do  not  accept  a  Proponents  offer  to  fund  the  conversion  ahead  of  time.  Under  such  an  approach,  the  incumbents
 bargaining  leverage  would  be  greater  the  further  in  the  future  we  established  the  conversion  deadline,  and  it  would  gradually  diminish  as  the  deadline  approached.  We  believe  that  we  have  the  legal  authority  to
 apply  such  deadlines  pursuant  to  Section  316(  a)  of  the  Communications  Act,  as  amended,  which  permits  us  to  modify  a  license  or  construction  permit  if  such  action  is  in  the  public  interest.  235  Section  316(  a)
 requires  that  we  notify  the  affected  stations  of  the  proposed  action,  the  public  interest  reasons  for  the  action,  and  afford  at  least  thirty  days  to  respond.  This  procedure  is  now  set  forth  in  Section  1.87  of  our
 Rules.  236  Licenses  may  be  modified  through  rule  making,  237  as  we  did  when  establishing  the  cellular  telephone  service.  238  We  seek  comment  on  alternative  means  by  which  we  might  lawfully  and  efficiently
 implement  a  schedule  for  modifying  existing  MDS  and  ITFS  stations,  such  as  the  adoption  of  a  single  deadline  by  rulemaking  rather  than  through  station-  by-  station  processes.
 103.  A  second  possible  approach  would  be  to  adopt  a  three-  phase  transition  process:  a  voluntary  negotiation  period,  during  which  incumbents  could  bargain  freely  for  the  best  inducements  they
 could  obtain  from  Proponents,  followed  by  a  mandatory  negotiation  and  conversion  phase,  during  which  Proponents  could  compel  incumbents  to  reduce  their  signal  strengths  by  offering  to  fund  their
 conversions,  based  on  specific  criteria  to  be  defined  in  our  rules.  In  the  final  stage,  Proponents  would  be  entitled  to  compel  incumbents  to  take  whatever  steps  are  necessary  to  reduce  their  signal  strengths  at  the
 incumbents  own  expense.  Such  an  approach  would  resemble  the  band-  clearing  procedures  that  we  adopted  for  terrestrial  fixed  microwave  services  in  the  bands  that  we  reallocated  to  PCS,  239  except  that
 233  Comments  of  MMDS  Licensee  Coalition  (  MMDS  Licensees),  filed  November  14,  2002,  at  3.
 234  Id.
 235  47  U.  S.  C.    316(  a).  We  note  that  converting  existing  licensees  to  geographic  service  area  licenses  would
 eliminate  the  need  to  modify  authorizations  for  individual  transmitters.
 236  47  C.  F.  R.    1.87.
 237  See  Amendment  of  Part  22  of  the  Commission's  Rules  to  Provide  for  Filing  and  Processing  of  Applications  for
 Unserved  Areas  in  the  Cellular  Service  and  to  Modify  Other  Cellular  Rules,  Notice  of  Proposed  Rulemaking,  5  FCC  Rcd  1,044,  1,048    25  (1990),  citing  WBEN,  Inc.  v.  United  States,  396  F.  2d  601  (2d  Cir.  1968);  American
 Airlines,  Inc.  v.  CAB,  359  F.  2d  624  (D.  C.  Cir.  1966);  Upjohn  Co.  v.  Food  and  Drug  Admin.,  911  F.  2d  1583  (D.  C.  Cir.  1987).
 238  See  generally,  Cellular  Communication  Systems  (Cellular  Systems),  Report  and  Order,  86  F.  C.  C.  2d  469
 (1981),  modified,  89  F.  C.  C.  2d  58  (1982),  further  modified,  90  F.  C.  C.  2d  571  (1982);  appeal  dismissed  sub  nom.  United  States  v.  FCC,  No.  82-  1526,  Slip  Op.  (D.  C.  Cir.  Mar.  3,  1983);  Rules  for  Rural  Cellular  Service,  First
 Report  and  Order,  60  Rad.  Reg.  2d  1029  (1986),  modified,  2  FCC  Rcd  733  (1987),  further  modified,  2  FCC  Rcd  3366  (1987),  4  FCC  Rcd  5272  (1988),  3  FCC  Rcd  4403  (1988),  4  FCC  Rcd  4,464  (1989).
 239  See  47  C.  F.  R.    101.69-  101.79.
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 MDS  and  ITFS  incumbents  would  ultimately  be  required  only  to  reduce  their  signal  strengths  at  their  GSA  boundaries,  not  cease  operations  altogether  or  relocate.
 104.  A  third  alternative  would  be  to  refrain  from  providing  for  a  voluntary  negotiation  period  and  proceed  immediately  to  a  mandatory  negotiation  and  conversion  phase,  later  to  be  followed  by  a
 sunset  date  after  which  incumbents  would  be  required  to  assume  their  own  conversion  costs.  The  Commission  used  this  procedure  to  clear  terrestrial  fixed  microwave  services  from  18.58-  19.3  GHz  band
 when  the  Commission  reallocated  it  to  FSS.  240  We  seek  comments  on  the  benefits  and  disadvantages  of  a  voluntary  negotiation  period,  and  inquire  what  mandatory  conversion  requirements  should  apply  if  we
 decide  not  to  adopt  a  voluntary  negotiation  period.  We  seek  comment  on  all  of  these  approaches,  on  other  possible  alternatives,  on  the  appropriate  date  or  dates  for  any  deadlines  that  we  might  apply  under
 any  of  the  transition  proposals  and  on  the  criteria  that  we  should  apply  during  any  mandatory  negotiation  and  conversion  phase,  should  we  choose  to  adopt  one.
 105.  An  altogether  different  option  would  be  to  rely  on  an  auction  to  restructure  the  bands.  241  Such  an  approach  might  mitigate  the  need  for  a  complicated  set  of  transition  rules  because  bidders  might
 be  able  to  obtain  efficient  packages  of  encumbered  and  unencumbered  spectrum  for  new  uses  without  engaging  in  costly  and  time-  consuming  bilateral  and  multi-  lateral  negotiations.  242  The  efficacy  of  such  an
 approach,  of  course,  would  depend  upon  how  many  incumbents  chose  to  make  their  licenses  available  for  competitive  bidding.  Transition  rules  might  be  necessary  as  a  fall-  back  even  if  we  conduct  such  an
 auction,  to  transition  incumbent  licensees  that  choose  not  to  participate  or  receive  no  bids  that  induce  them  to  sell.
 106.  We  seek  comment  on  all  issues  relating  to  the  transition  of  existing  licensees  to  a  new  band  plan,  including,  but  not  limited  to,  the  Coalition  Proposal.  Commenters  addressing  this  issue  should
 discuss  in  detail  their  preferred  mechanisms  for  adopting  any  transition.  243
 7.  ITFS  Eligibility  Restrictions
 107.  ITFS  main  channels  account  for  120  MHz  of  the  2500-  2690  MHz  band.  Initially,  the  Commission  intended  ITFS  stations  to  provide  formal  educational  and  cultural  development  in  aural  and
 visual  form  to  students  enrolled  in  accredited  public  and  private  schools,  colleges  and  universities.  244  Generally,  our  Rules  limit  eligibility  for  ITFS  to:  (1)  accredited  educational  institutions,  (2)  governmental
 organizations  engaged  in  the  formal  education  of  enrolled  students,  and  (3)  nonprofit  organizations  whose  purposes  are  organizational  and  include  providing  educational  and  educational  television  materials  to
 240  See  47  C.  F.  R.    101.85-  101.95.
 241  See  Section  III.  J,  infra.
 242  See  Evan  Kwerel  and  John  Williams,  A  Proposal  for  a  Rapid  Transition  to  Market  Allocation  of  Spectrum
 (FCC  Office  of  Plans  and  Policy  Working  Paper,  Nov.  2002).
 243  Some  MDS  licensees,  who  also  lease  ITFS  channels,  employ  CARS  for  their  video  operations  as  Wireless
 Cable  Systems.  They  would  continue  to  be  eligible  to  be  CARS  licensees  for  those  video  operations,  but  not  for  low  power  broadband  operations.  Transition  to  the  new  band  plan  must  also  consider  modification  of  those
 operations.
 244  47  C.  F.  R.    74.931(  a)(  1).
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 accredited  institutions  and  governmental  organizations.  245  In  1971,  the  Commission  did  not  see  a  valid  reason  to  change  the  ITFS  eligibility  rules.  246  In  1985,  after  recognizing  that  ITFS  signals  were  reaching
 the  homes  of  MDS  subscribers,  the  Commission  revised  the  main  purpose  of  ITFS.  The  Commission  determined  that  the  transmission  of  instructional  material  for  accredited  educational  institutions  was  an
 essential  use  of  ITFS  stations,  i.  e.,  at  least  some  of  their  capacity  had  to  be  used  for  the  transmission  of  course-  oriented  formal  instructional  material.  247  In  1991,  the  Commission  voiced  its  support  of  the  role  of
 ITFS  in  providing  improved  educational  opportunities  for  all.  248  Consequently,  the  Commission  remained  committed  to  not  jeopardizing  the  current  or  future  ability  of  ITFS  to  fulfill  its  primary  intended
 purpose  of  providing  educational  material  for  instructional  use.  249  In  fact,  the  Commission  expressed  its  intention  to  enforce  strictly  the  existing  eligibility  rules.  250
 108.  In  many  respects,  our  regulatory  policies  toward  MDS  and,  to  a  lesser  extent,  our  treatment  of  ITFS  over  the  years  have  represented  pioneering  movements  toward  flexible  use.  We
 initially  limited  MDS  licensees  to  common  carrier  operations  and  adopted  technical  rules  that  limited  the  service  to  point-  to-  multipoint  distribution  from  a  single  point,  but  we  allowed  MDS  subscribers  to
 transmit  any  of  a  broad  range  of  content  types:  private  television,  high  speed  computer  data,  facsimile,  control  information,  or  other  communications  capable  of  radio  transmission.  251  In  1983,  the  First  Leasing
 Decision  authorized  ITFS  operators  to  begin  leasing  unused  channel  capacity  to  commercial  entities.  Thus,  as  WCA  notes  in  comments  that  it  filed  in  our  Spectrum  Policy  Task  Force  proceeding,  The
 secondary  markets  concept  (under  which  licensees  could  lease  the  spectrum  usage  rights  to  third  parties)  has  been  a  staple  of  the  Commissions  MDS/  ITFS  rules  for  twenty  years.  252
 245  See  47  C.  F.  R.    74.932(  a).  Under  certain  circumstances,  wireless  cable  entities  may  obtain  access  to  ITFS
 channels  so  long  as  at  least  eight  other  ITFS  channels  remain  available  for  future  ITFS  use.  See  47  C.  F.  R.    74.990-  74.992.
 246  Amendment  of  Parts  2  and  74  of  the  Commissions  Rules  and  Regulations  to  Establish  a  New  Class  of
 Educational  Television  Service  for  the  Transmission  of  Instructional  and  Cultural  Material  to  Multiple  Receiving  Locations  on  Channels  in  the  2500-  2690  MHz  Frequency  Band,  Docket  No.  14744,  Second  Report  and  Order,  30
 F.  C.  C.  2d  197,  200    10  (  ITFS  Second  R&  O).
 247  Amendment  of  Part  74  of  the  Commissions  Rules  and  Regulations  in  Regard  to  the  Instructional  Television
 Fixed  Service,  Second  Report  and  Order,  101  F.  C.  C.  2d  50,  80    75-  78  (1985)  (emphasis  added)  Part  74  Second  R&  O).  The  Commission  also  eliminated  the  requirement  to  transmit  course-  oriented  material  to  selected
 accredited  school  sites  if  in  lieu  thereof  the  licensee  names  the  school(  s)  and  the  degree(  s)  or  diploma(  s)  for  which  the  formal  programming  will  be  offered  and  describe[  s]  the  administration  of  the  courses(  s),  along  with
 supporting  documentation.  47  C.  F.  R.    74.931(  a)(  2).
 248  Amendment  of  Parts  21,  43,  74,  78,  and  94  of  the  Commission's  Rules  Governing  Use  of  the  Frequencies  in  the
 2.1  and  2.5  GHz  Bands  Affecting:  Private  Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  Instructional  Television  Fixed  Service,  &  Cable  Television  Relay
 Service,  Second  Report  and  Order,  6  FCC  Rcd  6,764,  6,774    48  n.  45  (1991).
 249  Id.
 250  Id.  at  6  FCC  Rcd  6,774  n.  45.
 251  Amendment  of  Parts  1,  2,  and  43  of  the  Commissions  Rules  and  Regulations  to  Provide  for  Licensing  and
 Regulation  of  Common  Carrier  Radio  Stations  in  the  Multipoint  Distribution  Service,  Report  and  Order,  45  FCC  2d  616,  617    5  (1974).
 252  Comments  of  WCA  in  ET  Docket  No.  02-  135,  at  5-  6,  filed  Jan.  27,  2003.
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 cellularized  communication  systems.  265  In  2001,  we  applied  a  mobile  allocation  in  the  2500-  2690  MHz  band.  266  Despite  those  several  decisions  removing  various  restrictions  from  MDS  and  ITFS,  however,  we
 have  continued  to  limit  the  classes  of  applicants  that  are  eligible  to  obtain  ITFS  licenses.
 111.  In  recent  years,  we  have  pursued  a  general  policy  of  eliminating  use  restrictions  in  radio  licenses  except  in  circumstances  where  there  are  clear  and  compelling  reasons  for  retaining  them.  The
 basis  for  this  policy  was  articulated  in  the  Spectrum  Policy  Statement  in  2000:  if  market  forces  are  allowed  to  operate  without  being  restricted  by  government,  they  will  tend  to  push  the  use  of  radio  licenses
 to  their  highest  valued  applications.  267  Since  then,  we  have  applied  that  policy  to  broaden  eligibility  in  the  Cable  Television  Relay  Service;  268  to  establish  eligibility  for  a  broad  variety  of  users  in  the  648-  746
 MHz  band  (reclaimed  from  broadcasters  using  TV  channels  52-  59);  269  to  establish  service  rules  for  the  747-  762  MHz  and  777-  792  MHz  bands  (reclaimed  from  broadcasters  using  TV  channels  60-  69);  270  to
 explore  the  possibility  of  introducing  third  generation  cellular  services  in  frequency  bands  previously  reserved  for  traditional  forms  of  cellular,  broadband  PCS,  and  SMR,  as  well  as  in  the  1710-  1755  MHz,
 1755-  1850  MHz,  2110-  2150  MHz,  2160-  2165  MHz  and  2500-  2690  MHz  bands;  271  and  to  encourage  the  development  of  secondary  markets  in  radio  licenses.  272  Before  adopting  the  Spectrum  Policy  Statement,
 the  Commission  applied  a  flexible  use  policy  when  establishing  WCS.  In  that  service,  the  Commission  imposed  no  eligibility  restrictions  other  than  the  foreign  ownership  restrictions  set  forth  in  Section  310  of
 the  Communications  Act.  273  All  of  those  decisions  have  occurred  since  we  last  reaffirmed  our  ITFS  eligibility  policies  in  1991.
 112.  While  our  general  policy  toward  use  restrictions  has  evolved  since  1991,  significant  events  specific  to  ITFS  have  occurred  that  warrant  our  revisiting  whether  an  eligibility  restriction
 continues  to  be  necessary.  Those  events  include  the  increased  use  of  ITFS  spectrum  in  MDS  systems,
 265  Amendment  of  Parts  21  and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television  Fixed
 Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  MM  Docket  No.  97-  217,  Report  and  Order,  13  FCC  Rcd  19,112  (1998),  recon.,  14  FCC  Rcd  12,764  (1999),  further  recon.,  15  FCC  Rcd  14,566  (2000)  (Two-Way
 Order).
 266  Mobile  Report  and  Order,  16  FCC  Rcd  17,222  (2001).
 267  Principles  for  Promoting  the  Efficient  Use  of  Spectrum  by  Encouraging  the  Development  of  Secondary
 Markets,  15  FCC  Rcd  24,178  (2000)  (Spectrum  Policy  Statement).
 268  Amendment  of  Eligibility  Requirements  in  Part  78  Regarding  12  GHz  Cable  Television  Relay  Service,  Report
 and  Order,  17  FCC  Rcd  9,930  (2002).
 269  See  Reallocation  and  Service  Rules  for  the  698-  746  MHz  Spectrum  Band  (Television  Channels  52-  59),  Notice
 of  Proposed  Rulemaking,  16  FCC  Rcd  7,278  (2001).
 270  Service  Rules  for  746-  764  and  776-  794  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commission's  Rules,  First
 Report  and  Order,  15  FCC  Rcd  476  (2000).
 271  Amendment  of  Part  2  of  the  Commissions  Rules  to  Allocate  Spectrum  Below  3  GHz  for  Mobile  and  Fixed
 Services  to  Support  the  Introduction  of  New  Advanced  Wireless  Services,  Including  Third  Generation  Wireless  Systems,  Notice  of  Proposed  Rulemaking  and  Order,  16  FCC  Rcd  596  (2001).
 272  Promoting  Efficient  Use  of  Spectrum  Through  Elimination  of  Barriers  to  the  Development  of  Secondary
 Markets,  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  24,203  (2000).
 273  WCS  R&  O,  12  FCC  Rcd  10,785.
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 and  the  development  of  alternative  means  of  providing  educational  content  to  students.  Based  on  those  developments,  we  believe  that  it  serves  the  public  interest  to  consider  providing  both  current  MDS  and
 ITFS  licensees  with  additional  flexibility.
 113.  Although  our  rules  state  that  the  primary  use  of  ITFS  is  for  educational  and  cultural  development,  they  allow  an  ITFS  licensee  to  lease  up  to  ninety-  five  percent  of  its  channel  capacity  for
 non-  educational  programming.  274  This  increased  use  of  ITFS  spectrum  in  connection  with  MDS  systems  through  leasing  arrangements  enabled  educational  institutions  to  fund  the  construction  of  stations  and  to
 develop  educational  programming.  By  comparison,  our  rules  require  direct  broadcast  satellite  (DBS)  licensees  to  reserve  four  percent  of  their  channel  capacity  for  use  by  qualified  programmers  for
 noncommercial  programming  of  an  educational  or  informational  nature.  275  Thus,  while  ITFS  retains  both  its  historic  nomenclature  and  a  codified  statement  of  purpose  identifying  the  transmission  of  educational
 programming  as  its  primary  purpose,  the  required  amount  of  educational  programming  carried  on  such  stations  in  actuality  may  barely  exceed  the  minimum  proportion  required  for  DBS.  We  seek  comments
 from  other  licensees  and  lessees  to  determine  whether  that  degree  of  consolidation  is  typical  of  the  industry  as  a  whole.
 114.  We  note  currently,  for  example,  that  the  public  may  obtain  educational  programming  by  using  the  Internet  to  receive  college  courses  as  well  as  obtaining  the  services  of  for-  profit  corporations
 that  provide  educational  programming.  Education  is  becoming  more  popular  over  the  Internet  because  the  Internets  ability  to  deliver  media-  rich  content  is  improving  rapidly.  In  2002,  approximately  2.2
 million  college  students  took  courses  over  the  Internet  compared  with  710,000  college  students  in  1998    a  210%  increase.  276  These  students  chose  from  over  6,000  online  courses  delivered  by  eighty-  four
 percent  of  four-  year  colleges  and  universities.  277  These  courses  were  accessible  worldwide  on  the  Internet  to  a  rapidly  expanding  pool  of  users  with  sufficient  connections.  Already,  more  than  twenty-  eight  percent
 of  U.  S.  online  households  have  broadband  connections  to  the  Internet;  by  one  estimate,  the  number  of  broadband  users  experienced  a  nine  percent  average  monthly  growth  rate  between  February  2000  and
 June  2002.  278  On  the  other  hand,  some  educational  institutions,  especially  those  in  rural  areas  and  those  with  less  economic  resources,  do  not  utilize  broadband.  We  seek  comment  on  what  ITFS  enables
 educators  to  achieve  that  the  Internet  could  not.  What  role  does  educational  broadcasting  in  other  bands  play?  Finally,  we  seek  comment  from  educators  on  whether  commercial  programming  is  able  to  fulfill
 some  of  these  needs.  We  seek  comment  on  whether  continuing  to  restrict  the  eligibility  for  ITFS  spectrum  is  in  the  public  interest  or  whether  maintaining  educational  responsibilities  remains  in  the  public
 interest.
 115.  Although  we  perceive  that  significant  developments  have  occurred  since  the  last  examination  of  the  ITFS  eligibility  restriction,  retention  of  the  restriction  could  be  detrimental  to  the
 274  47  C.  F.  R.    74.931(  d)(  1).
 275  See  47  C.  F.  R.    100.5.
 276  Jared  Bleak,  Educated  by  the  Market:  A  Researchers  Look  at  Educational  Entrepreneurialism  (Harvard
 Graduate  School  of  Education,  Oct.  5,  2001)  http://  www.  gse.  harvard.  edu/  news/  features/  market10052001.  html).
 277  Id.
 278  Broadband  Increases  Household  Penetration,  Silicon  Valley/  San  Jose  Business  Journal,  Nov.  13,  2002,  citing
 a  Gartner  Dataquest  survey  of  45,000  U.  S.  households.  The  article  is  accessible  online  at  the  following  World  Wide  Web  address:  (http://  sanjose.  bizjournals.  com/  sanjose/  stories/  2002/  11/  11/  daily39.  html).
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 growth  of  services  on  the  ITFS  channels.  The  complexity  of  the  contractual  relationships  that  our  rules  require  in  the  ITFS  service  may  discourage  investment  and  impair  the  ability  of  service  providers  to
 modify  their  operations  in  response  to  changing  technology  and  market  conditions.  For  example,  an  MMDS  operator  who  wants  to  change  from  providing  one-  way,  high-  powered  television  transmission
 operations  from  a  single  tower  to  providing  two-  way  Internet  access  from  multiple  low-  powered  base  stations,  it  must  gain  the  consent  of  the  ITFS  operators  in  the  market,  even  though  the  MMDS  operator
 may  already  have  a  leasing  agreement  with  the  ITFS  licensee.  Innovation  could  proceed  more  smoothly  if  commercial  operators  were  able  to  aggregate  spectrum  in  the  2500-  2690  MHz  band  and  purchase  ITFS
 stations,  which  would  allow  them  to  exercise  direct  ownership  control.
 116.  In  light  of  these  developments,  we  seek  comment  on  various  options  relating  to  the  ITFS  service.  We  emphasize  that  we  do  not  contemplate  reclaiming  licenses  from  any  incumbent  licensees,  so
 long  as  they  comply  with  any  revised  technical,  service  or  other  rules  that  we  adopt  for  this  band.  We  realize  that  if  the  FCC  provides  existing  ITFS  and  MDS  licensees  with  greater  flexibility,  those  licensees
 may  capture  the  increased  value  given  that  they  could  not  have  paid  for  that  value  when  they  obtained  their  original  license.  Accordingly,  we  seek  comment  on  whether  allowing  these  licensees  to  capture
 such  value  is  in  the  public  interest  on  balance  with  having  this  spectrum  underutilized?  If  not,  what  other  approach  would  parties  recommend  the  FCC  implement  to  ensure  efficient  use  of  the  MMDS  and  ITFS
 spectrum?  We  request  comment  on  combining  the  MMDS  and  ITFS  services  into  a  new  Broadband  Radio  Service  with  requirements  similar  to  those  that  apply  now  to  MMDS,  i.  e.,  open  eligibility  and  no
 educational  programming  requirement.  Additionally,  we  seek  comment  on  maintaining  ITFS  as  a  separate  service  requiring  educational  programming  but  modifying  the  eligibility  requirements  to  allow
 for-  profit  companies  to  be  eligible  licensees.  Furthermore,  we  invite  comment  on  whether  or  not  we  should  eliminate  or  otherwise  change  our  existing  ITFS  instructional  content  origination  rules.  We  note,
 for  example,  that  one  such  change  could  be  to  apply  to  ITFS  channels  public  interest  obligations  comparable  to  those  that  apply  to  DBS  under  Section  100.5  of  our  rules.  279  We  also  ask  commenters  to
 suggest  alternative  changes  to  ITFS  that  will  result  in  robust  services  to  the  public.  280  We  also  seek  comment  on  whether  data  services  can  meet  the  ITFS  programming  requirement.  While  we  note  that
 these  educational  requirements  were  developed  in  a  video  context,  we  recognize  that  data  service,  i.  e.,  high  speed  internet  data  connections  may  be  useful  to  educational  institutions.  Moreover,  we  seek
 comment  on  what  kind  of  requirements  should  be  required  of  ITFS  licensees  providing  data  services.  We  believe  that  there  is  a  public  interest  benefit  in  promoting  data  services  in  this  context  particularly  given
 that  they  do  not  consume  as  much  spectrum  as  video  and  may  be  more  useful  than  a  minimal  amount  of  video  programming.  Commenters  may  also  believe  that  educational  requirements  for  ITFS  remains
 important,  and  that  the  Commission  should  find  ways  of  promoting  more  use  of  the  spectrum  for  educational  purposes.  We  also  seek  comment  on  requiring  a  higher  percentage  of  educational  use  for  new
 ITFS  licensees,  such  as  twenty-  five  percent  which  was  advocated  by  the  ITFS  community  in  the  past.  Finally  we  seek  comment  on  other  ways  the  Commission  can  strengthen  the  public  interest  in
 spectrum-  based  services  for  educational  institutions?
 117.  To  the  extent  that  commercial  or  noncommercial  MDS  or  ITFS  operators  may  prefer  to
 279  As  noted  in  para.  113,  supra.  DBS  operators  must  reserve  four  percent  of  their  channel  capacity  for  use  by
 qualified  programmers  for  noncommercial  programming  of  an  educational  or  informational  nature.  See  47  C.  F.  R.    100.5.
 280  Presumably,  licensees  in  the  new  Broadband  Radio  Service  or  ITFS  licensees  under  the  revised  eligibility
 requirements  would  be  eligible  for  CARS  licenses,  as  MDS  licensees  currently  are,  but  only  to  the  extent  they  carry  video  programming  broadband  data  is  not  a  permissible  use  for  CARS  stations.
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 continue  leasing  channel  capacity  from  others,  we  do  not  propose  to  prevent  licensees  from  entering  into  new  lease  arrangements.  ITFS  licensees,  to  the  same  extent  as  MDS  licensees,  may  assign  their
 underlying  license  rights  to  commercial  lessees  or  to  others.  In  general,  we  prefer  to  let  the  markets  determine  the  outcome  of  such  arrangements  without  imposing  limits,  unless  specific  reasons  justify  a
 contrary  policy.  As  a  result,  we  seek  comment  on  whether  there  are  any  circumstances  under  which  we  should  restrict  or  require  leasing  in  order  to  ensure  that  access  to  spectrum  is  not  unduly  limited.
 118.  We  propose  to  relieve  ITFS  operators  of  the  burden  of  filing  copies  of  every  channel  lease  agreement  with  the  Commission.  While  the  Commission  never  codified  these  requirements,  they
 were  enunciated  from  time  to  time  in  various  orders.  281  We  propose  to  eliminate  such  requirements,  with  the  proviso  that  licensees  retain  copies  of  channel  lease  agreements  in  their  files  and  make  them  available
 to  the  Commission  upon  request.  We  seek  comment  on  these  proposals  and  the  utility  of  retaining  the  ITFS  eligibility  restriction.
 8.  Other  Eligibility  Restrictions
 119.  Eligibility  issues  relevant  to  this  proceeding  are  addressed  in  Sections  309(  j),  257,  and  613(  a)  of  the  Telecommunications  Act  of  1996.  When  granting  the  Commission  authority  in  Section
 309(  j)  of  the  Act  to  auction  wireless  spectrum,  Congress  acknowledged  our  authority  to  [  specify]  eligibility  and  other  characteristics  of  such  licenses.  282  However,  Congress  specifically  directed  the
 Commission  to  exercise  that  authority  so  as  to  promot[  e]  .  .  .  economic  opportunity  and  competition.  283  Congress  also  emphasized  this  pro-  competitive  policy  in  Section  257,  where  it  articulated  a  national
 policy  in  favor  of  vigorous  economic  competition  and  the  elimination  of  barriers  to  market  entry  by  a  new  generation  of  telecommunications  providers.  284  Section  613(  a)  also  prohibits  a  cable  operator  from
 holding  an  MMDS  license  in  any  portion  of  the  franchise  area  served  by  that  cable  operators  system.  285  The  intent  was  to  encourage  entry  of  alternative  providers  of  multichannel  video  service  into  markets
 dominated  by  incumbent  cable  systems  in  order  to  spur  competition.  286  The  cross-  ownership  restriction
 281  See,  e.  g.,  Part  74  Second  R&  O,  101  F.  C.  C.  2d  at  91    105  (existing  operators  who  begin  to  lease  out  excess
 capacity  required  to  submit  copies  of  their  leases  to  the  Commission).
 282  See  47  U.  S.  C.    309(  j)(  3).
 283  Id.
 284  See  47  U.  S.  C.    257.
 285  Section  21.912  of  our  rules  implements  Section  613  of  the  Act.  Section  613  of  the  Act  states  that:  It  shall  be
 unlawful  for  a  cable  operator  to  hold  a  license  for  multichannel  multipoint  distribution  service,  or  to  offer  satellite  master  antenna  television  services  separate  and  apart  from  any  franchised  cable  service  in  any  portion  of  the
 franchise  area  served  by  that  cable  operators  cable  system.  The  Commission  (1)  shall  waive  the  requirements  of  this  paragraph  for  all  existing  multichannel  multipoint  distribution  services  .  .  .  which  are  owned  by  a  cable
 operator  on  October  5,  1992;  (2)  may  waive  the  requirements  of  this  paragraph  to  the  extent  the  Commission  determines  is  necessary  to  ensure  that  all  significant  portions  of  a  franchise  area  are  able  to  obtain  video
 programming;  and  (3)  shall  not  apply  the  requirements  of  this  subsection  to  any  cable  operator  in  any  franchise  area  in  which  a  cable  operator  is  subject  to  effective  competition  as  determined  under  section  623(  l)  (47  U.  S.  C.  
 533(  a)).  Section  613(  a)  was  added  to  the  Act  by  Section  11(  a)  of  the  1992  Cable  Act  (Cable  Television  Consumer  Protection  and  Competition  Act  1992,  Pub.  L.  No.  102-  385,  106  Stat.  1460  (1992  Cable  Act)).
 286  Implementation  of  Sections  11  and  13  of  the  Cable  Television  Consumer  Protection  and  Competition  Act  of
 1992  Horizontal  Limitations  and  Anti-  Trafficking  Provisions,  Report  and  Order  and  Furthermore  Notice  of  (continued.)
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 addressed  Congress  concern  that  common  ownership  of  different  means  of  video  distribution  may  reduce  competition  and  limit  the  diversity  of  voices  available  to  the  public.  287  However,  Section  613(  a)  does
 authorize  the  Commission  to  waive  the  cross-  ownership  prohibition  in  order  to  ensure  that  all  significant  portions  of  the  franchise  area  are  able  to  obtain  video  programming.  288  In  addition,  the  cross-  ownership
 restriction  shall  not  apply  if  the  cable  franchise  operates  in  a  geographic  area  that  is  subject  to  effective  competition.  289
 120.  When  the  Cable  Act  was  enacted  in  1992,  MDS  operators  were  limited  to  offering  television  programming  to  paid  subscribers  and  Congress  was  concerned  with  MDS  providers  ability  to
 compete  with  cable.  Six  years  later,  the  Commission  fundamentally  changed  the  nature  of  the  MDS  service  when  it  permitted  MDS  licensees  to  construct  systems  capable  of  providing  high-  speed,  high-capacity
 broadband  service.  In  light  of  the  legislative  history  of  Section  613  and  the  change  to  the  MDS  service,  we  seek  comment  on  how  this  statutory  restriction  would  apply  to  non-  video  services,  such  as
 broadband  service  or  mobile  phone  service.  In  this  regard,  we  note  that  the  Act  does  not  define  multichannel  multipoint  distribution  service  but  does  define  multichannel  video  programming
 distributor  (MVPD)  as  a  person  such  as,  but  not  limited  to,  a  cable  operator,  a  multichannel  multipoint  distribution  service,  a  direct  broadcast  satellite  service,  or  a  television  receive-  only  satellite  program
 distributor,  who  makes  available  for  purchase  by  subscribers  or  customers,  multiple  channels  of  video  programming.  290
 121.  Under  our  precedent,  eligibility  restrictions  should  be  imposed  only  when  (1)  there  is  a  significant  likelihood  of  substantial  competitive  harm  in  specific  markets,  and,  (2)  only  when  eligibility
 restrictions  are  an  effective  way  to  address  such  harm.  291  When  assessing  the  need  to  restrict  the  (Continued  from  previous  page)
 Proposed  Rulemaking,  MM  Docket  No.  92-  264,  8  FCC  Rcd  6,828,  6,845    121  (1993)  citing  Senate  Report  102-  92  (1991)  at  46  (Cable  R&  O).
 287  Cable  R&  O,  8  FCC  Rcd  6,828,  6841    92  citing  Senate  Report  102-  92  at  46.  The  Senate  Committee  also
 indicated  that  such  cross-  ownership  rules  were  necessary  to  enhance  competition  and  to  further  diversity,  by  preventing  cable  operators  from  warehousing  spectrum  in  an  attempt  to  preclude  entry  by  alternative  MVPD
 providers.  Id.
 288  Id.  at  6841    93  citing  47  U.  S.  C.    533(  c)(  2)(  B).
 289  47  U.  S.  C.    533(  a).  See  47  U.  S.  C.    543(  l).  Section  623(  l)  of  the  Communications  Act  defines  effective
 competition  as:  A)  fewer  than  30  percent  of  the  households  in  the  franchise  area  subscribe  to  the  cable  service  of  a  cable  system;  B)  the  franchise  area  is  served  by  a  minimum  of  two  unaffiliated  multichannel  video  programming
 distributors  each  of  which  offers  comparable  video  programming  to  at  least  fifty  percent  of  the  households  in  the  franchise  area  and  the  number  of  households  subscribing  to  programming  services  offered  by  multichannel  video
 programming  distributors  other  than  the  largest  multichannel  video  programming  distributor  exceeds  fifteen  percent  of  the  households  in  the  franchise  area;  C)  a  multichannel  video  programming  distributor  operated  by  the
 franchising  authority  for  that  franchise  area  offers  video  programming  to  at  least  fifty  percent  of  the  households  in  that  franchise  area;  or  D)  a  local  exchange  carrier  or  its  affiliate  (or  any  multichannel  video  programming
 distributor  using  the  facilities  of  such  carrier  or  its  affiliate)  offers  video  programming  services  directly  to  subscribers  by  any  means  (other  than  direct-  to-  home  satellite  services)  in  the  franchise  area  of  an  unaffiliated
 cable  operator  which  is  providing  cable  service  in  that  franchise  area,  but  only  if  the  video  programming  services  so  offered  in  that  area  are  comparable  to  the  video  programming  services  provided  by  the  unaffiliated  cable
 operator  in  that  area.
 290  47  U.  S.  C.    522(  13).
 291  See  39  GHz  Report  and  Order,  12  FCC  Rcd  at  18637    79.
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 opportunity  of  any  class  of  service  provider  to  obtain  spectrum  for  the  provision  of  communications  services,  our  overall  goal  has  been  to  determine  whether  the  restriction  is  necessary  to  ensure  that
 consumers  will  receive  communications  services  in  a  spectrum-  efficient  manner  and  at  reasonable  prices.  292  Consequently,  we  believe  we  should  rely  on  competitive  market  forces  to  guide  license
 assignment  absent  a  compelling  showing  that  regulatory  intervention  to  exclude  potential  participants  is  necessary.  In  order  to  determine  the  competitiveness  of  a  market,  there  must  be  an  examination  of  market
 concentration  in  addition  to  other  relevant  market  facts  and  circumstances.  Also  important  in  determining  the  competitiveness  of  a  given  market  are  the  economic  incentives  for  entry  into  a  market,  the  existence
 of  potential  competitors,  and  the  existence  of  barriers  to  entry.  293  According  to  the  Department  of  Justice  Merger  Guidelines,  a  market  is  competitive  if,  in  response  to  a  price  increase  or  quality  decrease  by  the
 incumbents,    entry  would  be  timely,  likely,  and  sufficient  in  its  magnitude,  character,  and  scope  to  deter  or  counteract  the  competitive  effects  of  concern.  294
 122.  Based  on  our  preliminary  analysis,  we  do  not  believe  it  likely  in  most  cases  that  cable  operators  and/  or  DBS  providers  would  have  the  incentive  to  acquire  MDS/  ITFS  licenses  in  order  to
 foreclose  entry  by  a  wireless  MVPD  provider.  New  MDS  licensees  are  very  unlikely  to  be  entrants  into  the  MVPD  market  for  reasons  discussed  earlier  in  the  NPRM  &  MO&  O.  This  conclusion  is  based  upon
 the  fact  that  the  current  MDS  video  providers  have  been  unable  to  penetrate  the  vast  majority  of  markets  within  the  United  States.  Overall,  the  service  has  proven  to  be  unsuccessful  and  at  the  moment  is  not  a
 viable  alternative  to  cable  and  DBS.  We  request  comment  on  whether  opening  up  eligibility  to  cable  providers  would  have  a  significant  effect  on  concentration  in  video  markets.
 123.  Although  we  anticipate  that  this  spectrum  will  be  largely  used  as  a  mobile  voice  and  data  service,  the  most  relevant  issue  may  be  whether  or  not  open  eligibility  for  cable  operators  would  have  a
 negative  impact  on  the  broadband  internet  market.  Industry  analysts  estimated  that  in  the  Fall  of  2001  approximately  68%  of  residential  broadband  subscribers  used  cable  modem  service,  29%  used  Digital
 Subscriber  Line  (DSL)  service,  and  about  3%  used  various  radio-  based  technologies.  295  Industry  analysts  also  estimated  that  in  the  second  quarter  of  2002,  approximately  66%  of  the  total  cable  and  DSL
 subscribers  were  cable  subscribers  and  about  34%  were  DSL  subscribers.  296  Our  own  data  indicate  that  57%  of  high  speed  lines  (connection  to  an  end-  user  that  is  faster  than  200  kbps  in  at  least  one  direction)  in
 service  are  cable  lines,  31%  are  Asymmetric  Digital  Subscriber  Line  (ADSL)  lines,  and  11%  are  operated  by  other  fringe  competitors  (other  wireline,  fiber,  satellite,  or  fixed).  297  In  addition,  36%  of  high-  speed
 lines  are  provided  by  a  Regional  Bell  Operating  Company  (RBOC)  or  other  Incumbent  Local  Exchange  Carrier  (ILEC),  56%  of  high-  speed  lines  are  provided  by  cable  (non-  ILEC),  and  7%  are  provided  by  other
 292  See  47  U.  S.  C.    151.
 293  Rule  Making  to  Amend  Parts  1,  2,  21,  and  25  of  the  Commissions  Rules  to  Redesignate  the  27.5-  29.5  GHz
 Frequency  Band,  to  Reallocate  the  29.5-  30.0  GHz  Frequency  Band,  to  Establish  Rules  and  Policies  for  Local  Multipoint  Distribution  Services  and  for  Fixed  Satellite  Services,  Third  Order  on  Reconsideration,  13  FCC  Rcd
 4856,  4861    7,  4863    12  (1998).
 294  1992  Horizontal  Merger  Guidelines,  U.  S.  Department  of  Justice  and  the  Federal  Trade  Commission,  p.  25.
 295  Declaratory  Ruling,  17  FCC  Rcd  at  4804.
 296  http://  www.  cabledatacomnews.  com/  cmic/  cmic16.  html  (visited  Feb.  5,  2002)
 297  Figures  derived  from  Table  1  of  High  Speed  Services  for  Internet  Access:  Status  as  of  June  30,  2002,
 Industry  Analysis  and  Technology  Division,  Wireline  Competition  Bureau,  Dec.  2002.
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 non-  ILEC.  298  If  we  assume  that  a  typical  market  consists  of  the  incumbent  service  provider,  one  cable  provider,  and  one  other  non-  ILEC,  and  assume  that  the  above  numbers  can  be  used  to  represent  a  typical
 market,  the  Herfindahl-  Hirschman  Index  (HHI)  is  approximately  4500.  299  If  we  dont  allow  for  an  additional  non-  ILEC  and  again  assuming  that  the  national  numbers  of  ILEC/  RBOC  and  cable  non-  ILEC
 can  be  used  to  calculate  market  shares  representative  of  a  typical  local  broadband  market,  the  HHI  ranges  between  approximately  5000  and  5400.  The  above  figures  indicate  that  the  typical  broadband  internet
 market  is  very  highly  concentrated.  We  request  comment  on  this  analysis  and  any  evidence  to  the  contrary.  Commenters  also  should  identify  and  discuss  any  regional  differences  and/  or  differences
 between  urban  and  rural  areas  that  impact  such  analysis.
 124.  We  note  that  broadband  market  shares  for  residential  and  small  business  markets  are  quite  different  from  those  of  medium  and  large  size  business  markets.  As  of  June  30,  2002,  national  high-speed
 residential  and  small  business  lines  consisted  of  65%  cable  lines,  31%  ADSL  lines,  and  3%  other.  300  Business  (medium  and  large  size)  lines  consisted  of  1%  cable  lines,  32%  ADSL  lines,  43%  other
 wireline,  23%  fiber,  and  1%  satellite  or  fixed  wireless.  301  In  addition,  31%  of  residential  and  small  business  high-  speed  lines  are  provided  by  a  RBOC  or  other  ILEC,  65%  are  provided  by  cable  (non-ILEC),
 and  4%  are  provided  by  other  non-  ILEC  on  a  national  basis.  Seventy-  two  percent  of  business  (medium  and  large  size)  high-  speed  lines  are  provided  by  a  RBOC  or  other  ILEC,  and  28%  are  provided
 by  non-  ILECs.  We  note  that  cable  seems  to  play  a  very  insignificant  role  in  the  business  market.  If  we  assume  that  a  typical  residential  (and  small  business)  market  consists  of  the  ILEC  provider,  one  cable
 provider,  and  one  other  non-  ILEC,  and  assume  that  the  national  figures  can  be  used  to  represent  a  typical  local  market,  the  HHI  is  approximately  5200.  If  we  dont  allow  for  an  additional  non-  ILEC  and  again
 assuming  that  the  national  numbers  of  ILEC/  RBOC  and  cable  non-  ILEC  can  be  used  to  calculate  market  shares  representative  of  a  typical  local  broadband  market,  the  HHI  ranges  between  approximately  5500
 and  5800.  We  note  that  the  residential  numbers  indicate  that  the  markets  are  more  concentrated  than  the  total  numbers  indicate.  If  we  assume  that  a  typical  business  (medium  and  large  size)  market  consists  of
 the  incumbent  service  provider  and  one  other  non-  ILEC,  the  HHI  is  approximately  6000.  Markets  in  which  the  non-  ILEC  plays  a  very  insignificant  role  are  essentially  monopolies  and  the  HHI  can  approach
 10,000.  As  the  national  market  share  for  the  non-  ILEC  (excluding  cable)  for  the  business  market  is  quite  a  bit  higher  than  for  the  residential  market,  we  request  comment  as  to  whether  there  is  likely  to  be  more
 than  one  non-  cable,  non-  ILEC  provider  in  a  typical  broadband  business  market.
 125.  Although  the  typical  broadband  internet  market  is  highly  concentrated,  in  some
 298  High  Speed  Services  for  Internet  Access:  Status  as  of  June  30,  2002,  Industry  Analysis  and  Technology
 Division,  Wireline  Competition  Bureau,  Dec.  2002,  Table  5.
 299  Note  that  we  do  not  have  the  data  necessary  to  explicitly  delineate  the  relevant  product  and  geographic  markets
 but  believe  that  this  analysis  can  give  us  a  general  idea  of  likely  concentration  levels.
 300  The  market  shares  do  not  sum  to  one  due  to  rounding.  The  data  consists  of  information  gathered  from  qualifying
 service  providers  who  must  submit  FCC  Form  477  on  a  biannual  basis.
 301  The  mutually  exclusive  types  of  technology  are,  respectively:  Asymmetric  digital  subscriber  line  (ADSL)
 technologies,  which  provide  speeds  in  one  direction  greater  than  speeds  in  the  other  direction;  wireline  technologies  other  than  ADSL,  including  traditional  telephone  company  high-  speed  services  and  symmetric  DSL  services  that
 provide  equivalent  functionality;  coaxial  cable,  including  the  typical  hybrid  fiber-  coax  (HFC)  architecture  of  upgraded  cable  TV  systems;  optical  fiber  to  the  subscribers  premises  (e.  g.,  Fiber-  to-  the-  Home,  or  FTTH);  and
 satellite  and  (terrestrial)  fixed  wireless  systems,  which  use  radio  spectrum  to  communicate  with  a  radio  transmitter  at  the  subscribers  premises.
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 circumstances  there  could  be  substantial  benefits  to  allowing  the  incumbent  cable  or  DSL  operator  to  have  more  access  to  the  MDS/  ITFS  spectrum.  For  example,  in  situations  where  expensive  plant  upgrades
 are  not  feasible,  DSL  service  providers  may  be  able  to  use  spectrum  to  offer  broadband  internet  service  to  customers  who  live  in  rural  areas  or  beyond  distance  limitations  from  the  central  office.  In  addition,  rural
 cable  operators  may  be  able  to  offer  broadband  internet  service  by  using  the  spectrum  to  expand  channel  capacity  (note  that  there  are  areas  of  the  country  that  do  not  have  access  to  DSL  or  cable  modem
 service.  302  We  note  that  Section  613(  a)  allows  the  Commission  to  waive  the  cable/  MMDS  cross-ownership  restriction  to  ensure  that  all  significant  portions  of  a  franchise  area  are  able  to  obtain  video
 programming.  If  eligibility  restrictions  were  to  be  implemented,  competition  in  the  broadband  internet  markets  could  be  enhanced  through  the  use  of  such  a  waiver.
 126.  Given  the  above  analysis  we  request  comment  on  whether  allowing  incumbent  cable  operators  and/  or  DSL  providers  to  be  eligible  to  obtain  MDS/  ITFS  licenses  could  have  a  negative  impact
 in  some  broadband  internet  markets.  If  the  incumbent  cable  and  DSL  operators  believe  that  purchasing  unlicensed  spectrum  at  auction  would  have  the  effect  of  precluding  current  as  well  as  future  entry,  they
 may  purchase  spectrum  in  an  attempt  to  protect  their  market  power.  We  request  comment  on  this  analysis  and  specific  evidence,  including  the  relevant  market  shares,  for  any  local  broadband  internet  market  that
 may  be  negatively  affected  by  allowing  open  eligibility  to  incumbent  cable  operators  and/  or  DSL  providers.  We  also  request  comment  on  the  impact  of  an  eligibility  restriction  on  rural  and  underserved
 areas  and  whether  eligibility  waivers  would  be  effective  in  allowing  growth  in  these  areas.  When  providing  market  share  information,  we  request  that  commenters  define  the  relevant  geographic  and
 product  markets  from  which  the  market  share  information  is  derived.  In  addition,  we  request  comment  on  the  likelihood  of  future  entry  of  wireless  broadband  internet  service  providers,  assuming  that  they  are  not
 able  to  purchase  the  unlicensed  ITFS  spectrum.  That  is,  are  there  substantial  barriers  to  entry  posed  by  the  limited  availability  of  spectrum?
 127.  As  discussed  earlier  in  the  NPRM  &  MO&  O,  the  proposed  band  restructuring  will  make  mobile  service  a  viable  option  in  the  MDS/  ITFS  band.  Therefore,  the  effect  of  open  eligibility  on  the
 mobile  voice  and  data  markets  also  needs  to  be  considered.  The  Commission  decided  last  year  to  sunset  the  CMRS  spectrum  aggregation  limit,  or  spectrum  cap,  303  effective  January  1,  2003.  304  The
 Commission  found  that  the  cap,  by  setting  an  a  priori  limit  on  spectrum  aggregation  without  looking  at  the  particular  circumstances  of  specific  proposed  transactions,  was  unnecessarily  inflexible  and  could  be
 preventing  beneficial  arrangements  that  promote  efficiency  without  undermining  competition.  However,  the  Commission  also  stated  that  the  Commission  would  continue  to  pursue  the  objectives  of
 discourag[  ing]  anticompetitive  behavior  while  at  the  same  time  maintaining  incentives  for  innovation  and  efficiency,  305  but  would  do  so  by  performing  case-  by-  case  reviews  of  proposed  CMRS  spectrum
 302  For  example,  there  are  residences  and  businesses  in  Jacksonville,  FL  that  have  neither  access  to  DSL  nor  cable
 modem  service.  Wireless  Communications  Association  Bulletin,  Clearwire  Launches  Next-  Gen  ITFS  Service  In  Jacksonville,  Jan.  9,  2003,  p.  3.
 303  See  47  C.  F.  R.    20.6.
 304  See  2000  Biennial  Regulatory  Review:  Spectrum  Aggregation  Limits  for  Commercial  Mobile  Radio  Services,
 WT  Docket  No.  01-  14,  Report  and  Order,  16  FCC  Rcd  22,668  (2001)  (Spectrum  Cap  Order),  recon.  pending.
 305  Spectrum  Cap  Order,  16  FCC  Rcd  at  22,679    26  n.  71  (citing  Implementation  of  Sections  3(  n)  and  332  of  the
 Communications  Act  Regulatory  Treatment  of  Mobile  Services,  GN  Docket  No.  93-  252,  Third  Report  and  Order,  9  FCC  Rcd  7,988,  8,105    251  (1993)).
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 transactions  rather  than  by  applying  a  prophylactic  rule.  306  And,  as  is  most  relevant  here,  the  Commission  found  that  to  the  extent  that  the  initial  distribution  of  spectrum  through  auction  is  an  issue  in  the  future,
 that  is  also  amenable  to  case-  by-  case  review,  in  the  sense  that  [the  Commission]  can  shape  the  initial  distribution  through  the  service  rules  adopted  with  respect  to  specific  auctions.  307
 128.  Given  the  current  state  of  competition  in  the  CMRS  industry,  we  believe  that  such  restrictions  are  not  necessary  for  the  2500-  2690  MHz  band.  To  the  contrary,  does  opening  this  band  to  as
 wide  a  range  of  applicants  as  possible  encourage  entrepreneurial  efforts  to  develop  new  technologies  and  services,  while  helping  to  ensure  efficient  use  of  this  spectrum?  Is  this  approach  consistent  with  our
 statutory  mandates?  We  seek  comment  on  these  questions.
 129.  In  sum,  we  seek  comment  on  whether  eligibility  restrictions  over  and  above  those  required  by  statute  are  necessary  in  the  2500-  2690  MHz  band.  We  seek  comment  on  whether  opening
 these  bands  to  as  wide  a  range  of  applicants  as  possible  would  encourage  entrepreneurial  efforts  to  develop  new  technologies  and  services,  while  helping  to  ensure  efficient  use  of  this  spectrum.  To  the
 extent  any  potential  and  substantial  harms  to  competition  are  raised,  we  seek  comment  on  whether  the  most  effective  means  for  addressing  such  allegations  would  be  through  a  case-  by-  case  review,  taking  into
 account  all  of  the  fact  and  circumstances.
 E.  Technical  Issues
 130.  In  the  preceding  section,  we  addressed  band  plan  reconfigurations,  geographic  area  licensing  and  eligibility  issues.  In  this  section,  we  address  technical  proposals  to  enhance  the  service.
 We  ask  for  comments  on  these  issues  as  well  as  suggestions  concerning  other  technical  rule  changes  that  may  be  of  benefit  to  the  Services.
 1.  Signal  Strength  Limits  at  Geographic  Service  Area  Boundaries
 131.  We  seek  comment  on  the  signal  strength  limits  to  apply  at  geographic  area  boundaries.  Last  year,  for  example,  we  reallocated  forty-  eight  megahertz  in  the  lower  700  MHz  band  (broadcast
 television  channels  52-  59)  to  fixed  and  mobile  services  while  allowing  continued  provision  of  broadcast  services  in  the  band  on  a  secondary  basis,  and  limited  the  permissible  signal  strength  at  service  area
 boundaries  to  40  dBV/  m,  the  same  signal  strength  limit  that  we  had  adopted  earlier  for  the  upper  700  MHz  band  and  the  800-  MHz  EA-  based  and  900-  MHz  MTA-  based  SMR  services.  308  By  comparison,  our
 rules  apply  a  somewhat  higher  47  dBV/  m  limit  at  the  geographic  service  area  boundaries  for  broadband  PCS,  309  for  Part  27  services  in  the  2305-  2320  and  2345-  2360  MHz  bands,  and  for  Part  27  services  in  the
 1390-  1395  and  1432-  1435  MHz  bands.  310  In  all  of  those  cases,  the  allowed  signal  strengths  are  compatible  with  the  provision  of  low-  powered  cellular  services  in  adjacent  service  areas.  We  are
 306  [  I]  n  light  of  the  growth  of  both  competition  and  consumer  demand  in  CMRS  markets,  we  conclude  that  case-by-
 case  review,  accompanied  by  enforcement  of  sanctions  in  cases  of  misconduct,  is  now  preferable  to  the  spectrum  cap  rule  because  it  gives  the  Commission  flexibility  to  reach  the  appropriate  decision  in  each  case,  on
 the  basis  of  the  particular  circumstances  of  that  case.  Spectrum  Cap  Order,  16  FCC  Rcd  at  22,693-  94    50.
 307  Id.  at  22,696    54.
 308  See  Lower  700  MHz  Band  R&  O,  17  FCC  Rcd  at  1,070    119.  This  limit  is  codified  at  47  C.  F.  R.    27.55(  a)(  2).
 309  47  C.  F.  R.    24.236.
 310  47  C.  F.  R.    27.55(  a)(  1)  and  (3).
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 tentatively  inclined  to  follow  the  same  general  standard  in  this  proceeding  but  seek  comments  on  any  unique  characteristics  of  the  2500-  2690  MHz  band  that  might  warrant  a  different  approach.
 2.  Authorization  of  Mobile  Operation
 132.  Although  we  have  applied  a  mobile  allocation  to  the  2500-  2690  MHz  band,  until  now  we  have  required  MDS  and  ITFS  licensees  to  obtain  separate  authorizations  before  commencing  mobile
 service.  We  propose  to  authorize  MDS  and  ITFS  licensees  to  engage  in  mobile  operation  by  blanket-licensing  such  operation  under  those  licensees  geographic  service  area  authorizations.  We  seek  comment
 on  the  advisability  of  such  blanket  licenses  and  any  requirements  they  should  contain,  including  but  not  limited  to  those  discussed  above  and  below.
 3.  Power  and  Antenna  Height  Limits
 133.  Response  Stations.  Under  our  current  rules,  we  limit  response  stations  to  a  transmitter  output  power  of  2  watts.  311  This  is  the  same  requirement  that  we  have  for  broadband  PCS  mobile/  portable
 operation  in  the  1.9  GHz  band.  312  However,  the  Coalition  notes  that  we  adopted  the  2-  watt  limit  in  the  Two-  Way  Order  without  any  explanation  and  urges  that  we  delete  this  power  limit.  313  It  says  that  the  limit
 unduly  restricts  the  flexibility  of  equipment  designers  to  make  the  most  efficient  use  of  the  2.1  and  2.5  GHz  bands.  The  Coalition  emphasizes,  however,  that  it  is  not  advocating  any  change  in  the  restrictions
 on  power  contained  in  Parts  1  and  2  that  are  designed  to  assure  the  protection  of  human  health  and  safety;  in  fact,  it  recommends  that  we  clarify  that  those  limits  apply  to  MDS  and  ITFS  by  adding  those  services
 to  the  list  of  services  specifically  shown  as  being  subject  to  the  rules.  314
 134.  While  the  2-  watt  limit  on  PCS  response  stations  seemed  like  a  reasonable  model  to  follow  when  we  adopted  a  similar  rule  for  MDS  and  ITFS,  the  record  of  the  PCS  proceeding  indicates
 that  the  2-  watt  limit  was  originally  designed  to  reduce  the  likelihood  of  interference  with  fixed  microwave  stations  in  the  PCS  bands.  315  We  seek  comment  on  the  extent  to  which  similar  concerns  should  apply  for
 MDS  and  ITFS,  bearing  in  mind  the  differences  between  the  incumbent  licensees  in  the  MDS/  ITFS  bands    and  their  circumstances    as  compared  with  the  incumbent  licensees  in  the  PCS  band.  While
 compliance  with  our  safety  rules  may  by  itself  necessitate  compliance  with  a  2-  watt  limit  for  devices  that  are  normally  held  close  to  the  users  body,  those  rules  allow  higher  power  levels  in  circumstances  where
 the  response  stations  transmission  antenna  is  designed  to  be  used  at  least  twenty  centimeters  away  from  the  body  of  the  user  or  any  nearby  persons.  316
 311  See  47  C.  F.  R.    21.909(  g)(  2)  and  74.939(  g)(  2).
 312  See  47  C.  F.  R.    24.232.
 313  Coalition  Proposal  at  25.
 314  Id.  at  26.
 315  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Second  Report
 and  Order,  8  FCC  Rcd  7,700,  7,764-  7,765    156  (1993).
 316  At  frequencies  above  1.5  GHz,  mobile  devices  whose  effective  radiated  power  (ERP)  is  less  than  3  watts  are
 not  required  to  undergo  even  routine  environmental  evaluation  for  radio  frequency  exposure  prior  to  equipment  authorization  or  use.  47  C.  F.  R.    2.1091.  A  mobile  device  is  defined  for  this  purpose  as  a  transmitting  device
 designed  to  be  used  in  other  than  fixed  locations  and  to  generally  be  used  in  such  a  way  that  a  separation  distance  of  at  least  20  centimeters  is  normally  maintained  between  the  transmitters  radiating  structure(  s)  and  the  body  of
 (continued.)
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 135.  Finally,  we  seek  comment  on  whether  we  should  establish  a  maximum  antenna  height  for  response  stations  in  view  of  our  proposal  to  blanket-  license  such  stations.  While  mobile  or  portable
 stations  would  typically  be  close  enough  to  the  ground  that  they  would  be  shielded  by  nearby  structures,  the  rules  that  we  contemplate  adopting  for  these  services  would  also  permit  the  deployment  of  response
 stations  at  fixed  locations,  where  they  could  be  attached  to  antennas  at  high  elevations.  Such  transmitters  would  have  a  greater  potential  for  generating  unwanted  electrical  interference.  We  seek  comment  on
 whether  or  not  the  signal  strength  limits  that  we  propose  to  apply  at  geographic  service  area  boundaries  would  obviate  the  need  for  antenna  height  limits.
 136.  Base/  Main  Stations.  We  note  that  there  is  no  specific  power  limit  specified  for  low  power  base  stations  nor  are  there  base  station  transmitting  antenna  height  limits  for  operating  in  this  band.
 In  view  of  our  proposals  above  to  limit  power  at  other  licensees  border  areas,  we  ask  for  comment  on  whether  there  would  be  any  benefit  to  establishing  base  station  power  and  antenna  height  limits.
 137.  In  particular,  we  seek  comment  upon  a  Coalition  proposal  to  create  incentives,  but  not  an  absolute  requirement,  for  licensees  to  limit  the  height  of  low  power  base  stations  near  their  GSA
 borders.  317  The  Coalition  expresses  concern  that  a  47  dBV/  m  signal  strength  limit  at  GSA  boundaries  might  not  provide  sufficient  protection  against  interference  to  base  station  receivers.  The  scenario  that
 causes  them  the  most  concern  would  arise  when  the  interfering  licensee  is  using  a  channel  for  downstream  communications  from  its  base  stations,  and  the  interfered-  with  licensee  in  a  contiguous  GSA
 is  using  the  same  channel  for  upstream  communications  to  its  base  stations.  Under  these  circumstances,  the  Coalition  would  have  us  apply  a  safe-  harbor  requirement  that  both  licensees  limit  their  antenna
 heights  to  D  2  /17,  where  D  is  the  distance  in  kilometers  between  the  base  station  causing  the  interference  and  the  point  where  a  line  connecting  the  transmitting  base  station  with  the  neighboring  receiving  base
 station  intersects  the  boundary  between  their  respective  GSAs.  Antenna  height  for  this  purpose  would  be  defined  as  the  height  in  meters  of  the  antennas  centerline  above  the  average  elevation  along  the  line
 between  the  two  base  stations.  318  If  a  transmitting  licensees  antenna  is  not  within  the  safe-  harbor  height  limit  and  the  receiving  licensees  antenna  is  within  the  safe  harbor,  the  transmitting  operator  would  be
 required  to  take  such  measures  as  are  necessary  to  limit  the  level  of  the  undesired  signal  at  the  receiving  base  station  to  -107  dBm  or  less.  319
 138.  By  comparison  with  the  Coalitions  recommendations,  our  Broadband  PCS  rules  do  not  impose  any  direct  limit  on  antenna  heights,  but  they  apply  a  graduated  reduction  in  permissible  e.  i.  r.  p.
 output  for  base  station  antennas  that  are  more  than  300  meters  in  height.  320  On  first  impression,  the  Coalitions  proposal  appears  to  lack  certainty,  insofar  as  the  requirements  imposed  upon  a  licensee  would
 be  dependent  upon  actions  taken  by  a  neighboring  licensee.  However,  a  licensee  could  ensure  its  compliance  with  the  recommended  safe  harbor,  regardless  of  any  future  actions  taken  by  the  neighboring
 licensee,  by  drawing  a  line  intersecting  the  nearest  point  on  the  GSA  boundary  and  assuming  that  the  other  licensee  might  someday  site  a  base  station  somewhere  on  that  line.  The  recommended  formula
 (Continued  from  previous  page)  the  user  or  nearby  person.  Id.  Units  designed  to  be  used  within  twenty  centimeters  of  a  person  are  defined  as
 portable  devices  and  are  subject  to  more  stringent  requirements.  47  C.  F.  R.    2.1093.
 317  See  Second  Supplement  to  the  Coalition  Proposal  at  3-  7,  filed  Feb.  7,  2003.
 318  Id.  at  5.
 319  Id.  at  6.
 320  47  C.  F.  R.    24.232(  a).
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 could  then  be  applied  to  determine  the  maximum  safe-  harbor  height  for  any  given  distance  from  the  boundary.  The  safe  harbor  distance  formula  proposed  by  the  Coalition  does  not  adversely  affect  the
 typical  2-  5  mile  antenna  service  distance  and  150'  to  300'  height  above  average  terrain  (HAAT)  of  base  stations  in  low-  power  cellular  networks.  Although  it  seems  to  have  a  minimal  effect  on  typical  base
 station  design,  it  is  unclear  how  the  coalition  arrived  at  the  formula  itself.  Is  the  formula  really  necessary?  Is  the  formula  technology  agnostic?
 139.  In  addition,  given  our  licensing  approach  discussed  herein,  we  seek  comment  on  whether  there  is  a  need  to  reduce  the  maximum  power  permitted  for  high-  powered  video  operations.  321  Finally,
 we  request  comment  on  the  Coalitions  proposal  to  eliminate  the  limitation  pertaining  to  the  use  of  digital  modulations  with  non-  uniform  spectral  densities,  i.  e.,  the  uneven  or  random  distribution  of  energy
 throughout  the  specified  spectrum  .  322
 4.  Emission  Limits
 140.  The  purpose  of  emission  limits,  also  known  as  emission  masks,  is  to  provide  protection  against  adjacent  channel  interference  (e.  g.,  restrict  transmitter  emissions  on  a  range  of  frequencies
 removed  from  the  licensees  assigned  frequency  or  frequency  band).  The  current  rules  governing  emission  limits  for  MDS  and  ITFS  are  set  forth  in  Section  21.905  and  74.936,  respectively.  The  current
 rules  are  based,  however,  on  high  power  video  operation  and  vary  slightly  between  the  services.  As  discussed  herein,  MDS  licenses  have  indicated  an  interest  to  use  this  band  for  low  power  two-  way
 operations.  Further,  we  are  proposing  rules  for  mobile  operation  in  this  band.  Consequently,  we  believe  that  modification  of  the  rules  governing  out-  of-  band  emissions  may  be  necessary.
 141.  The  Coalition  recommends  that  we  require  equipment  on  the  LBS  and  UBS  channels  (both  base  stations  and  stations  at  a  customers  premise)  to  attenuate  the  power  below  the  transmitter
 power  (P)  by  at  least  43  +  10  log10(  P)  dB  on  any  frequency  outside  a  licensees  authorized  spectrum.  323  This  recommendation  is  the  same  as  the  general  emission  mask  the  Commission  adopted  for  operations  in
 both  the  upper  and  lower  700  MHz  band.  324  For  the  R  channels  the  Coalition  suggests  requiring  an  attenuation  of  at  least  80  +  10  log10(  P)  dB.  The  Coalition  also  asserts  that  additional  attenuation  may  be
 required  in  special  circumstances.  For  example,  the  Coalition  states  that  the  rules  be  changed  to  require  a  licensee  to  take  steps  to  attenuate  out-  of-  band  emissions  by  at  least  67  +  10  log10(  P)  dB  upon  written
 request  from  an  adjacent  channel  licensee.  325  Requiring  a  licensee  to  reduce  its  out-  of-  band  emissions  at  the  request  of  an  adjacent  channel  licensee,  however,  is  not  something  we  have  done  in  the  past.  The
 321  See  47  C.  F.  R.    74.935.
 322  See  Coalition  Proposal  at  25  n.  70.
 323  Coalition  Proposal  at  29.
 324  Lower  700  MHz  Band  R&  O,  17  FCC  Rcd  at  1,070    122.
 325  According  to  the  Coalitions  Proposal,  the  written  request  must  include  a  certification  from  the  requesting
 licensee  that  it  intends  to  initiate  service  on  the  affected  adjacent  channel  group  at  a  date  certain  (not  more  than  one  year  after  the  date  of  the  written  request),  and  that  the  additional  attenuation  is  required  due  to  the  respective
 technical  characteristics  of  the  requesting  licensees  planned  facilities  and  those  of  the  party  receiving  the  request.  The  requesting  licensee  must  also  include  in  the  written  request  currently  available  information  regarding  its
 planned  network  design  comparable  in  scope  to  the  information  required  to  be  filed  upon  completion  of  the  construction  of  its  facilities.  See  Coalition  Proposal  at  29.
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 Coalition  also  outlines  a  more  restrictive  mask  for  protecting  operations  on  the  MBS  channels  326  and  for  licensees  of  MBS  channels  to  protect  operations  on  LBS  and  UBS  channels.  327  Our  initial  observation
 here  is  that  adopting  all  the  Coalitions  recommendations  would  be  inconsistent  with  our  attempt  herein  to  simplify  the  rules  governing  this  band  (e.  g.,  minimize  harmful  interference  without  establishing  overly
 burdensome  requirements).  Nevertheless,  we  seek  comment  on  whether  we  should  adopt  the  Coalitions  recommendations  concerning  out-  of-  band  emissions  or  different  criteria  and  details  on  measurement
 procedures  to  determine  compliance.  328  Further,  we  seek  comment  on  the  appropriate  emission  mask  for  mobile  operations.  In  that  regard,  we  note  that  we  recently  adopted  out  of  band  emission  requirements  to
 ancillary  terrestrial  component  (ATC)  mobile  units  in  the  2000-  2020  MHz  band  in  order  to  protect  adjacent  channel  PCS  operations.  329  Since  Mobile  Satellite  Service  (MSS)  and  ATC  units  will  be
 operating  in  the  band  immediately  below  2500  MHz,  we  seek  comment  on  whether  similar  limits  should  apply.  We  also  seek  comment  on  whether  any  special  rules  are  needed  to  protect  the  Earth  Exploration
 Satellite  (passive),  Radio  Astronomy,  and  Space  Research  allocations  in  the  2690-  2700  MHz  band.  330  Finally,  we  request  comment  on  whether  we  should  specify  a  frequency  tolerance  or  require  equipment  to
 maintain  its  operations  fully  within  the  emission  mask  at  all  times.
 5.  Technology
 142.  The  Coalition  states  that  we  should  not  restrict  operation  in  this  band  to  a  particular  technology  or  technologies  and  our  rules  should  remain  technology-  neutral  to  the  maximum  extent
 possible.  331  However,  it  does  mention  second-  generation  equipment  employing  two  different  technologies    FDD  and  TDD.  The  Coalition  notes  that  FDD  technology  requires  a  separation  between
 the  highest  frequency  used  in  one  direction  and  the  lowest  frequency  used  in  the  other  direction.  332  To  allow  for  FDD  technology,  the  Coalition  proposes  that  when  this  technology  is  employed  by  a  licensee,
 the  LBS  be  restricted  to  subscriber-  to-  base  (upstream)  communications  and  the  UBS  be  restricted  to  base-
 326  The  Coalition  states  [  i]  n  addition  to  the  other  requirements  imposed  on  out-  of-  band  emissions  by  stations
 operating  outside  the  MBS,  the  licensee  of  any  transmitter  operating  in  the  LBS,  UBS,  I,  J,  or  K  channels  shall  manage  its  out-  of-  band  emissions  such  that  the  noise  power  introduced  into  an  MBS  channel  does  not  exceed  an
 EIRP  of  -37  dBm  without  the  consent  of  the  affected  MBS  channel  licensee.  Notwithstanding  the  foregoing,  if  the  licensee  of  a  channel  outside  the  MBS  digitizes  a  channel  within  the  MBS,  the  noise  power  introduced  into
 that  channel  of  the  MBS  shall  not  exceed  an  EIRP  of  -20  dBm  without  the  consent  of  the  affected  MBS  channel  licensee.  See  Coalition  Proposal  at  30.
 327  See  Coalition  Proposal  at  16,  nn.  39,  41.
 328  For  example,  the  Coalition  suggests  that  we  measure  out-  of-  band  emissions  at  the  outermost  edges  of  the
 combined  channels  where  two  or  more  contiguous  channels  are  employed  in  the  same  system.  See  Coalition  Proposal  at  29  n.  79.  See  also  Coalition  Proposal  at  30  n.  81.
 329  Flexibility  for  Delivery  of  Communications  by  Mobile  Satellite  Service  Providers  in  the  2  GHz  Band,  the  L-Band,
 and  the  1.6/  2.4  GHz  Bands,  IB  Docket  No.  01-  185,  Report  and  Order  and  Notice  of  Proposed  Rulemaking,  FCC  03-  15  (rel.  Feb.  10,  2003)  at    119.
 330  See  47  C.  F.  R.    2.106  n.  US246.
 331  Coalition  Proposal  at  11  and  15.
 332  The  Coalition  points  out  that  the  Commissions  Interim  Report  stated  that  a  separation  of  at  least  30  megahertz
 between  upstream  (customer  to  base)  and  downstream  (base  to  customer)  transmissions  is  needed  to  provide  sufficient  isolation  of  signals  in  the  duplexer.  See  Coalition  Proposal  at  16.  See  also  Interim  Report  at  54.
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 to-  subscriber  (downstream  communications).  333  According  to  the  Coalition,  this  framework  will  simplify  adjacent  channel  coordination  and  provide  the  vendor  community  with  a  degree  of  certainty  as  to  the
 band  usage  that  will  translate  into  lower  equipment  costs  and  smaller  equipment.  We  seek  comment  on  whether  we  should  specify  upstream  and  downstream  channels  in  the  rules  should  licensees  use  FDD  or  a
 similar  technology.  We  also  ask  for  comment  on  whether  we  should  establish  formal  channel  pairings  to  standardize  the  separation  between  channels  used  in  upstream  and  downstream  equipment.  334  In  addition,
 we  ask  for  comment  on  what  role  software  defined  radio  technology  can  play  here  in  resolving  potential  problems.  Finally,  we  ask  for  comment  on  whether  the  Commission  should  adopt  standards  for  mobile
 operation  to  promote  interoperability  and  roaming.
 6.  Unlicensed  Underlay  Operation
 143.  As  noted  previously,  one  of  the  underlying  goals  of  this  proceeding  is  to  promote  increased  access  to  spectrum.  In  this  regard,  we  note  that  Intel  and  Microsoft  advocate  that  we  create  or
 at  least  preserve  the  opportunity  to  create  unlicensed  underlay  rights  for  very  low-  powered  devices  on  these  channels.  335  Recently,  we  issued  a  Notice  of  Inquiry  concerning  making  additional  spectrum
 available  for  use  by  unlicensed  devices  in  the  television  bands  and  in  the  3650-  3700  MHz  band.  336  In  the  Unlicensed  NOI,  we  noted  that  there  have  been  significant  advances  in  technology  that  that  may  make  it
 feasible  to  design  new  types  of  unlicensed  equipment  that  would  not  cause  interference  to  existing  services.  337  For  example,  equipment  could  be  designed  that  could  monitor  spectrum  before  transmitting
 to  avoid  interference,  or  equipment  could  be  designed  that  could  use  the  Global  Positioning  System  to  know  where  it  is  located  and  determine  whether  there  are  licensed  operators  in  the  area.  338  We  also  noted
 that  allowing  unlicensed  operation  with  minimal  technical  requirements  could  potentially  permit  the  development  of  new  and  innovative  types  of  devices,  such  as  new  wireless  data  networks.  339
 144.  The  proximity  of  the  2500-  2690  MHz  band  to  successful  unlicensed  technologies  in  the  2.4  GHz  band,  and  our  goal  of  increasing  the  intensiveness  and  efficiency  of  use  of  the  2500-  2655  MHz
 band,  suggests  that  it  may  be  appropriate  to  consider  enhancing  unlicensed  use  in  the  that  band  on  a  secondary,  non-  interference  basis.  340  While  we  recognize  that  unlicensed  operations  under  our  Part  15
 rules  are  subject  to  the  condition  that  the  transmitter  does  not  cause  interference  to  authorized  services,  we  nonetheless  are  mindful  in  this  context  that  additional  measures  may  be  necessary  to  ensure  that
 333  Coalition  Proposal  at  16.
 334  In  raising  these  questions,  we  recognize  that  the  Coalition  Proposal  does  not  provide  for  formal  pairings  of
 channels  but  that,  as  the  Coalition  notes,  operators  could  choose  to  pair  channel  groups  that  are  sufficiently  separated  to  allow  upstream  and  downstream  FDD  communications.  See  Coalition  Proposal  at  15,  n.  40.
 335  Intel  Reply  Comments  in  RM-  10586,  at  5;  Microsoft  Reply  Comments  in  RM-  10586,  at  3-  4.
 336  Additional  Spectrum  for  Unlicensed  Devices  Below  900  MHz  and  in  the  3  GHz  Band,  ET  Docket  No.  02-  380,
 Notice  of  Inquiry,  17  FCC  Rcd  25,632,  (2002)  (  Unlicensed  NOI)
 337  Id.    13.
 338  Id.
 339  Id.    21.
 340  We  also  seek  comment  on  a  proposal  to  allow  unlicensed  operation  on  a  primary  basis  for  unassigned  ITFS
 spectrum.  See  paras.  79-  82,  supra.
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 unlicensed  operations  do  not  cause  interference  to  existing,  licensed  operations.  In  that  regard,  we  note  that  WCA  believes  that  Microsofts  and  Intels  proposal  is  premature.  WCA  contends  that  the  necessary
 technology  for  mass  producing  affordable  devices  capable  of  measuring  and  reliably  adapting  to  the  presence  of  background  noise  or  interference  temperature  has  not  been  demonstrated.  341
 145.  As  we  observed  in  the  Unlicensed  NOI,  allowing  unlicensed  devices  to  operate  on  spectrum  that  is  not  being  utilized  in  a  particular  area  would  be  a  more  efficient  use  of  spectrum.  342  We
 seek  comment  on  possible  revisions  to  our  rules  to  enhance  unlicensed  operations  in  the  2500-  2690  MHz  band.  Are  equipment  economies  possible  between  the  2.4  GHz  band  and  the  2.5  GHz  band  for  unlicensed
 operators?  What  Part  15  rules  would  need  to  be  changed  in  order  to  allow  enhanced  unlicensed  operation?  Could  we  permit  power  levels  greater  than  1  watt  for  such  operations  without  causing  harmful
 interference  to  authorized  MDS  and  ITFS  users?  If  so,  we  seek  comment  on  the  maximum  permissible  power  level.  Would  any  restrictions  on  antenna  gain  or  directivity  be  necessary?  What  other
 requirements  would  be  necessary  to  protect  existing  MDS  and  ITFS  users?  Is  unlicensed  use  appropriate  for  any  of  the  band  plans  we  mentioned  earlier?  343  If  we  create  high-  power  and  low-  power  sections  of  the
 band,  should  we  permit  unlicensed  use  in  one  section  of  the  band  but  not  the  other?
 146.  We  seek  comment  on  the  extent  to  which  underlay  rights  would  have  practical  utility  if  they  were  made  available  on  a  less-  than-  nationwide  basis.  Is  it  feasible  to  manufacture  affordable
 transceivers  that  are  capable  of  using  underlay  rights  where  and  only  where  such  access  is  offered,  if  some  but  not  all  licensees  on  a  given  channel  allow  underlay  access?  If  not,  what  kinds  of  institutional
 frameworks  could  facilitate  national  aggregation  and  sale  of  underlay  rights?  If  a  licensee  or  a  group  of  licensees  were  willing  to  sell  such  rights,  what  kinds  of  entities  would  be  likely  purchasers?  To  make
 such  transactions  feasible,  would  it  be  necessary  for  the  Commission  to  issue  separate  licenses  for  underlay  rights,  or  would  it  suffice  for  the  primary  licensees  to  commit  themselves  contractually  to  refrain
 from  seeking  enforcement  of  interference  protection  from  underlay  users?  If  companies  like  Intel  or  Microsoft  were  willing  to  consider  paying  licensees  to  allow  underlay  operation  on  their  channels,  would
 the  vendors  seek  to  restrict  underlay  operation  to  their  own  customers,  or  would  it  suffice,  from  their  perspective,  if  licensees  were  to  allow  underlay  operation  by  anyone  on  their  channels?
 147.  In  addition,  we  note  that  Part  15  transmitters  may  not  operate  in  certain  restricted  bands,  including  2655-  2690  MHz.  344  Are  there  any  circumstances  under  which  unlicensed  operation  could  be
 allowed  in  the  2655-  2690  MHz  band  without  adversely  affecting  passive  sensing  operations  in  the  2655-  2700  MHz  band?
 148.  We  also  seek  comment  on  what  rules  might  provide  incentives  for  licensees  to  offer  access  to  devices  operating  above  Part  15  power  limits  either  through  secondary  markets  or  an  easment
 basis.  Although  our  first  choice  is  that  licensees  make  available  these  rights  via  commercial  transactions,  we  recognize  that  in  many  cases  transaction  costs  may  be  too  high  to  enable  efficient  transactions,  and
 that  in  some  cases  licensees  may  refrain  from  entering  into  such  transactions  to  preclude  potential  competitors.  We  seek  comment  on  whether  high  transaction  costs  or  anti-  competitive  motivations  will
 hinder  such  transactions.
 341  WCA  Comments  in  ET  Docket  No.  02-  135,  at  10.
 342  Unlicensed  NOI,    14.
 343  See  paras.  79-  82,  supra.
 344  47  C.  F.  R.    15.205.
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 7.  RF  Safety
 149.  The  Coalition  states  that  to  implement  its  proposed  approach,  we  should  amend  our  RF  emissions  rules.  More  specifically,  the  Coalition  contends  that  we  should  amend  Sections  1.1307(  b)(  2),
 2.1091(  c)  and  2.1093(  c)  345  to  include  MDS  and  ITFS  services.  346  The  Commission  considers  RF  safety  procedures  to  be  essential  in  protecting  human  beings  from  excessive  exposure  to  RF  energy.  347
 Accordingly,  we  seek  comment  on  whether  and  how  we  should  amend  the  RF  safety  rules.
 8.  North  American  Datum  (NAD)  83  Coordinate  Data
 150.  The  Coalition  notes  that  our  rules  require  the  submission  of  different  coordinate  data  for  licensing  actions.  Applicants  submit  coordinate  data  in  NAD83  for  applications  filed  on  FCC  Form  331
 but  in  NAD27  for  all  other  MDS/  ITFS  forms.  The  Coalition  asks  that  we  require  applicants  to  use  NAD83  coordinate  data  and  update  or  convert  the  current  database.  348  As  stated  above,  we  propose  to
 process  applications  using  the  ULS.  We  require  NAD83  coordinate  data  for  applications  filed  under  ULS.  Accordingly,  we  propose  to  require  all  licensees  to  file  coordinate  data  using  NAD83  and  propose
 to  convert  existing  data  to  NAD83.  We  seek  comment  on  these  proposals.  349
 9.  MDS  Response  Station  Hubs
 151.  Our  existing  rules  treat  hubs  like  main  stations  for  application  processing  purposes.  For  instance,  whereas  47  C.  F.  R.  Section  1.1104  contains  a  special  section  on  the  application  fee  for  signal
 booster  applications  and  for  signal  booster  certification  of  completion  of  construction  applications  ($  70.00  in  each  instance),  the  rules  do  not  differentiate  between  requirements  for  main  station
 applications  and  certifications  and  response  station  hub  applications  and  certifications.  At  present,  the  fee  for  a  response  station  hub  on  a  Form  331  is  $210.00,  and  the  fee  for  the  Form  304A  is  $610.00.  350
 Section  21.909  states  that  an  MDS  response  station  hub  application  must  be  filed  on  a  Form  331.  Licensees  of  MDS  response  station  hubs  must  also  file  a  certification  of  completion  of  construction
 application.  351  Response  station  hubs,  signal  booster  stations  and  R  channels  are  considered  stand-  alone  stations,  and  thus  have  unique  facility  ID  numbers  separate  from  the  associated  main  stations.  352
 However,  at  this  time,  only  signal  booster  stations  are  designated  for  special  treatment  in  the  application  fee  schedule.  We  do  not  believe  that  certifications  of  completion  of  construction  of  two-  way  hubs  will  be
 345  See  47  C.  F.  R.    1.1307(  b)(  2),  2.1091(  c)  and  2.1093(  c).
 346  See  Coalition  Proposal  at  20,  n.  51  and  26.
 347  The  existing  requirements  are  located  in  47  C.  F.  R.    1.1307(  b),  1.1310,  2.1091  and  2.1093.
 348  Coalition  Proposal  at  56.
 349  With  regard  to  the  Coalitions  request  to  convert  the  database,  we  note  that  the  Wireless  Bureau  has  asked
 MDS  and  ITFS  licensees  to  review  their  license  data,  including  coordinate  data,  to  determine  if  it  is  correct.  See  Wireless  Telecommunications  Bureau  Seeks  to  Verify  ITFS,  MDS  and  MMDS  License  Status  and  Pending
 Applications,  Public  Notice,  DA  02-  2751,  released  Oct.  18,  2002.
 350  See  47  C.  F.  R.    1.1104  and  21.909(  c)(  1).
 351  47  C.  F.  R.    21.909(  h)(  i)(  2).
 352  See  Public  Notice,  Mass  Media  Bureau  Multipoint  Distribution  Service  and  Instructional  Television  Fixed
 Service  Applications  Tendered  For  Filing,  Report  No.  148,  (Nov.  29,  2000).
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 necessary  under  the  GSA  licensing  approach  that  we  propose,  and  therefore  propose  to  eliminate  such  filing  requirements.
 10.  2150-  2162  MHz  band
 152.  In  the  Third  Report  and  Order,  the  Commission  addressed  relocation  issues  for  the  MDS  channels  in  the  2150-  2162  band.  We  stated  that  MDS  incumbents  would  be  entitled  to  comparable
 facilities  and/  or  adequate  replacement  spectrum.  The  Commission  noted  that  our  relocation  policies  do  not  dictate  that  systems  be  relocated  to  the  same  amount  of  spectrum  as  they  currently  use,  only  that
 comparable  facilities  be  provided.  353  We  further  concluded  that  [  g]  iven  advances  in  technology,  e.  g.,  changing  from  analog  to  digital  modulation  and  the  flexibility  provided  by  our  existing  relocation
 procedures  to  make  incumbents  whole,  we  believe  that  current  MDS  operations  could  be  accommodated  using  substantially  less  spectrum  than  that  of  the  existing  2150-  2160/  62  MHz  allocation.  We  then
 sought  comment  on  how  much  spectrum  was  necessary  for  MDS  relocation.  The  Commission  further  noted  under  our  relocation  policies  only  stations  with  primary  status  are  entitled  to  relocation.  354
 153.  In  light  of  the  fact  that  we  do  not  yet  know  where  MDS  licensees  operating  on  Channels  1  and  2  (or  2A)  will  be  relocated,  we  will  not  propose  changes  to  service  rules  for  those  channels  at  this
 time.  Depending  on  the  relocated  spectrum  that  MDS  licensees  receive,  additional  technical  rules  may  be  necessary  to  accommodate  the  technical  characteristics  of  that  spectrum.  Once  relocation  spectrum  for
 these  MDS  licensees  has  been  identified,  we  will  issue  a  further  notice  of  proposed  rulemaking  in  this  proceeding  seeking  comment  on  service  rules  for  relocated  licensees.
 11.  Radiation  from  Stations  that  are  Not  Engaged  in  Communications
 154.  On  September  25,  1998,  the  Commission  amended  its  rules  to  allow  MDS  and  ITFS  licensees  to  provide  a  wide  range  of  high-  speed,  two-  way  services  to  a  variety  of  users.  355  On  July  29,
 1999,  the  Commission  made  some  additional  rule  modifications  to  facilitate  the  provision  of  these  services.  356  On  December  22,  1999,  IPWireless,  Inc.  (IPWireless)  requested  reconsideration  of  the
 Commissions  out-  of-  band  emission  limitations.  357  On  February  10,  2000,  the  group  of  over  100  wireless  communications  system  operators,  Commission  licensees,  equipment  manufacturers  and  consultants  who
 353  See  Amendment  of  Part  2  of  the  Commission's  Rules  to  Allocate  Spectrum  Below  3  GHz  for  Mobile  and  Fixed
 Services  to  Support  the  Introduction  of  New  Advanced  Wireless  Services,  including  Third  Generation  Wireless  Systems,  Third  Report  and  Order,  Third  Notice  of  Proposed  Rulemaking,  and  Second  Memorandum  Opinion  and
 Order,  ET  Docket  No.  00-  258,  FCC  03-  16,  72  (2003)  (AWS  Third  R&  O,  Third  NPRM,  and  Second  MO&  O).
 354  In  1992,  when  the  2160-  2165  MHz  band  was  reallocated  to  emerging  technologies,  the  Commission
 implemented  a  policy  by  which  incumbent  MDS  licensees  that  were  using  the  2160-  2162  MHz  band  would  continue  such  use  on  a  primary  basis.  See  Redevelopment  of  Spectrum  to  Encourage  Innovation  in  the  Use  of
 New  Telecommunications  Technologies,  First  Report  and  Order  and  Third  Notice  of  Proposed  Rule  Making,  7  FCC  Rcd  6886,  6889  17  (1992).  However,  any  MDS  station  that  applied  for  use  of  this  band  after  January  16,
 1992  would  be  granted  only  on  a  secondary  basis  to  emerging  technology  use.  Id.  at  n.  22.
 355  Two-  Way  R&  O,  13  FCC  Rcd  19,112.
 356  Amendment  of  Parts  1,  21  and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television  Fixed
 Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  Report  and  Order  on  Reconsideration,  14  FCC  Rcd  12,764  (1999)  (Two-  Way  R&  O  on  Recon).
 357  IPWireless,  Inc.  Petition  for  Reconsideration,  filed  Dec.  22,  1999.
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 were  parties  to  the  Petition  for  Rulemaking  that  commenced  the  Two-  Way  Proceeding  (collectively,  Petitioners)  did  not  oppose  IPWireless  petition,  but  sought  clarification  of  Sections  21.909(  m)  and
 74.939(  o)  of  our  Rules.  358  The  Petitioners  indicated  that  there  was  some  uncertainty  within  the  industry  as  to  the  meaning  of  the  language,  "Radiation  of  an  unmodulated  carrier  and  other  unnecessary
 transmissions  are  forbidden."  359
 155.  The  Petitioners  requested  clarification  that  this  language  requires  a  response  station's  transmitter  to  be  biased  off  so  that  no  RF  Gaussian  noise  is  emitted  when  the  station  is  not  engaged  in
 communications.  360  The  Petitioners  argued  that  this  interpretation  assures  the  protection  of  the  noise  floor  of  adjacent  channel  and  adjacent  market  licensees  against  unnecessary  emissions  from  transceivers.  361  On
 May  11,  2000,  the  Petitioners  and  IPWireless  notified  the  Commission  that  it  had  reached  a  compromise  concerning  the  appropriate  level  of  emissions  that  a  response  station  may  generate  when  not  directly
 engaged  in  communications  with  a  response  hub.  362
 156.  The  Petitioners  and  IPWireless  requested  amendment  of  Sections  21.909(  m)  and  74.939(  o)  of  our  Rules  to  provide  that  when  a  response  station  is  not  in  communications  with  its
 associated  hub,  it  must  restrict  its  field  strength.  363  First,  they  proposed  to  set  the  permissible  level  of  RF  Gaussian  noise  at  10  microvolts/  meter  per  1  MHz  bandwidth  at  a  distance  of  3  meters  for  response
 stations  utilizing  antennas  with  6  dB  or  less  gain  over  isotropic.  Second,  they  proposed  to  set  the  permissible  level  of  RF  Gaussian  noise  at  10  microvolts/  meter  x  10exp[(  antenna  gain  -  6  dB)  /  20]  per  1
 MHz  bandwidth  at  a  distance  of  3  meters  for  stations  utilizing  antennas  with  more  than  6  dB  gain  over  isotropic.  364
 157.  We  note  that  the  Commission  agreed  to  clarify  this  issue  and  sought  comment  365  on  specific  issues  relating  to  this  matter.  366  In  this  NPRM  &  MO&  O,  we  are  seeking  comments  on
 comprehensive  changes  to  the  interference  rules  that  would  apply  in  these  services.  In  light  of  that  fact,  we  seek  further  comment  on  whether  the  rules  changes  suggested  by  the  Petitioners  are  still  necessary  or
 appropriate.  We  note  that  other  services  do  not  have  a  similar  requirement.  We  ask  commenters  who  support  imposition  of  such  a  requirement  to  explain  the  need  for  such  a  requirement  in  light  of  other
 358  Petitioners  Consolidated  Comments  and  Partial  Opposition  at  5  (Consolidated  Comments)  filed  Feb.  10,  2000.
 Although  the  Commission  inadvertently  indicated  that  WCA  requested  clarification,  we  take  this  opportunity  to  correct  the  record  to  reflect  that  the  Petitioners  requested  clarification  of  this  issue.  See  Amendment  of  Parts  1,  21
 and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television  Fixed  Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  Report  and  Order  on  Further  Reconsideration  and  Further  Notice  of  Proposed
 Rulemaking,  15  FCC  Rcd  14,566,  14,576  (2000)  (Two-  Way  FNPRM).
 359  Petitioners  Consolidated  Comments  at  6.
 360  Id.
 361  Id.
 362  Petitioners  and  IPWireless,  Ex  Parte,  filed  May  11,  2000.
 363  Id.  at  1.
 364  Id.
 365  Two-  Way  FNPRM,  15  FCC  Rcd  at  14,576.
 366  Two-  Way  FNPRM,  15  FCC  Rcd  14,576-  7    39-  40.
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 changes  we  are  proposing  to  our  technical  rules.
 158.  In  a  related  matter,  we  also  seek  comment  on  requiring  that  subscriber  handsets  not  transmit  unless  a  base  station  pilot  is  present.  Such  a  rule  could  be  necessary  in  order  to  avoid
 interference  to  existing  operations.
 F.  Standardization  of  Practices  and  Procedures
 1.  Consolidation  of  Procedural  Rules  in  Part  1
 159.  With  the  adoption  of  the  ULS  R&  O,  the  Commission  consolidated  the  majority  of  its  wireless  services  procedural  rules  into  Part  1.  367  By  consolidating  the  procedural  rules  in  Part  1,  the
 Commission  improved  the  consistency  of  its  rules  across  wireless  services  and  provided  a  single  point  of  reference  for  applicants,  licensees,  and  the  members  of  the  public  seeking  information  regarding  our
 licensing  procedures.  368  Additionally,  the  consolidation  reduced  confusion  among  applicants  and  licensees,  accelerated  the  application  process,  and  improved  the  speed  with  which  wireless  carriers  were
 able  to  provide  service  to  the  public.  369  We  believe  that  consolidating  the  MDS  and  ITFS  procedural  rules  into  one  rule  part  will  decrease  confusion  concerning  the  application  of  our  MDS  and  ITFS  rules.
 Because  we  believe  that  consolidation  will  benefit  applicants,  licensees  and  members  of  the  public,  we  propose  to  consolidate  the  MDS  and  ITFS  procedural  rules  into  Part  1.  We  invite  comment  on  this
 proposal.
 2.  Consolidation  of  Service  Specific  Rules  in  Part  101
 160.  Currently,  three  rules  parts  -  Parts  21,  73  and  74    contain  our  MDS  and  ITFS  service  specific  rules.  Part  21  contains  our  MDS  rules  while  Parts  73  and  74  contain  our  ITFS  rules.  Although
 MDS  and  ITFS  licensees  use  their  licenses  to  provide  similar  services,  our  rules  treat  these  licensees  differently.  We  believe  that  regulatory  parity  will  lead  to  efficiency  in  this  band  and  spur  the
 development  of  new  and  improved  services  for  the  public.  Additionally,  we  believe  that  consolidating  the  MDS  and  ITFS  service  specific  rules  into  one  rule  part  will  reduce  confusion  and  provide  a  single
 reference  point  for  these  similar  services.  Because  we  believe  that  consolidation  will  benefit  applicants,  licensees  and  members  of  the  public,  we  propose  to  consolidate  the  MDS  and  ITFS  service  specific  rules
 into  Part  101.  We  also  seek  comment  on  alternative  means  of  consolidating  the  rules  relating  to  these  services,  such  as  incorporating  the  rules  into  Parts  21  or  27  of  our  Rules.
 3.  Standardization  of  Major  and  Minor  Filing  Requirements
 161.  The  license  modification  rules  for  MDS  and  ITFS  are  spread  across  seven  rules.  MDS  licensees  submit  FCC  Forms  304  or  331  to  modify  their  licenses  pursuant  to  Sections  21.40  and  21.41  of
 our  Rules.  370  For  a  major  modification  to  an  MDS  station,  the  Commission  will  not  grant  the  modification  unless  it  finds  that  the  modification  is  in  the  public  interest  and  in  compliance  with
 367  Biennial  Regulatory  Review    Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,  97,  and  101  of  the
 Commissions  Rules  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless  Telecommunications  Services,  Report  and  Order,  13  FCC  Rcd  21,027,  21,054    56  (ULS  R&  O).
 368  Id.
 369  Id.
 370  47  C.  F.  R.    21.40,  21.41.
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 Communications  Act.  371  A  major  modification  to  an  MDS  license  would  also  include  an  amendment  that  would  require  submission  of  an  environmental  assessment,  would  result  in  a  substantial  and  material
 alteration  of  the  proposed  service,  specifies  a  substantial  change  in  beneficial  ownership  or  control,  or  is  deemed  substantial  by  the  Commission  pursuant  to  section  309  of  the  Communication  Act.  372
 162.  Our  existing  rules  require  an  ITFS  licensee  to  file  a  formal  application  on  FCC  Form  330  for  any  of  the  following  kinds  of  changes  or  modifications  to  its  transmission  system:  adding  a  new
 channel;  changing  channels;  changing  polarization;  increasing  the  EIRP  in  any  direction  by  more  than  1.5  dB;  increasing  the  transmitting  height  by  twenty-  five  feet  or  more;  or  relocating  a  facilitys  transmitter
 site  by  ten  miles  or  more.  373  Our  rules  further  provide  that  applications  for  major  changes  to  existing  ITFS  facilities  that  are  mutually  exclusive  with  other  such  applications  or  with  applications  for  new
 stations  are  subject  to  competitive  bidding.  374  ITFS  minor  modification  applications  may  continue  to  be  filed  at  any  time  and  are  not  be  subject  to  competitive  bidding.  375  Our  rules  also  permit  certain  parties,
 subject  to  Commission  approval,  to  modify  involuntarily  the  facilities  of  an  existing  ITFS  licensee  in  certain  situations.  376
 163.  We  have  adopted  one  set  of  modification  rules  for  the  services  that  we  license  using  the  ULS.  377  This  consolidation  of  modification  rules  has  led  to  efficient  processing  of  modification
 applications  in  ULS.  We  treat  all  major  modifications  as  new  applications  in  ULS.  378  Licensees  may  make  minor  modifications  as  a  matter  of  right  without  prior  Commission  approval  (other  than  pro  forma
 assignments  and  transfers)  within  thirty  days  of  implementing  such  changes.  379  Where  other  rule  parts  permit  licensees  to  make  permissive  changes  to  technical  parameters  without  notifying  the  Commission
 (e.  g.,  adding,  modifying,  or  deleting  internal  sites),  no  notification  is  required.  380  Although  there  are
 371  See  47  C.  F.  R.    21.40.  A  major  modification  for  an  MDS  license  includes  a  substantial  modification  of  the
 engineering  proposal  such  as  (but  not  limited  to)  a  change  in,  or  addition  of,  a  radio  frequency  channel;  a  change  in  polarization  of  the  transmitted  signal;  a  change  in  type  of  transmitter  emission  or  an  increase  in  emission
 bandwidth  of  more  than  ten  percent;  a  change  in  the  geographic  coordinates  of  a  stations  transmitting  antenna  of  more  than  ten  seconds  of  latitude  or  longitude  or  both;  any  change  which  increases  the  antenna  height  by  three
 meters  or  more;  any  technical  change  that  would  increase  the  effective  radiated  power  in  any  direction  by  more  than  1.5  dB;  or  any  changes  or  combination  of  changes  that  would  cause  harmful  electrical  interference  to  an
 authorized  facility  or  result  in  a  mutually  exclusive  conflict  with  another  pending  application.  47  C.  F.  R.    21.  23.
 372  Id.
 373  47  C.  F.  R.    74.951.
 374  47  C.  F.  R.    73.5000.  We  note  that  our  rules  permit  ITFS  licensees  to  exchange  channels  evenly  with  each
 other  or  with  MDS  licensees  after  filing  pro  forma  applications.  47  C.  F.  R.    74.902(  f).
 375  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding  for  Commercial
 Broadcast  and  Instructional  Television  Fixed  Service  Licenses,  First  Report  and  Order,  13  FCC  Rcd  15,920    207  (1998).
 376  See  47  C.  F.  R.    74.986.
 377  See  47  C.  F.  R.    1.929.
 378  See  47  C.  F.  R.    1.947.
 379  See  47  C.  F.  R.    1.929.
 380  See  47  C.  F.  R.    1.947(  b).
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 similarities  between  our  current  MDS  and  ITFS  license  modification  rules,  we  believe  that  there  are  substantial  benefits  to  employing  the  simplified  approach  we  use  in  ULS  to  the  MDS  and  ITFS  licenses.
 We  believe  that  using  our  Part  1  ULS  modification  rules  will  reduce  confusion  with  regards  to  the  appropriate  rules  to  use,  increase  the  speed  with  which  the  Commission  staff  processes  applications  and
 will  eliminate  redundancy  in  our  rules.  Accordingly,  we  propose  to  use  our  Part  1  modification  rules  to  determine  major  and  minor  modifications  for  MDS  and  ITFS  licenses.  We  seek  comment  on  this
 proposal.
 4.  Amendments  to  New  and  Modification  Applications
 164.  The  MDS  community  apparently  did  not  raise  any  objections  to  the  procedural  rules  regarding  the  filing  of  amendments  in  the  Services  in  response  to  the  Coalitions  proposals.  However,  our
 consolidated  approach  to  amendments  for  wireless  applications  381  differs  in  some  respects  with  our  approach  to  amendments  for  MDS/  ITFS  applications.  382  We  must  reconcile  these  differences.  For
 instance,  we  must  address  the  treatment  of  major  amendments,  and  amendments  regarding  ownership  and  auction  services.  MDS  operators  have  recommended  that  we  revise  our  MDS/  ITFS  rules  to  use  the  same
 definitions  for  major  and  minor  amendments  as  for  major  and  minor  modifications.  383  We  invite  comment  on  whether  to  adopt  the  consolidated  wireless  procedures  for  amendments  to  applications.
 Furthermore,  ITFS  applicants  may  amend  applications  to  cure  defects  noted  in  deficiency  letters  to  the  applicant.  MDS  BTA  applicants  may  amend  a  long-  form  application  up  to  the  date  the  application  has
 appeared  on  public  notice  as  accepted  for  filing  or  by  written  petition  demonstrating  good  cause  if  the  application  is  already  on  public  notice.
 381  Our  rules  treat  certain  amendments  as  new  applications  that  receive  a  new  filing  date  as  of  the  date  the
 applicant  submits  the  amendment.  Amendments  that  we  treat  as  new  applications  include  applications  submitted  up  to  fourteen  days  after  the  application  appeared  as  accepted  on  public  notice  and  that  reflects  any  change  in  the
 technical  specifications  of  the  proposed  facility;  submitted  with  a  new  or  modified  analysis  of  potential  interference  to  another  facility;  or  submitted  with  an  interference  consent  statement  from  a  neighboring  licensee.
 47  C.  F.  R.    21.23.  In  such  cases,  the  amended  application  must  include  an  applicant  certification  that  it  has  met  all  requirements  regarding  interference  protection  to  existing  and  prior  proposed  facilities,  and  that  it  has  obtained
 any  necessary  consent  letters  in  lieu  of  interference  protection.  The  applicant  must  also  certify  that  it  has  served  all  potentially  affected  parties  with  copies  of  its  amended  application  and  engineering  materials,  and  that  the
 engineering  analyses  comply  with  the  rules  and  methodology.  See  47  C.  F.  R.    21.23,  73.3522(  a).  Furthermore,  ITFS  applicants  may  amend  applications  to  cure  defects  noted  in  deficiency  letters  to  the  applicant.  See  47  C.  F.  R.
   73.3522(  a).  MDS  BTA  applicants  may  amend  a  long-  form  application  up  to  the  date  the  application  has  appeared  on  public  notice  as  accepted  for  filing  or  by  written  petition  demonstrating  good  cause  if  the  application
 is  already  on  public  notice.  See  47  C.  F.  R.    21.926.  In  both  Services,  applicants  may  not  amend  applications  if  the  proposed  amendment  seeks  more  than  a  pro  forma  change  of  ownership  or  control.
 382  Generally,  under  our  consolidated  approach  for  processing  wireless  applications,  applicants  may  file
 amendments  to  pending  applications  as  a  matter  of  right  if  we  have  not  designated  the  application  for  hearing  or  listed  it  in  a  competitive  bidding  public  notice  as  accepted  for  filing.  See  47  C.  F.  R.    1.927.  Where  an
 amendment  to  an  application  constitutes  a  major  change  as  defined  in  Section  1.929,  we  treat  the  amendment  as  a  new  application  for  determination  of  filing  date,  public  notice,  and  petition  to  deny  purposes.  See  47  C.  F.  R.  
 1.927(  h).  Where  an  amendment  to  an  application  specifies  a  substantial  change  in  beneficial  ownership  or  control  (de  jure  or  de  facto)  of  an  applicant,  the  applicant  must  provide  an  exhibit  with  the  amended  application
 containing  an  affirmative,  factual  showing  as  set  forth  in  Section  1.948(  h)(  2).  See  47  C.  F.  R.    1.927(  g).
 383  Memorandum  to  WCA  Government  Relations  Committee  from  Paul  J.  Sinderbrand,  Esq.,  Petition  for
 Rulemaking  -  Amendment  of  Parts  21  and  74,  at  11,  August  1,  2001.
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 5.  Assignments  of  Authorization  and  Transfers  of  Control
 165.  MDS  licensees  use  FCC  Form  305  to  apply  for  voluntary  assignments;  involuntary  assignments;  and  pro  forma  assignments  and  FCC  Form  306  to  apply  for  voluntary  transfers  of  control,
 involuntary  assignments,  and  pro  forma  transfers  of  control.  384  These  licensees  use  FCC  Form  304A  to  request  a  partial  assignment.  385  However,  the  assignor  should  apply  for  deletion  of  the  assigned  facilities,
 indicating  concurrence  in  an  assignee's  request.  386  The  parties  must  consummate  these  transactions  within  forty-  five  days  from  the  date  of  approval.  387  If  the  parties  fail  to  consummate  a  partial  assignment,  the
 parties  must  submit  FCC  Form  304A  to  return  the  assignor's  license  to  its  original  condition.  388  Before  the  Commission  will  consent  to  these  transactions,  the  assignor/  transferor  must  complete  construction  of
 the  facility  and  file  a  certificate  of  completion  of  construction.  389
 166.  The  assignor/  transferor  must  file  the  certificate  of  construction  within  one  year  from  the  initial  license  grant  date,  the  consummation  date  of  the  transaction;  or  median  date  of  the  applicable
 commencement  dates  if  the  transaction  involves  a  system  of  two  or  more  stations.  The  Commission  also  requires  an  assignee/  transferee  to  file  FCC  Form  430  License  Qualification  Report  with  the  appropriate
 application  form  (Form  305  or  Form  306)  unless  the  assignee  or  transferee  already  has  a  current  and  substantially  accurate  report  on  file  with  the  Commission.  Finally,  the  parties  of  both  transactions  must
 notify  the  Commission  of  the  date  of  consummation,  by  letter,  within  ten  days  of  the  date  of  consummation.
 167.  ITFS  licensees  use  one  form,  FCC  Form  330,  to  request  an  assignment  of  license  or  a  transfer  of  control.  390  With  both  types  of  transactions,  ITFS  licensees  must  file  their  applications  at  least
 forty-  five  days  before  the  contemplated  effective  date  of  the  transaction.  391  However,  in  the  case  of  an  involuntary  transaction,  notification  must  be  made  to  the  Commission,  in  writing,  promptly  after  the  death
 or  legal  disability  of  a  licensee.  392  Additionally,  the  Commission  requires  the  filing  of  an  application  for
 384  See  47  C.  F.  R.    21.11(  d)  (Assignment  of  License);  47  C.  F.  R.    21.11(  e)  (Transfer  of  control  of  corporation
 holding  a  conditional  license  or  license);  47  C.  F.  R.    21.13  (General  Application  Requirements);  47  C.  F.  R.    21.15  (Technical  Content  of  Applications);  47  C.  F.  R.    21.17  (Certification  of  Financial  Qualifications);  47
 C.  F.  R.    21.19  (Waiver  of  Rules);  47  C.  F.  R.    21.38  (Assignment  or  Transfer  of  Station  Authorizations);  47  C.  F.  R.    21.39  (Considerations  Involving  Transfer  or  Assignment  Applications);  47  C.  F.  R.    21.912  (Cable
 Television  Eligibility  Requirements  and  MDS/  Cable  Cross  Ownership);  47  U.  S.  C.    310  (Limitation  on  Holding  and  Transfer  of  Licenses  (Alien  Ownership  Restriction).
 385  47  C.  F.  R.    21.11(  e).
 386  Id.
 387  Id.
 388  Id.
 389  See  47  C.  F.  R.    21.934.  We  note  that  exceptions  exist  if  there  is  not  a  substantial  change  in  ownership  or
 control  of  the  authorized  facility  from  the  transaction  (assignment/  transfer);  involuntary  transaction  due  to  the  licensee's  bankruptcy,  death,  or  legal  disability;  and  if  the  transaction  involves  BTA  authorizations.  See  id.
 390  See  47  C.  F.  R.    74.910,  73.3500.
 391  See  47  C.  F.  R.    73.3540.
 392  See  47  C.  F.  R.    73.3541.
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 involuntary  transaction  within  thirty  days  of  such  occurrence.  393
 168.  When  the  Commission  developed  FCC  Form  603  to  process  assignment  of  license  and  transfer  of  control  applications  in  ULS,  the  Commission  recognized  there  would  be  significant  benefits  to
 eliminating  inconsistencies  between  similar  services.  Specifically,  the  Commission  found  that  replacing  service  specific  forms  with  consolidated  forms  would  provide  the  public  with  a  consistent  set  of
 procedures  and  filing  requirements  and  would  increase  the  speed  and  accuracy  of  the  assignment  and  transfer  process.  394  Although  there  are  some  differences  in  the  information  requirements  for  transfers  and
 assignments,  there  is  a  sufficient  degree  of  overlap  in  the  information  that  both  types  of  applicants  supply  that  both  MDS  and  ITFS  applicants  can  use  the  FCC  Form  603  for  transfers  and  assignments.
 Furthermore,  we  designed  the  FCC  Form  603  so  that  the  applicant  only  has  to  answer  the  questions  pertinent  to  the  type  of  transaction  involved.  395  We  propose  to  revise  our  MDS  and  ITFS  transaction
 requirements  to  conform  to  and  merge  with  the  ULS  requirements  in  Section  1.948  of  our  rules.
 169.  Specifically,  we  propose  to  eliminate  the  prior  consent  requirement  for  non-  substantial,  pro  forma  assignments  in  MDS,  and  extend  the  consummation  notice  period  to  180  days  for  both
 services.  We  believe  these  changes  will  lessen  the  administrative  burden  on  applicants,  licensees,  and  Commission  staff,.  With  regard  to  involuntary  assignments,  we  propose  to  integrate  the  MDS  rules  into
 our  ULS  consolidated  rules.  We  invite  comment  on  this  integration.
 170.  Further,  we  propose  to  revise  our  channel  exchange  procedures  396  to  conform  to  our  assignment  of  license  procedures.  Currently,  our  rules  require  both  the  filing  of  a  major  modification
 application  to  change  a  frequency  assignment  397  and  each  licensee  seeking  to  exchange  channels  to  file  in  tandem  with  the  Commission  separate  pro  forma  assignment  applications.  398  Furthermore,  our  engineers
 must  generate  and  enter  a  minor  modification  application  into  BLS  for  each  channel  the  parties  seek  to  exchange.  We  find  that  this  channel  exchange  procedure  is  unduly  burdensome  upon  licensees  and  the
 Commissions  resources.  The  MDS/  ITFS  community  has  also  asked  that  we  make  changes  in  this  area.  399  We  propose  instead  to  require  the  licensees  involved  to  treat  channel  exchanges  like  any  other  set  of
 license  transfers,  i.  e.,  to  file  two  or  more  applications  showing  the  transferor  and  transferee  for  each  channel  or  set  of  channels  being  transferred.
 6.  Partitioning  and  Disaggregation
 171.  In  other  services  where  we  have  implemented  geographic  area  licensing  400  we  have
 393  See  47  C.  F.  R.    73.3541.
 394  ULS  R&  O,  13  FCC  Rcd  at  21079    113.
 395  Id.
 396  See  47  C.  F.  R.    21.901(  d);  74.902(  f);  74.951(  e).
 397  See  47  C.  F.  R.    74.951(  e).
 398  See  47  C.  F.  R.    74.902;  see  also  47  C.  F.  R.    21.901.
 399  Coalition  Proposal  at  Appendix  B  n.  49.
 400  See,  e.  g.,  47  C.  F.  R.    27.15,  101.535,  101.1111,  101.1323.
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 allowed  licensees  to  partition  their  service  areas  and  to  disaggregate  their  spectrum.  401  MDS  BTA  licensees  may  partition  their  spectrum.  402  We  seek  comment  on  whether  allowing  such  flexibility  here  to
 all  licensees  will  promote  efficient  spectrum  use,  rule  consistency  and  facilitate  market  entry  by  parties  who  may  lack  the  financial  resources  for  participation  in  ITFS  auctions  such  as  small  businesses,
 educational,  telemedicine  or  medical  institutions.  The  Coalition  also  supports  allowing  disaggregation  and  partitioning  to  the  maximum  extent  possible.  403  Should  we  allow  geographic  area  licensees  of  current
 ITFS  channels  to  partition  and  disaggregate.  Under  this  proposal,  licensees  could  file  for  partial  assignment  of  a  licensee,  and  licensees  could  apply  to  partition  their  licensed  geographic  service  areas  or
 disaggregate  their  licensed  spectrum  at  any  time  following  grant  of  their  geographic  area  licensee.  The  area  to  be  partitioned  would  be  defined  by  the  partitioner  and  partitionee.  The  partitionee  or  isaggregate
 would  be  authorized  to  hold  its  license  for  the  remainder  of  the  partitioners  or  disaggregators  license  term,  and  would  be  eligible  for  renewal  expentancy  on  the  same  basis  as  other  licensees.  There  would  be
 no  restriction  on  the  amount  of  spectrum  disaggregated  and  we  would  permit  combined  partitioning  and  disaggregation.  Licensees  that  partition  and  disaggregate  would  be  subject  to  provisions  against  unjust
 enrichment.  We  also  propose  to  eliminate  any  separate  provisions  relating  to  channel  swapping  and  rely  upon  the  ability  of  licensees  to  partition  and  disaggregate  their  spectrum.  404
 172.  We  also  seek  comment  on  factors  other  than  geography  or  frequency  that  licensees  might  reasonably  use  when  disaggregating  their  licenses.  For  example,  the  Spectrum  Policy  Report  discusses
 the  possibility  that  licensees  might  also  be  willing  to  sell  off  parts  of  their  license  rights  on  the  basis  of  time  slots  and  power  levels.  405  That  report  suggests  that  frequency-  agile  transceivers  are  already  capable
 of  sensing  if  a  given  channel  is  in  use  at  a  particular  moment  in  time,  by  switching  channels,  reducing  power,  or  remaining  silent  until  a  channel  becomes  available.  Should  we  afford  licensees  in  this  band  the
 right  to  sell  spare  capacity  on  that  basis  to  others,  on  a  preemptible  basis?
 7.  License  Renewal
 173.  Except  for  special  temporary  authorizations  (STAs),  MDS  licensees  must  file  FCC  Form  405,  in  duplicate,  to  renew  their  licenses.  406  They  must  file  the  form  between  thirty  and  sixty  days  before
 the  expiration  date  of  the  license  to  be  renewed.  407  A  licensee  shall  automatically  forfeit  its  license  in  whole  or  in  part  without  further  notice  to  the  licensee  upon  the  expiration  of  the  license  period  specified
 therein,  unless  prior  thereto  an  application  for  renewal  has  been  filed  with  the  Commission.  408  An  MDS  licensee  may  seek  reinstatement  of  its  licenses  by  filing  a  petition  within  30  days  of  the  licenses
 401  Partitioning  is  the  assignment  of  geographic  portions  of  a  license  along  geopolitical  or  other  boundaries.
 Disaggregation  is  the  assignment  of  discrete  portions  of  blocks  of  spectrum  licensed  to  a  geographic  area  licensee  or  qualifying  entity.
 402  47  C.  F.  R.    21.931.
 403  Coalition  Proposal  at  13.
 404  See,  e.  g.,  47  C.  F.  R.    21.901,  47  C.  F.  R.    74.902.
 405  Spectrum  Policy  Report  at  19.
 406  See  47  C.  F.  R.    21.11(  c).
 407  Id.
 408  See  47  C.  F.  R.    21.44(  a)(  2).
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 expiration  explaining  the  failure  to  timely  file  the  required  notification  or  application  and  setting  out  with  specificity  the  procedures  that  the  petititioner  has  established  to  ensure  that  such  filings  will  be  submitted
 on  time  in  the  future..  409  Generally,  a  license  period  is  ten  years.  The  terms  of  MDS  station  licenses  granted  on  the  basis  of  underlying  BTA  service  area  authorizations  obtained  by  competitive  bidding
 extend  until  the  end  of  the  ten-  year  BTA  authorization.  410
 174.  ITFS  licensees  must  file  an  FCC  Form  330-  R  to  renew  a  license.  411  Unless  otherwise  directed  by  the  FCC,  ITFS  licensees  must  file  their  renewal  applications  no  later  than  the  first  day  of  the
 fourth  full  month  prior  to  the  expiration  date  of  the  license  to  be  renewed.  412  Licensees  in  auctionable  services  file  FCC  Form  601  no  later  than  the  expiration  date  of  the  authorization  for  which  renewal  is
 sought,  and  no  sooner  than  ninety  days  prior  to  expiration.  The  Commission  will  reinstate  expired  ITFS  licensees  if  the  former  licensee  files  a  timely  petition  with  adequate  justification.  413
 175.  The  Commission  designed  ULS  to  provide  wireless  licensees  with  a  pre-  expiration  notification  approximately  ninety  days  before  their  licenses  expire  and  thereby  avoid  situations  in  which
 licensees  allow  their  licenses  to  expire  inadvertently  and  subsequently  seek  reinstatement.  414  The  Commission  provides  pre-  expiration  letters  of  reminder  to  all  wireless  radio  services  licensees  by  regular
 mail.  Specifically,  the  Commission  sends  letters  of  reminder  to  all  wireless  radio  service  licensees,  both  site-  specific  and  geographic  area  licensees,  ninety  days  before  the  expiration  of  their  licenses.  Although  a
 license  expires  automatically  on  the  date  specified  on  the  individual  license,  ULS  does  not  show  a  license  expiration  as  final  until  approximately  thirty  days  after  the  renewal  deadline.  We  note  that  while  we
 generally  provide  renewal  notices  to  licensees,  the  pre-  expiration  notice  is  not  a  prerequisite  to  cancellation  should  a  licensee  fail  to  renew  its  license.  After  the  license  expiration,  the  previous  licensee
 may  file  a  new  application  for  use  of  those  frequencies  subject  to  any  service  specific  rules.  Once  that  thirty-  day  period  has  elapsed,  or  the  prior  holder  of  the  license  files  a  new  application  for  that  spectrum,
 the  license  then  becomes  available  for  the  Commission  to  reassign  by  competitive  bidding  or  other  means  according  to  the  rules  of  the  particular  service.  415
 176.  In  1999,  the  Commission  adopted  a  new  policy  regarding  treatment  of  late-  filed  renewal  applications  in  the  Wireless  Radio  Services.  416  Renewal  applications  that  are  filed  up  to  thirty  days  after
 409  See  47  C.  F.  R.    21.43(  b).
 410  See  47  C.  F.  R.    21.929(  b).
 411  See  Public  Notice,  Wireless  Telecommunications  Bureau  Suspends  Electronic  Filing  for  the  Broadband
 Licensing  System  on  October  11,  2002  ,  17  FCC  Rcd  18,365  (2002).
 412  See  47  C.  F.  R.    73.3539.
 413  See,  e.  g.,  Jonsson  Communications  Corp.,  Memorandum  Opinion  and  Order,  (DA  02-  3099,  released  Nov.  13,
 2002).  There  is  no  codified  rule  specifically  addressing  reinstatement  of  ITFS  licenses.
 414  ULS  R&  O,  13  FCC  Rcd  at  21071    96.
 415  See  Rules  and  Regulations  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the
 Wireless  Telecommunications  Service,  63  Fed.  Reg.  68904,  68908  (1998).
 416  See  Biennial  Regulatory  Review  -  Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,  and  101  of  the
 Commission's  Rules  to  Facilitate  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless  Telecommunications  Service,  Memorandum  Opinion  and  Order  on  Reconsideration,  WT  Docket  No.  98-  20,
 14  FCC  Rcd  11476,  11485    22  (1999).
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 the  expiration  date  of  the  license  are  granted  nunc  pro  tunc  if  the  application  is  otherwise  sufficient  under  our  Rules.  417  However,  the  licensee  may  be  subject  to  an  enforcement  action  for  untimely  filing  and
 unauthorized  operation  during  the  time  between  the  expiration  of  the  license  and  the  untimely  renewal  filing.  418  Applicants  who  file  renewal  applications  more  than  thirty  days  after  the  license  expiration  date
 may  also  request  renewal  of  the  license  nunc  pro  tunc,  but  such  requests  are  not  routinely  granted,  and  are  subject  to  stricter  review,  and  may  be  accompanied  by  enforcement  action,  including  more  significant
 fines  or  forfeitures.  419  In  determining  whether  to  grant  a  late-  filed  renewal  application,  we  take  into  consideration  all  of  the  facts  and  circumstances,  including  the  length  of  the  delay  in  filing,  the  reasons  for
 the  failure  to  timely  file,  the  potential  consequences  to  the  public  if  the  license  should  terminate,  and  the  performance  record  of  the  licensee.  420
 177.  We  believe  that  elimination  of  the  reinstatement  period  will  benefit  all  licensees  and  entities  interested  in  acquiring  abandoned  spectrum.  421  Under  our  ULS  procedures,  failure  to  file  for
 renewal  of  the  license  before  the  end  of  the  license  term  results  in  automatic  cancellation  of  the  license.  422  We  believe  that  we  should  eliminate  reinstatement  of  expired  licenses  because  licensees  will  receive
 notification  that  their  licenses  are  about  to  expire  and,  therefore,  should  be  responsible  for  submitting  timely  renewal  applications.  Additionally,  interactive  electronic  filing  will  make  it  easier  for  all  licensees
 to  timely  file  renewal  applications.  Moreover,  we  believe  elimination  of  the  reinstatement  procedures  will  facilitate  our  ability  to  efficiently,  and  quickly  perform  our  licensing  responsibilities  by  reducing  the
 amount  of  late-  filed  renewal  applications  and  eliminating  the  processing  of  reinstatement  applications.  Accordingly,  we  propose  to  eliminate  reinstatement  procedures  and  adopt  the  late-  filed  renewal  policy  for
 wireless  radio  services  for  MDS  and  ITFS.  We  seek  comment  on  this  proposal.  Additionally,  we  seek  comment  on  whether  we  should  impose  any  special  requirements  or  limitations  on  the  renewal  of  ITFS
 licenses.  For  example,  we  seek  comment  on  the  possibility  of  imposing  special  performance  requirements  on  ITFS  licensees  in  order  to  ensure  efficient  utilization  of  the  spectrum.  We  seek  comment
 on  these  proposals.
 8.  Special  Temporary  Authority
 178.  In  MDS,  in  circumstances  requiring  immediate  or  temporary  use  of  facilities,  entities  may  request  special  temporary  authority  to  install  and/  or  operate  new  or  modified  equipment.  423  Requests  may
 be  submitted  as  informal  applications,  at  least  ten  days  prior  to  the  date  of  the  proposed  construction  or  operation  (however,  in  practice  an  FCC  Form  304  is  attached  to  the  informal  request).  424  We  may  grant
 STAs  without  regard  to  the  thirty-  day  public  notice  requirement  in  certain  instances.  First,  we  may  grant
 417  See  id.  at  11485    22.
 418  Id.
 419  Id.
 420  Id.  at  11485-  6    22.
 421  ULS  R&  O,  13  FCC  Rcd  at  21,071    96.  The  Commission  excluded  Commercial  Radio  Operators  Licenses
 and  Amateur  licenses  from  this  policy.  Id.
 422  Id.
 423  See  47  C.  F.  R.    21.25.
 424  47  C.  F.  R.    21.5.
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 an  STA  when  the  STA  period  is  not  to  exceed  thirty  days  and  the  filing  of  an  application  to  change  the  STA  into  a  permanent  situation  is  not  contemplated.  Second,  we  may  grant  an  STA  when  the  STA  period
 is  not  to  exceed  sixty  days,  pending  the  filing  of  an  application  to  change  the  special  situation  into  a  regular  operation.  Third,  we  may  grant  an  STA  to  permit  interim  operation  to  facilitate  completion  of
 authorized  construction  or  to  provide  substantially  the  same  service  as  previously  authorized.  Fourth,  we  may  grant  an  STA  when  there  are  extraordinary  circumstances  requiring  operation  in  the  public  interest.
 We  may  grant  STAs  and  extensions  of  STAs  up  to  180  days  pursuant  to  Section  309(  f)  of  the  Communications  Act  where  extraordinary  circumstances  so  require,  but  the  licensee  has  a  heavy  burden
 to  show  it  warrants  such  action.  Finally,  in  times  of  national  emergency  or  war,  we  may  grant  special  temporary  licenses  (in  place  of  construction  permits,  station  licenses,  modifications  or  renewals)  for  the
 period  of  the  emergency.  425
 179.  We  may  grant  ITFS  STAs  in  extraordinary  circumstances  requiring  emergency  operation  to  serve  the  public  interest.  426  As  in  MDS,  only  an  informal  application  is  required.  However,
 ITFS  STA  applicants  must  submit  the  request  at  least  ten  days  before  the  date  of  the  proposed  operation.  We  may  grant  ITFS  STAs  for  a  period  not  to  exceed  180  days  with  a  limited  number  of  extensions  also
 granted  for  up  to  180  days.  However,  we  may  grant  an  STA  necessitated  for  technical  reasons  for  an  initial  period  of  ninety  days  only.
 180.  Under  our  consolidated  ULS  approach,  applicants  must  file  STA  requests  electronically  on  an  FCC  Form  601  within  ten  days  before  the  date  of  the  proposed  operation  (although  we  may  grant
 requests  received  less  than  ten  days  for  compelling  reasons).  427  As  in  MDS/  ITFS,  grant  of  STAs  are  without  public  notice.  Wireless  Services  have  the  same  requirements  as  MDS/  ITFS  for  thirty,  sixty,  and
 180-  day  STA  requests.  In  addition,  since  MDS  STA  requests  are  informal  applications,  but  in  practice  have  an  FCC  Form  304  attached,  adoption  of  the  Form  601  for  MDS/  ITFS  STA  requests  as  currently
 used  in  WTB  makes  good  sense.  Since  STAs  are  an  emergency  measure,  mandatory  electronic  filing  as  now  required  in  WTB,  would  also  provide  MDS/  ITFS  licensees  with  faster,  more  responsive  service.  For
 the  foregoing  reasons,  we  propose  to  include  MDS  and  ITFS  STA  requests  under  the  same  ULS  regulatory  regime  as  the  Wireless  Services.  We  request  comment  on  this  proposal.
 9.  Ownership  Information
 181.  MDS  and  ITFS  licensees  file  FCC  Form  430  to  submit  ownership  information  to  the  Commission.  The  Communications  Act  mandates  the  ownership  information  requested  in  Form  430.  428
 The  submission  of  ownership  information  enables  the  Commission  to  review  whether  applicants  and  licensees  comply  with  our  real-  party-  in-  interest  rules,  eligibility  for  treatment  as  a  small  business  at
 auction  and  foreign  ownership  restrictions.  429  Wireless  licensees  use  Form  602  to  file  ownership  information  electronically  in  ULS.  430  FCC  Form  602  and  FCC  Form  430  request  the  same  ownership
 425  Id.
 426  See  47  C.  F.  R.    73.3542;  see  also  47  C.  F.  R.    73.1635;  74.910.
 427  See  47  C.  F.  R.    1.931.
 428  See  47  U.  S.  C.    310.
 429  See  ULS  NPRM,  13  FCC  Rcd  9672,  9691    43  (1998).
 430  ULS  will  pre-  fill  information  that  the  licensee  has  previously  submitted  on  a  Form  602,  enabling  the  licensee  to
 limit  new  submissions  to  changed  information,  and  ULS  can  also  fill  in  certain  parts  of  a  Form  602  by  reference  to  (continued.)
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 information.  431  On  June  14,  2002,  the  Wireless  Bureau  stopped  accepting  electronically  filed  Forms  430  temporarily.  432  Therefore,  in  the  short  term,  MDS  and  ITFS  licensees  may  continue  to  file  the  Form  430
 manually.  The  Form  430  requires  the  licensee  to  list  its  MDS  and/  or  ITFS  licenses  or  conditional  licenses.  We  seek  comment  on  whether  this  requirement  is  necessary  in  light  of  the  proposed  transition  to
 ULS.  433  Additionally,  we  propose  to  require  MDS  and  ITFS  licensees  to  file  Form  602  instead  of  Form  430  to  submit  ownership  information.  We  request  comment  on  this  proposal.
 10.  Regulatory  Status
 182.  Consistent  with  our  goal  to  maximize  flexibility  to  the  extent  possible,  we  tentatively  conclude  that  MDS  and  ITFS  applicants  may  request  more  than  one  regulatory  status  for  authorization  in
 a  single  license.  Thus,  under  this  approach,  an  MDS  or  ITFS  license  may  authorize  a  combination  of  common  carrier  and  non-  common  carrier  services  in  a  single  license  and  licensees  in  this  band  may
 render  any  kind  of  communications  service  (e.  g.,  fixed,  mobile,  point-  to-  multi-  point)  consistent  with  that  regulatory  status  and  the  existing  rules.  This  approach  is  consistent  with  the  approach  we  have  used  for
 other  services  licensed  on  a  geographic  area  basis.  434  Applicants  would  not  be  required  to  describe  the  services  they  seek  to  provide  but  would  be  required  to  designate  the  regulatory  status  of  services  they
 intend  to  provide  using  the  Form  601.  435  We  seek  comment  on  what  procedures  to  adopt  for  licensees  to  change  their  regulatory  status  (i.  e.,  notify  the  Commission  within  a  certain  timeframe  or  seek  prior
 approval).
 11.  Fee  Issues
 183.  Currently,  MDS  applicants  and  licensees  are  subject  to  application  fees  under  Section  8  of  the  Act,  which  directs  the  Commission  to  assess  and  collect  charges  for  applications  and  other  filings
 by  regulated  entities.  436  These  fees  were  initially  set  by  statute  and  are  subject  to  adjustment  by  the  Commission  437  MDS  licensees  are  also  subject  to  regulatory  fees  under  Section  9  of  the  Act.  438  We
 collect  these  fees  to  recover  the  regulatory  costs  associated  with  our  enforcement,  policy  and  rulemaking,
 (Continued  from  previous  page)  other  previously  filed  information.  For  example,  if  Party  A  has  previously  submitted  its  own  ownership  filing
 and  is  subsequently  listed  as  a  disclosable  interest  holder  on  the  ownership  filing  of  of  another  licensee  (Party  B),  Party  A's  FCC-  regulated  businesses  may  be  automatically  copied  to  Party  B's  filing.  Public  Notice,  Wireless
 Telecommunications  Bureau  Announces  Availability  of  Electronic  Filing  of  FCC  Form  602,  17  FCC  Rcd  16,779  (2002).
 431  See  Public  Notice,  Wireless  Telecommunications  Bureau  Answers  Frequently  Asked  Questions  Concerning
 Reporting  of  Ownership  Information  on  FCC  Form  602,  DA  99-  1001  (May  25,  1999).
 432  Public  Notice,  Wireless  Telecommunications  Bureau  to  Temporarily  Suspend  Electronic  Filing  of  FCC  Form
 430  via  the  Broadband  Licensing  System,  17  FCC  Rcd  11,131  (2002).
 433  See  para.  176  supra.
 434  See  e.  g.,  47  C.  F.  R.    27.10;  47  C.  F.  R.      101.511  and  101.133.
 435  ULS  R  &O,  13  FCC  Rcd  21027  at  Appendix  C.
 436  47  U.  S.  C.    158.
 437  Id.    158(  b).
 438  47  U.  S.  C.    159.
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 user  information,  and  international  activities.  439  Currently,  we  do  not  assess  ITFS  applicants  and  licensees  with  either  application  fees  or  regulatory  fees.  The  Commission  exempted  ITFS  from
 application  fees  because  the  original  statutory  schedule  of  charges  did  not  provide  for  fees  for  ITFS  applicants  and  because  ITFS  stations  were  traditionally  used  by  public  service  organizations.  440
 184.  In  light  of  the  possible  changes  to  the  ITFS  service  that  we  are  proposing  in  this  proceeding,  we  seek  comment  on  whether  ITFS  licensees  and  applicants  (or  former  licensees  of  the
 service,  if  we  decide  to  reclassify  ITFS  as  a  new  service)  should  become  subject  to  application  fees  and  regulatory  fees,  to  the  extent  that  such  licensees  or  applicants  do  not  fall  within  an  express  statutory
 exemption.  441  In  light  of  our  contemplated  changes  to  the  rules,  the  fact  that  MDS  and  ITFS  licensees  often  provide  service  as  part  of  the  same  system,  and  the  fact  that  ITFS  licensees  can  lease  up  to  ninety-five
 percent  of  their  capacity  to  other  entities  (usually  MDS  licensees),  we  seek  comment  on  whether  there  currently  is  any  valid  basis  for  treating  MDS  and  ITFS  applicants  and  licensees  differently  for  fee
 purposes.  We  note  that  under  our  proposal,  those  ITFS  licensees  that  are  governmental  entities  would  continue  to  be  exempt  under  the  statute  from  application  fees.  442  We  also  note  that  most  existing  ITFS
 licensees  would  likely  remain  exempt  from  regulatory  fees  because  they  would  be  covered  under  the  statutory  exemptions  for  governmental  entities  and  nonprofit  entities.  443  To  the  extent  we  change  the
 eligibility  criteria  for  ITFS,  however,  we  propose  to  require  new  licensees  that  are  not  statutorily  exempt  to  pay  regulatory  fees.  We  seek  comment  on  this  proposal.
 185.  We  also  seek  comment  on  changing  the  regulatory  fees  applicable  to  MDS  licensees.  Congress  has  authorized  the  Commission  to  add,  delete,  or  reclassify  services  in  the  regulatory  fee
 schedule  to  reflect  additions,  deletions,  or  changes  in  the  nature  of  its  services  as  a  consequence  of  Commission  rulemaking  proceedings  or  changes  in  law.  444  The  instant  proceeding  proposes  major
 changes  to  the  MDS  service,  including  allowing  mobile  operation  and  expediting  the  use  of  MDS  to  provide  advanced  broadband  services.  In  light  of  these  potential  changes,  we  seek  comment  on  adjusting
 the  regulatory  fees  for  MDS.  Currently,  we  assess  MDS  stations  a  regulatory  fee  of  $450  per  station.  445  We  note  that  converting  MDS  stations  to  geographic  area  licensing  would  reduce  the  number  of  MDS
 licenses.  Furthermore,  to  the  extent  MDS  stations  begin  offering  mobile  services,  it  may  be  appropriate  to  begin  assessing  these  licensees  on  a  per  unit  basis,  as  we  do  for  other  mobile  services.  446  Accordingly,
 we  seek  comment  on  the  appropriate  changes  to  the  regulatory  fee  structure  and  amount  for  MDS  licensees.  To  the  extent  we  conclude  that  ITFS  licensees  should  pay  regulatory  fees,  we  tentatively
 conclude  that  the  regulatory  fees  for  MDS  and  ITFS  licensees  should  be  the  same.  We  seek  comment  on
 439  47  U.  S.  C.    159(  a).
 440  Establishment  of  a  Fee  Collection  Program  to  Implement  the  Provisions  of  the  Consolidated  Omnibus  Budget
 Reconciliation  Act  of  1985,  Notice  of  Proposed  Rulemaking,  51  Fed.  Reg.  25792    68  (1986).
 441  Governmental  entities  are  statutorily  exempt  from  Section  8  fees,  and  both  governmental  entities  and  nonprofit
 entities  are  statutorily  exempt  from  Section  9  fees.  47  U.  S.  C.    158(  d)(  1),  159(  h).
 442  47  U.  S.  C.    158(  d)(  1).
 443  Compare  47  U.  S.  C.    159(  h)  (exceptions  to  regulatory  fees)  and  47  C.  F.  R.    74.932  (ITFS  eligibility).
 444  47  U.  S.  C.    159(  b)(  3).  Increases  or  decreases  in  fees  made  by  amendments  pursuant  to  this  paragraph
 shall  not  be  subject  to  judicial  review.  Id.  445  47  C.  F.  R.    1.1153.
 446  See  47  C.  F.  R.    1.1152  (CMRS  Mobile  Services  and  CMRS  Messaging  Services).
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 this  tentative  conclusion.
 12.  Discontinuance,  Reduction  or  Impairment  of  Service
 186.  The  Commission  implemented  its  license  forfeiture  rules  to  ensure  station  operation  and  alleviate  concerns  about  spectrum  warehousing.  447  When  considering  forfeitures,  cancellation  and
 discontinuance  of  service,  an  MDS  licensee  has  five  separate  rule  sections  to  review  an  ITFS  licensee  has  three  separate  rule  sections  to  review  448  Because  a  system  can  have  both  ITFS  and  MDS  channels,  we
 believe  that  consolidating  these  rules  will  be  advantageous  to  both  the  industry  and  the  Commission  staff.  We  tentatively  conclude  that  consolidating  these  rules  will  reduce  the  confusion  of  the  industry  as  to  the
 appropriate  rules  and  increase  the  efficiency  of  the  Commission  staff  in  processing  these  actions.  We  propose  to  move,  revise,  and  consolidate  these  rules  in  Parts  1  and  101  of  our  rules.
 187.  We  note  that  MDS  licensees  may  alternate  between  providing  service  as  a  common  carrier  or  a  non-  common  carrier.  449  However,  before  alternating,  the  licensee  must  notify  the
 Commission  of  the  change  at  least  thirty  days  before  the  change.  450  Additionally,  common  carriers  who  seek  to  alternate  or  who  otherwise  intend  to  reduce  or  impair  service  must  notify  all  affected  customers  of
 the  planned  discontinuance,  reduction,  or  impairment  on  or  before  providing  notice  to  the  Commission.  451  These  provisions  concerning  licensees  alternating  between  common  carrier  and  non-  common  carrier
 status  are  not  in  our  Part  101  rules.  We  invite  comment  on  whether  we  should  retain  these  rules  and  consolidate  them  in  Part  101.
 188.  Through  these  actions,  we  are  proposing  above,  we  are  endeavoring  to  ensure  station  operation  and  to  alleviate  concerns  about  the  warehousing  of  spectrum  in  MDS/  ITFS.  The  MDS/  ITFS
 community,  however,  has  asked  us  to  liberalize  the  rules  on  forfeiture  of  license  and  discontinuance  of  service  due  to  the  transition  of  the  spectrum  to  new  uses.  For  instance,  the  industry  has  called  for  a
 liberalizing  of  the  rules  regarding  the  retention  and  periodic  use  of  facilities  to  provide  for  simpler  preservation  of  downstream  authorization  for  stations  operating  upstream  and  to  provide  for  preservation
 of  licenses  for  channels  being  used  as  guard  bands.  452  Therefore,  we  invite  comment  on  the  proposals  described  in  this  section.  We  invite  alternate  proposals  that  would  allow  for  flexible  use  of  the  spectrum
 while  preserving  our  policy  of  ensuring  station  operation  and  alleviating  concerns  about  the  warehousing  of  spectrum.
 447  See  Reorganization  and  Revision  of  Parts  1,  2,  21,  and  94  of  the  Rules  to  Establish  a  New  Part  101  Governing
 Terrestrial  Microwave  Fixed  Radio  Services,  WT  Docket  No.  94-  148,  Report  and  Order,  11  FCC  Rcd  13,449,  13,465  (1996).
 448  See  47  C.  F.  R.    21.44;  21.303;  21.910;  21.932;  21.936;  73.3534;  73.3598;  74.932.
 449  See  47  C.  F.  R.    21.903(  d);  21.910.
 450  See  47  C.  F.  R.    21.903(  d)  which  provides  that  the  notification  must  state  whether  there  is  any  affiliation  or
 relationship  to  any  intended  or  likely  subscriber  or  program  originator.
 451  See  47  C.  F.  R.    21.910  which  provides  that  the  notice  shall  be  in  writing  and  shall  include  the  name  and
 address  of  the  carrier,  the  date  of  the  event,  the  area(  s)  affected  and  the  channels  that  are  affected  by  the  event.  Id.  at    21.910(  b).
 452  Coalition  Proposal  at  44-  45.
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 13.  Foreign  Ownership  Restrictions
 189.  Sections  310(  a)  and  310(  b)  of  the  Communications  Act,  as  modified  by  the  Telecommunications  Act  of  1996,  impose  foreign  ownership  and  citizenship  requirements  that  restrict  the
 issuance  of  licenses  to  certain  applicants.  453  An  applicant  requesting  authorization  only  for  non-  common  carrier  services  would  be  subject  to  Section  310(  a),  but  not  to  the  additional  prohibitions  of  section
 310(  b).  An  applicant  requesting  authorization  for  common  carrier  services  would  be  subject  to  both  Sections  310(  a)  and  310(  b).  We  do  not  believe  that  common  carriers  and  non-  common  carriers  filing  an
 application  to  operate  in  this  band  should  be  subject  to  varied  reporting  obligations.  Rather,  as  a  matter  of  fostering  regulatory  parity  and  transparency,  we  believe  that  all  applicants  should  be  required  to  file
 changes  in  foreign  ownership  information  to  the  extent  required  by  Part  101  of  our  Rules.  454  By  establishing  parity  in  reporting  obligations,  however,  we  do  not  propose  a  single,  substantive  standard  for
 compliance.  For  example,  we  do  not  and  would  not  deny  a  license  to  an  applicant  requesting  authorization  exclusively  to  provide  services  not  enumerated  in  Section  310(  b),  solely  because  its  foreign
 ownership  would  disqualify  it  from  receiving  a  license  if  the  applicant  had  applied  for  a  license  to  provide  the  services  enumerated  in  Section  310(  b).  We  request  comment  on  this  proposal.
 14.  Performance  Requirements
 190.  Incumbents  in  the  2500-  2690  MHz  band  consist  of  MDS  BTA  Authorization  holders  and  site-  based  ITFS  and  MDS  licensees.  In  addition,  as  noted  above,  we  are  seeking  comment  on,  among
 other  things,  whether  geographic  licensing  for  unassigned  ITFS  spectrum  would  be  appropriate.  In  this  section,  we  discuss  the  various  performance  requirements  applicable  to  the  categories  noted  above  and
 seek  comment  on  whether  we  should  retain  those  requirements  or  whether  we  should  make  changes.  We  also  seek  comment  on  the  construction  benchmarks  we  should  adopt  to  encourage  licensees  to  deliver
 service  to  rural  areas.  We  note  that  the  Communications  Act  requires  us  to  adopt  policies  to  deter  spectrum  warehousing,  promote  the  rapid  development  and  deployment  of  new  technologies  and  services,
 and  promote  service  to  rural  areas.  455
 453  47  U.  S.  C.    310(  a),  (b).
 454  47  C.  F.  R.    101.7,  1.913,  1.919.  Moreover,  as  we  observed  in  the  LMDS  2d  R&  O,  requiring  submission  of
 ownership  information  that  may  not  be  immediately  necessary  to  assess  the  qualifications  of  a  licensee  (i.  e.,  one  who  currently  operates  as  a  non-  common  carrier)  is  an  efficient  and  reasonable  measure  to  facilitate  the  flexibility
 accorded  licensees  to  change  status  with  a  minimum  of  regulatory  interference.  With  this  approach,  updated  information  can  be  used  whenever  the  licensee  changes  to  common  carrier  status  without  imposing  an  additional
 filing  requirement  when  the  licensee  makes  the  change.  Moreover,  having  access  to  this  ownership  information  allows  the  Commission  to  monitor  all  of  the  licensed  providers  more  effectively,  in  light  of  their  ability  to  provide
 both  common  and  non-  common  carrier  services.  Rulemaking  to  Amend  Parts  1,  2,  21,  and  25  of  the  Commissions  Rules  to  Redesignate  the  27.5-  29.5  GHz  Frequency  Band,  to  Reallocate  the  29.5-  30.0  GHz
 Frequency  Band,  To  Establish  Rules  and  Policies  for  Local  Multipoint  Distribution  Service  and  For  Fixed  Satellite  Services,  Second  Report  and  Order,  Order  on  Reconsideration,  and  Fifth  Notice  of  Proposed  Rulemaking,  CC
 Docket  No.  92-  297,  12  FCC  Rcd  12545  (1997)  (LMDS  2d  R&  O).
 455  [  T]  he  Commission  is  required  under  Section  309  (j)  of  the  Communications  Act  to  include
 safeguards  to  protect  the  public  interest  in  use  of  the  spectrum  and  performance  requirements  to  ensure  prompt  delivery  of  service  to  rural  areas,  to  prevent  stockpiling  or  warehousing  of  spectrum  by  licensees  or  permittees,
 and  to  promote  investment  in  and  rapid  deployment  of  new  technologies  and  services.  WCS  Report  and  Order,  12  FCC  Rcd.  at  10841  (quoting  47  U.  S.  C.    309(  j)(  4)(  B))(  footnote  omitted).
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 191.  MDS  BTA  Authorization  Holders.  Currently,  MDS  BTA  authorization  holders  have  a  five-  year  build-  out  period,  which  begins  on  the  date  of  the  grant  of  the  MDS  BTA  authorization  and  ends
 on  the  fifth  anniversary  of  the  authorization  grant.  456  This  build-  out  period  is  not  extended  by  the  grant  of  subsequent  authorizations.  457  Timely  certifications  of  completion  of  construction  for  each  MDS  station
 within  a  MDS  BTA  or  partitioned  service  area  must  be  filed  on  completion  of  the  construction  of  a  station.  458  Within  five  years  of  a  grant  of  a  MDS  BTA-  authorization,  the  authorization  holder  must
 construct  MDS  stations  to  provide  signals  pursuant  to  Section  21.907  of  the  Commissions  Rules  459  that  are  capable  of  reaching  at  least  two-  thirds  of  the  population  of  the  applicable  service  area,  excluding  the
 populations  within  protected  service  areas  of  incumbent  MDS  stations  460  and  the  authorization  holder  must  file  sixty  days  prior  to  the  end  of  the  five-  year  build-  out  period  that  it  has  met  this  requirement.  461  If
 the  Commission  finds  that  the  authorization  holder  has  met  this  requirement,  the  Commission  will  issue  a  declaration  so  stating.  462  If  the  Commission  finds  that  the  BTA  authorization  holder  did  not  meet  this
 requirement,  the  Commission  will  partition  from  the  BTA  any  unserved  area  and  will  reauthorize  service  to  the  unserved  area  pursuant  to  the  MDS  competitive  bidding  procedures  463  and  the  BTA  authorization
 holder  originally  authorized  to  provide  service  will  be  ineligible  to  participate  in  the  auction  of  the  unserved  areas.  464  We  seek  comment  on  whether  we  should  retain  these  requirements  as  they  are,  or
 whether  they  should  be  changed  or  clarified  in  some  way.  If  they  should  be  changed,  commenters  should  recommend  specifically  those  requirements  that  should  be  changed,  those  that  should  be  clarified,  and
 those  that  should  remain  unchanged.  In  the  alternative,  we  seek  comment  on  whether  we  should  adopt  a  different  approach  altogether,  such  as  a  substantial  service  approach.  We  note  that  for  services  that
 require  ubiquitous  coverage,  the  Commission  has  required  that  at  the  time  of  license  renewal  each  geographic  area  authorization  holder  demonstrate  that  it  has  made  substantial  service  available  within
 its  authorized  service  area.  465  The  Commission  has  observed  that  the  substantial  service  standard  affords
 456  See  47  C.  F.  R.    21.930(  a)(  1).
 457  See  47  C.  F.  R.    21.930(  a)(  2).
 458  See  47  C.  F.  R.    21.930(  a)(  3).
 459  47  C.  F.  R.    21.907.
 460  See  47  C.  F.  R.    21.930(  c)(  1).
 461  See  47  C.  F.  R.    21.930(  c)(  2).
 462  See  47  C.  F.  R.    21.930(  d)(  1).
 463  See  47  C.  F.  R.    21.930(  d)(  2).
 464  See  47  C.  F.  R.    21.930(  d)(  2)(  ii).
 465  Amendment  of  the  Commissions  Rules  to  Establish  Part  27,  the  Wireless  Communications  Service
 (  WCS),  GN  Docket  No.  96-  228,  Report  and  Order,  12  FCC  Rcd  10785,  10843-  45  (1997)  (WCS  Report  and  Order);  LMDS  2d  R&  O,  12  FCC  Rcd  at  12,659-  61,  affd  Melcher  v.  FCC,  134  F.  3d  1143,  1161-  2  (D.  C.  Cir.
 1998);  Amendments  to  Parts  1,  2,  87,  and  101  of  the  Commissions  Rules  to  License  Fixed  Services  at  24  GHz,  WT  Docket  No.  99-  327,  Report  and  Order,  15  FCC  Rcd  16934,  16950-  52  (2000)  (24  GHz  Report  and  Order);  39
 GHz  R&  O,  12  FCC  Rcd  at  18624-  25;  Amendment  of  Parts  2  and  25  of  the  Commissions  Rules  to  Permit  Operation  of  NGSO  FSS  Systems  Co-  Frequency  with  GSO  and  Terrestrial  Systems  in  the  Ku-  Band  Frequency
 Range,  ET  Docket  No.  98-  206,  Memorandum  Opinion  and  Order  and  Second  Report  and  Order,  17  FCC  Rcd  9614,  9684-  9685,    177  (2002)  (MVDDS  Memorandum  Opinion  and  Order  and  Second  Report  and  Order).
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 maximum  flexibility  for  authorization  holders  to  offer  a  range  of  services  and  fosters  competition.  466  If  we  were  to  adopt  a  substantial  service  approach,  should  we  also  adopt  safe  harbors?  We  ask  commenters
 who  believe  that  we  should  adopt  safe  harbors  to  recommend  specific  safe  harbors.  Accordingly,  if  the  Commission  adopts  a  substantial  service  performance  standard,  we  propose  that  any  licensee  who  fails  to
 meet  the  standard  with  respect  to  a  license  will  forfeit  the  license  or  be  ineligible  to  renew  the  license  pursuant  to  sections  1.946(  c)  and  1.955(  a)(  2)  of  our  rules.  467  Additionally,  we  propose  to  eliminate
 extension  of  time  requests  for  MDS  BTA  Authorization  holders  who  must  satisfy  a  substantial  service  performance  standard.  We  seek  comment  on  this  proposal.
 192.  Site-  based  licensees.  As  noted  above,  we  are  proposing  to  provide  each  incumbent  on  a  current  ITFS  channel  and  each  MDS  incumbent  with  a  PSA  based  on  a  circle  with  a  35-  mile  radius
 around  its  main  station.  Currently,  the  rules  provide  MDS  incumbent  stations  with  a  maximum  construction  period  of  twelve  months  from  the  date  of  the  license  grant.  468  We  note  that  the  Commission
 extended  the  construction  period  from  eight  months  to  twelve  months  to  provide  MDS  permittees  with  sufficient  time  to  meet  the  construction  requirements  without  requesting  extensions  of  time.  469  ITFS
 licensees  have  eighteen  months  from  the  date  of  the  issuance  of  the  original  construction  permit  to  construct  their  facilities.  470  We  seek  comment  on  whether  we  should  retain  these  requirements  or  whether
 466  Based  on  the  record  in  this  proceeding,  we  believe  that  the  substantial  service  standard,  in  lieu  of
 specific  coverage  requirements  best  serves  the  public  interest.  In  addition  to  being  consistent  with  the  approach  used  in  other  wireless  services,  we  believe  that  this  standard  is  sufficiently  flexible  to  foster  expeditious
 development  and  deployment  of  systems  and  will  ultimately  create  competition  among  service  providers  in  this  band.  24  GHz  Report  and  Order,  15  FCC  Rcd  at  16951.  This  approach  [substantial  service]  will  permit
 flexibility  in  system  design  and  market  development,  while  ensuring  that  service  is  being  provided  to  the  public.  39  GHz  Report  and  Order,  12  FCC  Rcd  18624.
 467  47  C.  F.  R.    1.946(  c)  and  1.955(  a)(  2).  See  also  47  C.  F.  R.    101.1325.
 468  See  47  C.  F.  R.    21.43(  a).
 469  Revision  of  Part  21  of  the  Commissions  Rules,  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  86-
 128,  104  F.  C.  C.  2d  116,  125  n.  41  (1986).  We  permit  extensions  of  time  to  construct  when  the  authorization  holder  applies  for  the  extension  and  submits:  1)  a  verified  statement  of  diligent  efforts  to  construct,  and  2a)  the  delay  is
 due  to  circumstances  beyond  the  applicants  control,  or  2b)  there  are  unique  and  overriding  public  interest  concerns.  See  47  C.  F.  R.    21.  11(  b),  21.  40(  b).  A  carrier  who  does  not  promptly  construct  facilities  precludes
 others  who  are  willing  and  able  to  construct  from  access  to  the  spectrum.  See  Revision  of  Part  21  of  the  Commissions  Rules,  Report  and  Order,  2  FCC  Rcd  5713,  5721  (1987)  (1987  Report  and  Order).  In  order  to
 ensure  timely  construction  of  facilities,  the  Commission  announced  its  intent  to  enforce  strictly  construction  deadlines  .  .  .  when  it  established  a  construction  period  of  12  months.  See  also  Miami  MDS  Co.,  7  FCC  Rcd
 4347,  4349  (1992),  affd  mem,  Miami  MDS  Co.,  v.  FCC,  14  F.  3d  658  (D.  C  Cir.  1994).  Consequently,  we  do  not  grant  extensions  of  time  for  delays  caused  by  the  lack  of  financing  or  the  lack  of  site  availability.  See  47  C.  F.  R.  
 21.40(  b).
 470  See  47  C.  F.  R.    73.3534(  a).  The  Commission  recognized  that  a  one-  year  period  may  not  be  sufficient
 for  ITFS  licensees  due  to  the  budgeting  and  scheduling  processes  for  educational  institutions  could  delay  the  construction  of  ITFS  facilities  beyond  the  one  year  period.  Amendment  of  Part  74  of  the  Commissions  Rules
 and  Regulations  in  Regard  to  the  Instructional  Television  Fixed  Service,  Report  and  Order,  MM  Docket  No.  83-  523,  98  F.  C.  C.  2d  925,  935  (1984).  However,  the  Commission  provided  that  ITFS  licensees  could  obtain  an
 extension  of  time  to  construct  by  submitting  a  specific,  detailed  narrative  statement  demonstrating  that  the  delay  is  due  to  causes  not  under  the  control  of  the  permittee,  or  upon  a  specific  and  detailed  showing  of  other  sufficient
 justification  for  extension.  See  47  C.  F.  R.    73.3534(  c).  An  ITFS  extension  of  time  applicant  must  demonstrate  that  1)  construction  is  complete  and  testing  of  facilities  has  begun;  2)  substantial  progress  has  been  made;  or  3)
 (continued.)
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 they  should  be  changed.  Do  licensees  need  more  time  to  construct?  If  licensees  need  more  time  to  construct,  how  much  is  appropriate?  Should  MDS  and  ITFS  site-  based  licensees  be  given  the  same  time
 to  construct?  Or  are  there  reasons  to  treat  MDS  and  ITFS  site-  based  licensees  differently?
 193.  Geographic  area  licensing.  As  noted  above,  we  seek  comment  on  whether  we  should  license  unassigned  ITFS  spectrum  via  a  geographic  area  overlay  license.  If  we  were  to  adopt  such  an
 approach,  we  seek  comment  on  whether  we  should  adopt  the  same  performance  standard  for  geographic  licensees  of  unassigned  ITFS  spectrum  as  we  do  for  MDS  BTA  Authorization  holders.  Are  there  any
 reasons  that  they  should  be  treated  differently?  In  other  words,  if  we  decide  to  retain  the  current  performance  requirements  for  MDS  BTA  authorization  holders,  discussed  above,  should  we  apply  those
 same  requirements  to  geographic  licensees  of  unassigned  ITFS  spectrum?  Or,  if  we  were  to  adopt  a  substantial  service  standard  for  MDS  BTA  Authorization  holders,  should  we  adopt  that  same  standard  for
 geographic  licensees  of  unassigned  ITFS  spectrum?  If  not,  commenters  should  specify  a  different  approach  for  geographic  area  licensee  of  unassigned  ITFS  spectrum.  Commenters  should  also  state  the
 reason  that  licensees  of  unassigned  ITFS  spectrum  should  be  treated  differently  than  MDS  BTA  Authorization  holders.  We  note  that  commenters  to  the  recent  Extension  Memorandum  Opinion  and
 Order  proceeding  consistently  advocated  the  replacement  of  the  current  build-  out  requirement  with  a  substantial  service  benchmark.  471  Accordingly,  if  the  Commission  adopts  a  substantial  service
 performance  standard,  we  propose  that  any  licensee  who  fails  to  meet  the  standard  with  respect  to  a  license  will  forfeit  the  license  or  be  ineligible  to  renew  the  license  pursuant  to  sections  1.946(  c)  and
 1.955(  a)(  2)  of  our  rules.  472  Additionally,  we  propose  to  eliminate  extension  of  time  requests  for  geographic  area  licensees  who  must  satisfy  a  substantial  service  performance  standard.  We  seek
 comment  on  this  proposal.
 194.  Coalition  Proposal.  Although  the  Coalition  did  not  recommend  an  overlay  approach  for  licensing  unassigned  ITFS  spectrum,  the  Coalition  did  recommend  that  a  transition  to  a  pure  geographic
 licensing  system  for  the  Services  presents  the  need  and  opportunity  to  adopt  revised  performance  requirements  for  licensees.  473  Instead  of  continuing  to  use  site-  based  licensing  procedures,  the  Coalition
 advocates  using  a  substantial  service  requirement  at  the  time  of  renewal,  coupled  with  safe  harbors  designed  to  provide  licensees  with  a  measure  of  certainty  and  an  appropriate  period  for  service  activation
 (Continued  from  previous  page)  reasons  clearly  beyond  the  applicants  control,  which  the  applicant  has  taken  all  possible  steps  to  resolve,  have
 prevented  construction.  See  ITFS  Report  and  Order,  10  FCC  Rcd  at  2921.  Thus,  depending  on  the  circumstances,  the  lack  of  funding  may  warrant  an  extension  of  time  to  construct  for  an  ITFS  licensee.  See
 Amendment  of  Parts  21,  43,  74,  78,  and  94  of  the  Commissions  Rules  Governing  Use  of  the  Frequencies  in  the  2.1  and  2.5  GHz  Bands  Affecting  Private  Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,
 Multichannel  Multipoint  Distribution  Service,  Instructional  Television  Fixed  Service,  and  Cable  Television  Relay  Service  Gen.  Docket  No.  90-  54,  Gen.  Docket  No.  80-  113,  Amendment  of  Parts  21  and  73  of  the  Commissions
 Rules  with  Regard  to  Filing  Procedures  in  the  Multipoint  Distribution  Service  and  in  the  Instructional  Television  Fixed  Service,  MM  Docket  No.  94-  131,  and  Implementation  of  Section  309(  j)  of  the  Communications  Act  
 Competitive  Bidding,  PP  Docket  No.  93-  253,  Third  Order  on  Reconsideration  and  Order  to  Clarify,  11  FCC  Rcd  17003,  17011  (1996).
 471  See  e.  g.  WCA  Comments  at  7-  11  (filed  May  9,  2001);  Sprint  Comments  at  2-  3  (filed  May  9,  2001);
 WorldCom,  Inc.  Comments  at  4-  6  (filed  May  9,  2001);  Nucentrix  Broadband  Networks,  Inc.  Comments  at.  9-  10  (filed  May  9,  2001);  Hubbard  Trust  Comments  at  5  (filed  May  9,  2001);  Wireless  One  of  North  Carolina,  L.  L.  C.
 Reply  Comments  at  1-  3  (filed  May  16,  2001).
 472  47  C.  F.  R.    1.946(  c)  and  1.955(  a)(  2).  See  also  47  C.  F.  R.    101.1325.
 473  Coalition  Proposal  at  43.
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 following  adoption  of  the  new  rules,  for  those  licensees  with  early  forthcoming  license  expirations.  474
 195.  The  Coalition  argues  that  using  a  case-  by-  case  standard  to  evaluate  MDS  and  ITFS  construction  is  appropriate.  Unlike  most  other  services,  they  assert  that  MDS/  ITFS  system  operators  will
 provide  service  using  channels  combined  from  a  variety  of  sources    their  own  BTA  authorized  stations,  incumbent  MDS  stations  they  own,  and  leased  capacity  of  MDS  and  ITFS  stations  licensed  to  others.  475
 Thus,  focusing  solely  on  the  population  served  via  stations  authorized  pursuant  to  a  particular  license  hardly  tells  the  story  as  to  whether  the  licensee  is  providing  adequate  service  to  the  public.  476  In  fact,  they
 say,  the  Commission  should  recognize  that  in  some  cases  a  licensee  may  not  use  particular  spectrum  covered  by  one  license,  or  certain  channels  authorized  by  a  license,  that  is  part  of  a  larger  operating
 system  at  the  time  of  renewal.  Instead,  the  licensee  may  use  the  spectrum  in  the  system  as  a  guard  band    not  used  in  the  classic  sense,  but  they  argue  a  critical  component  of  the  system  design.  477
 196.  Alternatively,  they  say,  the  licensed  spectrum  may  not  be  built-  out,  but  instead  the  system  operator  may  hold  the  spectrum  for  future  use  as  the  demands  of  the  operating  system  expand.  478
 Still  licensees  may  construct  other  systems  for  use  by  particular  constituents  rather  than  the  general  population  covered  by  a  GSA.  479  The  Coalition  maintains  that  it  is  also  essential  that  system  operators
 just  launching  systems  hold  spectrum  in  reserve  to  address  increases  in  demand  and  that  there  is  no  valid  reason  to  penalize  MDS  and  ITFS  licensees  for  providing  that  spectrum.  Particularly  with  respect  to
 licenses  that  come  up  for  renewal  in  the  early  years  of  MDS/  ITFS  broadband  deployment,  they  assert  that  a  channel-  by-  channel  evaluation  will  not  provide  an  accurate  assessment  of  service  development.  480  For
 those  reasons,  they  conclude,  the  flexibility  inherent  in  the  case-  by-  case  application  of  the  substantial  service  standard  provides  the  Commission  with  a  means  of  examining  the  entire  picture.  481
 197.  The  Coalition  recommends  that  we  clarify  that  a  substantial  service  evaluation  will  include  not  only  the  service  areas  of  incumbent  stations  that  are  directly  owned  by  the  entity,  which  holds
 the  BTA  authorization,  but  also  the  service  areas  of  incumbent  stations  owned  by  any  entity  controlled  by  the  same  ultimate  parent  company  as  is  the  BTA  authorization  holder.  482  We  seek  comment  on  the
 Coalitions  recommendations.
 198.  Rural  areas.  We  seek  comment  on  whether  and  how  we  may  use  construction  benchmarks  to  encourage  licensees  to  deliver  wireless  services  to  rural  populations.  To  what  extent  are
 our  current  construction  benchmarks  effective  in  ensuring  that  spectrum-  based  services  are  provided  to
 474  Id.
 475  Id.  at  45.
 476  Id.  at  47-  48.
 477  Id.  at  45.
 478  Id.  at  46.
 479  Id.
 480  Id.
 481  Id.  at  45-  46.
 482  Coalition  Proposal  at  49.
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 rural  areas?  In  what  instances,  and  under  what  circumstances,  should  the  Commission  adopt  a  population-  based,  geography-  based,  or  substantial  service  construction  benchmark?  For  example,  in
 licensing  service  areas  that  are  predominantly  rural,  should  the  Commission  adopt  geography-  based  construction  benchmarks?  Are  there  other  types  of  construction  benchmarks  that  would  promote  service
 to  rural  regions  better?  For  instance,  should  we  adopt  a  separate  construction  benchmark  applicable  only  to  service  areas  that  constitute  rural  areas?  Alternatively,  should  we  revise  our  current  construction
 benchmarks  to  permit  service  providers  to  serve  either  smaller  portions  of  the  population  or  service  area  if  they  meet  a  second  construction  benchmark  applicable  to  the  rural  portions  of  a  licensees  market?  If  so,
 commenters  should  explain  what  construction  benchmarks  we  should  adopt  for  the  rural  portions  of  the  service  area  and  how  to  determine  whether  an  area  is  rural?  If,  as  suggested  above,  we  were  to  require
 licensees  to  disaggregate  or  partition  unused  spectrum  or  unserved  portions  of  geographic  service  areas,  should  we  adopt  additional  construction  benchmarks  to  implement  this  requirement?  If  so,  what  penalties
 should  the  Commission  impose  on  licensees  for  failure  to  timely  meet  such  additional  construction  benchmarks?  The  Commission  has  generally  accepted  certifications  of  CMRS  carriers  that  they  have  met
 their  construction  benchmarks.  483  To  what  extent  are  our  self-  certification  procedures  an  adequate  means  of  ensuring  compliance  with  our  construction  benchmark  requirements?
 199.  Extension/  Suspension  of  current  performance  requirements  for  MDS  BTA  Authorization  holders.  The  Coalition  requests  that  we  immediately  suspend  the  MDS  BTA  build-  out  deadline  in
 Section  21.930,  as  extended  by  the  MDS  Build-  Out  Extension  Order,  while  our  build-  out  policy  for  this  service  remains  subject  to  pending  rulemaking  proceedings.  484  We  note  that  on  August  16,  1996,  the
 Commission  granted  334  of  the  493  BTA  authorizations.  485  As  a  result,  the  five-  year  build-  out  period  for  these  authorizations  ended  on  August  16,  2001.  However,  before  the  end  of  the  build-  out  period,  the
 former  Mass  Media  Bureau  extended  the  construction  deadline  for  BTA  authorizations  to  August  16,  2003  or  the  existing  build-  out  date,  whichever  is  later.  486  The  former  Mass  Media  Bureau  found  that  a
 maximum  of  two  years  would  be  a  sufficient  amount  of  time  to  allow  the  MDS  industry  to  build-  out  its  facilities  and  provide  new  and  innovative  two-  way  services  to  the  public.  487  The  former  Mass  Media
 Bureau  found  that  a  longer  extension  period  would  unreasonably  delay  MDS  entry  in  both  rural  and  urban  markets.  488  At  that  time,  the  former  Mass  Media  Bureau  indicated  that  the  Commission  would
 address  issues  concerning  the  clarification,  modification,  or  abolishment  of  the  MDS  BTA  requirement  in  an  upcoming  rulemaking.  489
 483  See  Facilitating  The  Provision  Of  Spectrum-  Based  Services  To  Rural  Areas  And  Promoting
 Opportunities  For  Rural  Telephone  Companies  To  Provide  Spectrum-  Based  Services,  WT  Docket  No.  02-  381,  Notice  of  Inquiry,  17  FCC  Rcd  25,554  at    22  (2002).
 484  Id.  at  50;  see  also  paras.  168-  169.
 485  See  Extension  of  the  Five-  Year  Build-  out  Period  for  BTA  Authorization  Holders  in  the  Multipoint
 Distribution  Service,  Memorandum  Opinion  and  Order,  16  FCC  Rcd  12593,  12594-  12595    5  (2001).  The  Commission  did  not  alter  the  construction  deadlines  that  already  fell  after  August  16,  2003.
 486  Id.  at  12593    1.
 487  Id.  at  12,596    8.
 488  Id.  at  12,596    8.
 489  Id.  at  12,597    9.
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 200.  In  light  of  the  breadth  of  the  proposals  set  forth  in  this  NPRM  &  MO&  O,  and  our  re-evaluation  of  performance  standards  for  the  2500  -2690  MHz  band,  we  believe  that  suspending  the
 current  August  16,  2003  construction  deadline  for  BTA  authorization  holders  is  in  the  public  interest.  While  we  are  normally  reluctant  to  suspend  a  build-  out  requirement,  a  suspension  of  this  construction
 deadline  will  allow  the  Commission  to  evaluate  the  performance  requirements  and  service  rules  for  this  band.  This  approach  is  consistent  with  prior  Commission  actions  suspending  a  deadline  while  relevant
 policy  is  subject  to  the  pending  rulemaking  proceedings.  490  Accordingly,  we  will  suspend  the  BTA  construction  deadline  pending  the  release  of  a  Report  and  Order  in  this  proceeding.  We  seek  comment,
 however,  on  how  much  additional  time  we  should  give  MDS  BTA  Authorization  holders.  Should  we  toll  the  time  from  the  release  of  the  NPRM  until  the  August  16,  2003  deadline,  which  is  approximately  five
 months  and  give  them  an  additional  five  months  from  the  release  date  of  the  Report  and  Order  in  this  proceeding?  Should  we  give  them  eight  months  from  the  release  of  the  Report  and  Order  in  this
 proceeding?  Should  we  give  them  an  additional  two  years  from  the  release  date  of  the  Report  and  Order  in  this  proceeding?
 201.  Extension/  Suspension  of  current  performance  requirements  for  site-  based  licensees.  Moreover,  we  also  believe  that  it  is  in  the  public  interest  to  suspend  the  construction  deadline  for  ITFS
 and  MDS  site-  based  licensees  and  permittees  that  have  unexpired  licenses  or  permits  that  have  not  expired  as  of  the  release  date  of  the  NPRM  &  MO&  O  and  that  have  made  a  timely  filed  extension  request.
 We  seek  comment,  however,  on  whether  we  should  review  those  timely  filed  extension  requests  to  construct  under  our  current  rules  and  suspend  the  construction  deadline  only  for  those  that  comply  with
 the  current  rules,  or  whether  we  should  automatically  suspend  the  construction  deadline  for  all  timely  filed  requests  for  extension  of  time  to  construct.  If  we  should  automatically  grant  such  requests,  how
 much  time  should  licensees  or  permittees  receive  to  construct?  We  seek  comment  on  whether  this  suspension  should  also  cover  licensees  and  permittees  whose  requests  for  extension  of  time  have  been
 denied,  but  who  have  timely  petitions  for  reconsideration  or  applications  for  review  pending.  We  also  request  comment  on  the  proper  treatment  of  objections  or  other  pleadings  that  have  been  filed  against
 requests  for  extension  of  time.  We  emphasize  that  the  suspension  of  this  construction  deadline  for  site-based  licensees  does  not  affect  the  requirement  for  such  licensees  to  timely  file  a  renewal  application.  491
 We  stress  that  all  site-  based  licensees  are  required  to  timely  file  renewal  applications  or  face  cancellation  of  their  licenses  regardless  of  the  pendency  of  this  proceeding.
 202.  In  light  of  the  changes  we  are  proposing,  we  seek  comment  on  whether  we  should  continue  our  current  policy  with  regard  to  extension  requests  to  construct  facilities.  If  we  should  continue
 our  current  policy,  should  we  make  any  changes?  If  so,  we  seek  comment  on  the  specific  changes  that  we  should  make.
 490  See,  e.  g.,  Amendment  of  Parts  2  and  90  of  the  Commission's  Rules  to  Provide  for  the  Use  of  200
 Channels  Outside  the  Designated  Filing  Areas  in  the  896-  901  MHz  and  935-  940  MHz  Bands  Allotted  to  the  Specialized  Mobile  Radio  Pool  Modification  of  FCC  Rule  Section  90.627(  b)  Governing  Multiple  Sites  for
 Specialized  Mobile  Radio  Service  Systems  In  Rural  Markets,  Order,  8  FCC  Rcd  3974  (1993);  Requests  by  Interactive  Video  And  Data  Service  Auction  Winners  to  Waive  the  January  18,  1998,  and  February  28,  1998,
 Construction  Deadlines,  Order,  13  FCC  Rcd  756  (WTB  1998);  Requests  by  Interactive  Video  and  Data  Service  Auction  Winners  to  Waive  the  March  28,  1997  Construction  Deadline,  Order,  12  FCC  Rcd  3,181,  3,184  (WTB
 1997);  Deferral  of  Rate  of  Return  Represcription  Filings  Pursuant  to  Section  65.102(  c)  of  the  Rules,  Memorandum  Opinion  and  Order,  3  FCC  Rcd  7,220,  7,222  (CCB  1988).  Cf.  Channel  16  of  Rhodel  Island,  Inc.  v.
 FCC,  440  F.  2d  266,  275-  76  (D.  C.  Cir.  1971).
 491  See,  e.  g.  Daniel  R.  Goodman,  Receiver;  Dr.  Robert  Chan,  Memorandum  Opinion  and  Order  and  Order  on
 Reconsideration,  13  FCC  Rcd  21,944,  21972-  973,  21977    53,  62  (1998).
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 15.  Annual  Reports
 203.  Our  existing  rules  require  MDS  operators  to  file  annual  reports  even  if  they  are  in  full  compliance  with  all  of  our  rules.  492  We  propose  to  eliminate  this  requirement  because  these  reports  do
 not  appear  to  serve  any  purpose.
 G.  Application  Processing
 204.  Currently,  our  MDS  and  ITFS  application  processing  is  cumbersome,  time-  consuming,  and  resource  intensive.  As  noted  above,  we  propose  to  replace  the  requirement  to  separately  license
 individual  transmitters  with  a  geographic  area  licensing  scheme  in  which  most  operations  would  be  authorized  under  the  geographic  area  license.  We  believe  this  change  will  substantially  reduce  the
 burdens  on  licensees,  expedite  the  initiation  of  service,  and  provide  greater  flexibility.  Nonetheless,  we  note  that  there  will  continue  to  be  limited  instances  in  which  transmitters  will  have  to  be  licensed
 individually.  We  therefore  believe  it  is  appropriate  to  review  and  streamline  our  application  procedures.
 205.  With  respect  to  the  processing  of  ITFS  applications,  our  rules  require  the  opening  of  a  filing  window  before  we  will  accept  applications.  493  Then  we  must  announce  a  one-  week  filing  period  for
 applications  for  major  changes,  high-  power  signal  booster  station,  response  station  hub  and  R  channels  point-  to-  multipoint  transmissions  licenses.  At  the  conclusion  of  the  one-  week  filing  period,  we  announce
 the  tendering  for  filing  of  applications  submitted  during  the  filing  window  and  provide  a  sixty-  day  filing  window  for  applicants  to  amend  their  applications.  494  At  the  end  of  the  sixty-  day  filing  window,  we
 announce  the  acceptance  for  filing  of  all  applications  submitted  during  the  initial  window,  as  amended  by  the  applicants.  495  Opposing  parties  receive  sixty  days  from  the  release  of  the  public  notice  announcing
 the  acceptance  for  filing  of  the  applications  to  file  a  petition  to  deny  against  an  application.  496  On  the  sixty-  first  day,  we  grant  the  unopposed  applications  unless  we  notified  the  applicant  that  we  were  not
 granting  the  application.  We  are  concerned  that  this  process  may  result  in  delays  to  the  public  and  hinders  the  efficient  processing  of  ITFS  applications.  We  seek  comment  on  whether  this  concern  is  valid.
 Additionally,  if  this  concern  is  valid,  we  seek  comment  on  measures  we  may  implement  to  stream-  line  this  process.
 206.  Although  our  MDS  application  processing  procedures  are  different  from  the  ITFS  procedures,  we  seek  comment  on  whether  we  should  consolidate  the  MDS  and  ITFS  application
 procedures.  Generally,  upon  receipt  of  an  MDS  application,  we  give  the  application  a  file  number.  497  After  preliminary  review,  we  place  those  applications  that  appeared  complete  on  public  notice  as  accepted
 492  47  C.  F.  R.    21.911.
 493  See  47  C.  F.  R.    74.911(  c)(  1),  (d).
 494  See  47  C.  F.  R.    74.911(  d)  (amendments  were  permissible  as  long  as  they  did  not  result  in  any  increase  in
 interference  to  any  previously-  proposed  or  authorized  station,  or  to  facilities  proposed  during  the  window,  absent  consent  of  the  applicant  for  or  licensee  of  the  stations  that  would  receive  the  additional  interference).
 495  See  id.
 496  See  id.
 497  See  47  C.  F.  R.    21.26.
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 for  filing.  498  However,  with  regard  to  MDS  two-  way  application  filings,  we  currently  use  a  rolling  one-day  filing  window.  499  We  announced  the  tendering  for  filing  of  applications  submitted  during  the  filing
 window.  500  After  a  sixty-  day  period,  we  released  a  second  public  notice  announcing  those  applications  that  we  accepted  for  filing.  501  Although  the  MDS  application  filing  procedures  appear  quicker,  we  are
 concerned  that  these  procedures  can  be  stream-  lined  as  well.  Accordingly,  we  seek  comment  on  whether  we  should  stream-  line  the  MDS  application  procedures.  If  so,  we  seek  comment  on  methods  to  stream-line
 these  procedures  and  where  possible  to  consolidate  the  procedures.
 207.  Previously,  applicants  could  file  and  view  their  applications  on-  line  using  the  Broadband  Licensing  System  (BLS).  502  The  BLS  contained  the  licensing  data  for  MDS  and  ITFS.  503  The  public
 could  access  the  BLS  via  the  Internet.  504  This  on-  line  access  enables  users  to  search  and  display  MDS  and  ITFS  application  and  station  information  including  Internet  display  of  granted  station
 authorizations.  505  Users  could  also  view  filed  applications  in  the  electronic  format.  506
 208.  On  October  11,  2002,  the  Wireless  Bureau  suspended  the  electronic  filing  capabilities  of  the  BLS  in  order  to  improve  the  integrity  of  data  in  the  BLS,  prepare  for  converting  the  ITFS  and  MDS
 services  to  the  ULS,  and  facilitate  future  enhancements  to  electronic  filing.  507  Although  the  BLS  had  some  on-  line  capabilities,  we  believe  that  conversion  of  the  data  from  BLS  to  ULS  will  improve  the
 efficiency  of  filing  applications,  as  well  as  searching  for  data  on  these  services.
 209.  In  this  vein,  we  note  that  we  require  the  majority  of  the  wireless  applicants  to  file  their  applications  electronically  using  ULS.  The  ULS  has  eliminated  the  need  for  wireless  carriers  to  file
 duplicative  applications  and  has  increased  the  accuracy  and  reliability  of  licensing  information  for
 498  See  id.  Neither  the  assignment  of  a  file  number  nor  the  listing  on  a  public  notice  as  accepted  for  filing  indicates
 that  the  application  has  been  found  acceptable  for  filing  or  precludes  the  subsequent  return  or  dismissal  of  the  application  if  it  is  found  defective  or  not  in  substantial  compliance  with  the  Commissions  rules.  Id.
 499  See  Amendment  of  Parts  21  and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television
 Fixed  Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  Report  and  Order,  MM  Docket  No.  97-  217,  13  FCC  Rcd  19112,  19150  (1998);  47  C.  F.  R.    21.27(  d).
 500  Commission  Announces  Initial  Filing  Window  for  Two-  Way  Multipoint  Distribution  Service  and  Instructional
 Television  Fixed  Service,  Public  Notice,  15  FCC  Rcd  5,850  (MMB  2000).
 501  47  C.  F.  R.    21.27(  d).
 502  Pubic  Notice,  Mass  Media  Bureau  Implements  ,  May  30,  2000  (BLS  Implementation  PN).
 503  Id.;  see  also,  Wireless  Telecommunications  Bureau  Suspends  Electronic  Filing  for  the  Broadband  Licensing
 System  on  October  11,  2002,  Public  Notice,  17  FCC  Rcd  18,365  (2002)  (Electronic  Filing  Suspension  PN).
 504  BLS  Implementation  PN.
 505  Id.
 506  Id.
 507  Electronic  Filing  Suspension  PN,  17  FCC  Rcd  at  18,365.  We  note  that  effective  March  25,  2002,  the
 Commission  transferred  the  regulatory  functions  for  the  Services  from  the  former  Mass  Media  Bureau  to  the  Wireless  Telecommunications  Bureau.  Radio  Services  are  Transferred  from  Mass  Media  Bureau  to  Wireless
 Telecommunications  Bureau,  Public  Notice,  17  FCC  Rcd  5077  (2002).
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 wireless  services.  Additionally,  ULS  has  increased  the  speed  and  the  efficiency  of  the  application  process  because  wireless  licensees  and  applicants  can  file  all  licensing-  related  applications  and  other  filings
 electronically.  Since  the  implementation  of  ULS,  the  public  may  access  all  publicly  available  wireless  licensing  information  on-  line.  508  Because  ULS  is  interactive,  ULS  prompts  the  applicant  to  input  the
 required  information  for  the  type  of  action  that  the  applicant  seeks.  As  a  result,  applicants  must  submit  all  the  appropriate  information  before  they  may  file  their  applications  electronically  in  ULS.  509  Notably,
 ULS  will  automatically  pre-  fill  licensee  information  already  in  the  system  and  will  display  only  the  portions  of  the  form  and  schedules  that  require  completion  for  the  applicants  or  licensees  indicated
 purpose.  510
 210.  The  Commission  also  created  redundant  systems  and  back  up  procedures  to  safeguard  against  loss  of  data  or  system  access  should  a  system  failure  occur.  511  We  believe  that  transitioning  MDS
 and  ITFS  to  ULS  will  have  the  same  benefits  for  MDS  and  ITFS  carriers,  the  public  and  the  Commission.  Accordingly,  we  seek  comment  on  the  changes  needed  to  transition  MDS  and  ITFS  to  ULS.
 211.  In  light  of  the  interactively  nature  of  ULS  to  assist  an  applicant  through  the  application  process,  we  propose  to  streamline  the  licensing  process.  512  Generally,  upon  filing  of  an  application  in
 ULS,  we  place  the  application  on  public  notice  as  accepted  for  filing.  513  The  extra  step  of  allowing  applicants  to  amend  their  applications  to  make  corrections  is  not  necessary  with  ULS.  We  seek  comment
 on  this  proposal.  In  addition  to  the  concerns  noted  above  with  regard  to  streamlining  the  ITFS  and  MDS  application  processes,  we  tentatively  conclude  that  the  interactive  nature  of  ULS  will  enhance  the  on-  line
 capabilities  of  MDS  and  ITFS  users.  Accordingly,  we  propose  to  integrate  the  Services  into  ULS.  We  seek  comment  on  this  proposal.
 1.  Returns  and  Dismissals  of  Incomplete  or  Defective  Applications
 212.  As  noted  above,  514  in  some  instances  ITFS  and  MDS  applicants  submitted  applications  that  were  incomplete  or  required  the  submission  of  additional  information  before  they  could  be  placed  on
 public  notice  as  accepted  for  filing.  We  propose  to  extend  our  uniform  rule  for  dismissal  or  return  of  defective  applications  in  the  Wireless  Services  to  ITFS  and  MDS  applications.
 508  ULS  R&  O,  13  FCC  Rcd  21027,  21031    4.
 509  Phase  I  Mandatory  Electronic  Filing  Deadline  Extended  for  PCIA  and  ITA,  Public  Notice,  16  FCC  Rcd  13,681
 (2001)  (the  Commission  extended  the  deadline  for  mandatory  electronic  filing  to  July  25,  2001).
 510  On-  line  help,  including  form  instructions,  is  provided  for  electronic  filers.  Additionally,  the  FCC  Technical
 Support  Hotline  is  available  Monday  through  Friday,  8  a.  m.  to  6  p.  m.  All  calls  to  the  FCC  Technical  Support  Hotline  are  recorded.  Wireless  Telecommunications  Bureau  Grants  Dismissal  Requests  of  Eligible  Auction  No.
 35  Winners  and  Dismisses  Applications  for  Five  C  and  F  Block  Broadband  Personal  Communications  Services  (PCS)  Licenses,  Public  Notice,  (DA  02-  3585,  rel.  Dec.  24,  2002),  Attachment  B.
 511  ULS  R&  O,  13  FCC  Rcd  21027,  21031    5.
 512  See  paras.  208-  209  supra.
 513  See  47  C.  F.  R.    1.933(  1).
 514  See  paras.  204-  205  supra.
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 213.  In  the  ULS  Report  and  Order,  the  Commission  adopted  a  uniform  application  dismissal  and  return  rule  in  all  the  Wireless  Services.  515  Pursuant  to  the  uniform  rule,  the  Commission  indicated
 that  it  has  the  discretion  to  return  applications  for  correction  on  minor  filing  errors,  but  it  also  has  the  authority  to  dismiss  any  incomplete  or  defective  application  without  prejudice.  516  However,  the
 Commission  explained  that  it  would  automatically  dismiss  any  application  that  is  defective  because  the  applicant  failed  to  sign  the  application,  failed  to  pay  the  required  filing  fee,  or  filed  outside  of  the
 applicable  filing  window.  517  The  Commission  concluded  that,  in  contrast  to  minor  filing  errors,  such  defects  were  fatal  to  the  consideration  of  the  application.  518  Accordingly,  the  Commission  found  that,
 regardless  of  the  manner  in  which  applicants  submitted  their  applications,  ULS  would  automatically  dismiss  applications  that  were  unsigned,  untimely,  or  not  fee-  compliant.  519
 214.  The  Wireless  Bureau  announced  specific  procedures  for  complying  with  the  Commissions  uniform  policy.  520  The  Wireless  Bureau  explained  that,  [  g]  enerally,  timely  filed  renewal
 applications  and  construction  notifications  that  are  otherwise  defective  will  be  returned  to  the  applicants  for  correction,  rather  than  dismissed  by  the  Bureau.  521  However,  the  Bureau  clarified  that  renewal
 applications  and  construction  notifications  that  fail  to  comply  with  the  applicable  fee  and  signature  requirements  will  be  dismissed  by  the  Bureau  as  defective,  rather  than  returned  to  the  applicants  for
 correction,  even  if  timely  filed.  522  We  propose  to  adopt  this  application  dismissal  and  return  policy  for  MDS  and  ITFS  to  ensure  efficient  processing  and  equal  treatment  of  all  applications.  We  invite  comment
 on  this  proposal.
 2.  ULS  Forms
 215.  The  Commission  consolidated  the  ULS  application  forms  for  wireless  services  to  replace  approximately  forty-  one  application  forms.  523  The  consolidation  streamlined  the  processing  of
 applications  and  reduced  the  filing  burden  for  wireless  applicants  and  licensees.  524  We  use  four  forms  in  ULS    Form  601  (Long-  Form  or  FCC  Application  for  Wireless  Telecommunications  Bureau  Radio
 515  See  ULS  R&  O,  13  FCC  Rcd  21,027:  See  also  47  C.  F.  R.    1.934.
 516  ULS  R&  O,  13  FCC  Rcd  at  21068    90.
 517  ULS  R&  O,  13  FCC  Rcd  at  21068    90.
 518  Id.
 519  See,  e.  g.,  id.
 520  See  Wireless  Telecommunications  Bureau  Clarifies  Unified  Policy  for  Dismissing  and  Returning  Applications,
 Public  Notice,  17  FCC  Rcd  30  (WTB  2001)  (Unified  Dismissal  and  Return  PN);  Wireless  Telecommunications  Bureau  Revises  and  Begins  Phased  Implementation  of  its  Unified  Policy  for  Reviewing  License  Applications  and
 Pleadings,  Public  Notice,  14  FCC  Rcd  11182,  11185  (WTB  1999);  Wireless  Telecommunications  Bureau  Announces  Unified  Policy  for  Dismissing  and  Returning  Applications  and  Dismissing  Pleadings  Associated  with
 Applications,  Public  Notice,  14  FCC  Rcd  5499  (WTB  1999).
 521  Unified  Dismissal  and  Return  PN,  17  FCC  Rcd  at  30.
 522  Id.  at  32.
 523  ULS  R&  O,  13  FCC  Rcd  21,027,  21,033-  21,034    10.
 524  Id.
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 222.  We  anticipate  that  ITFS  and  MDS  operators  will  find  the  application  and  renewal  process  with  the  ULS  to  be  easier  and  less  error-  prone  than  with  the  existing  system.  Before  implementing  the
 electronic  ULS,  the  Commission  established  a  task  force  to  receive  public  input  on  the  design  of  the  system  and  to  coordinate  efforts.  Consistent  with  the  WTBs  approach  in  implementing  other  services
 into  ULS,  Commission  staff  will  conduct  interactive  demonstrations  for  licensees  and  their  representatives  on  the  proper  use  of  the  system  for  filing  license  applications  and  conducting  database
 research.  Such  demonstrations  will  be  announced  by  public  notice  and  will  include  topics  such  as:  (1)  finding  information  in  ULS  for  license  and  application  searches;  (2)  filing  and  researching  license
 transfers  and  assignments;  and  (3)  general  application  filing  procedures.
 223.  We  also  note  that  the  WTB  has  ongoing  initiatives  designed  to  familiarize  Commission  licensees  with  the  ULS  and  give  notice  of  upcoming  changes  thereto.  For  instance,  the  WTB  periodically
 updates  its  ULS  Newsletter  on  the  WTB  web  site  to  provide  the  public  with  current  information  on  ULS  and  related  topics  of  interest.  536  The  WTB  maintains  an  electronic  mail  list  of  interested  parties,
 which  are  provided  with  updated  ULS  information  free  of  charge.  The  WTB  also  maintains  a  toll-  free  phone  line  537  to  assist  with  licensing  questions  during  the  ULS  transition  and  has  established  a  technical
 support  hotline  (and  e-  mail  address)  538  to  assist  the  public  with  computer-  related  issues,  including  set-  up  and  configuration.
 224.  To  ensure  that  existing  and  potential  licensees  will  be  comfortable  with  the  integration  of  MDS  and  ITFS  into  the  ULS,  we  intend  to  pursue  a  variety  of  outreach  efforts  similar  to  those  we  have
 followed  in  the  past  when  bringing  new  classes  of  licenses  into  the  ULS.  The  WTB  has  operated  booths  at  many  industry  trade  shows,  providing  hands-  on  training  regarding  use  of  the  Commissions  ULS  and
 auction  bidding  software  over  the  Internet.  The  Commissions  outreach  program  also  includes  a  web  page  and  telephone  hot  lines.  Members  of  the  Commission  and  its  staff  have  spoken  at  numerous  industry,
 trade  association,  public  interest  organization,  and  telecommunications  user  group  conferences  on  opportunities  in  wireless  services  licensed  by  the  Commission,  and  will  continue  to  do  so.  539  We  also
 solicit  comment  on  additional  means  by  which  we  can  afford  MDS  and  ITFS  licensees  opportunities  to  become  educated  about  and  familiar  with  ULS  and  the  new  application  procedures  we  adopt  in  this
 proceeding.
 225.  We  note  that  the  MDS/  ITFS  community  requests  clarification  that  it  may  use  the  FCC  Form  331  for  all  modification  applications  for  existing  stations,  whether  main  stations,  boosters,  or
 response  station  hubs,  and  that  it  should  use  the  FCC  Forms  304  and  330  only  for  applications  for  new  stations.  540  Although  the  MDS  community  seeks  a  clarification  that  it  may  use  FCC  Form  331  to  modify
 existing  stations,  whether  main  stations,  booster  stations  or  response  stations,  we  believe  that  MDS
 536  See  Section  257  Report  to  Congress:  Identifying  and  Eliminating  Market  Entry  Barriers  For  Entrepreneurs
 and  Other  Small  Businesses,  15  FCC  Rcd.  15,376,  15,408,    77  (2000)  (  Section  257  Report).  A  list  of  FCC  Public  Notices  concerning  ULS  is  available  on  the  WTB  ULS  Homepage  at  www.  fcc.  gov/  wtb/  uls.
 537  The  toll-  free  number  regarding  ULS  questions  is  1-  888-  CALL-  FCC,  option  2.
 538  The  Technical  Support  telephone  no.  is  202-  414-  1250  and  the  e-  mail  address  for  ULS  technical  questions  is
 ulstech@  fcc.  gov.
 539  See  Section  257  Report  at  15,407-  15,408,    76.
 540  Memorandum  to  WCA  Government  Relations  Committee  from  Paul  J.  Sinderbrand,  Esq.,  Petition  for
 Rulemaking  -  Amendment  of  Parts  21  and  74,  page  3,  August  1,  2001.
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 applicants  should  use  FCC  Form  601,  upon  adoption  of  final  rules,  to  ensure  a  smooth  transition  to  ULS.  We  seek  comment  on  this  concern.
 4.  Suspension  of  Acceptance  and  Processing  of  Applications
 226.  In  light  of  our  actions  described  above,  and  effective  as  of  the  date  of  the  release  of  this  NPRM  &  MO&  O,  we  will  suspend  acceptance  of  applications  for  ITFS  channels  for  new  licenses,
 amendments  or  modifications  for  any  kind  of  station  temporarily,  except  as  provided  below.  The  suspension  is  effective  until  further  notice  and  applies  to  applications  received  on  or  after  the  date  of
 release  of  this  NPRM  &  MO&  O.  Any  such  applications  received  after  the  deadline  will  be  returned  as  unacceptable  for  filing.  We  take  this  action  to  permit  the  orderly  and  effective  resolution  of  issues  in  this
 proceeding.  Absent  this  action,  applications  for  new  licenses,  amendments,  and  modifications  might  limit  the  effectiveness  of  the  decisions  made  and  the  standards  developed  in  this  proceeding.  We  note  this
 action  is  consistent  with  the  approach  we  have  taken  in  other  existing  services  where  we  have  proposed  to  adopt  geographic  area  licensing.  541  We  therefore  find  that  this  temporary  measure  is  in  the  public  interest.
 227.  Notwithstanding  this  temporary  suspension,  we  will  continue  to  process  applications  for  ITFS  channels  that  involve  minor  modifications,  assignment  of  license  or  transfer  of  control.  542  This
 exception  should  permit  modifications  that  can  improve  the  efficiency  of  incumbent  operations  on  these  channels  without  affecting  the  effective  and  orderly  resolution  of  the  issues  in  this  proceeding.  Again,  we
 will  continue  to  accept  applications  for  minor  modifications,  license  assignments  and  transfers  of  control  under  existing  procedures.
 228.  With  respect  to  pending  ITFS  applications  that  were  filed  prior  to  the  release  date  of  this  Notice  of  Proposed  Rulemaking,  and  which  are  pending,  we  will  process  such  applications  provided  that
 they  are  not  mutually  exclusive  with  other  applications  as  of  the  deadline  stated  above.  We  believe  that  this  approach  gives  the  appropriate  consideration  to  those  applicants  who  filed  applications  prior  to  our
 proposed  changes  and  whose  applications  are  not  subject  to  competing  applications.  We  note  that  we  used  this  approach  in  other  services  where  we  have  proposed  a  transition  to  geographic  area  licensing.  543
 If  applicants  have  filed  settlement  agreements  prior  to  the  release  date  of  the  Notice  of  Proposed  Rulemaking,  and  such  settlement  agreements  comply  with  our  rules,  we  will  act  on  the  settlement
 agreements.  If  we  approve  such  a  settlement  agreement,  we  will  allow  the  processing  and  grant  of  the  remaining  non-  mutually  exclusive  applications.  We  will  not  accept  settlement  agreements  relating  to
 mutually  exclusive  ITFS  applications  that  are  filed  after  the  release  date  of  this  Notice  of  Proposed  Rulemaking.  With  respect  to  applications  for  ITFS  stations  filed  prior  to  the  adoption  of  this  Notice  of
 541  See  e.  g.,  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of
 Paging  Systems,  WT  Docket  No.  96-  18,  Notice  of  Proposed  Rule  Making,  WT  Docket  No.  96-  18,  PP  Docket  No.  93-  253,  11  FCC  Rcd  3108  (1996).  See  also,  Amendment  of  the  Rules  Regarding  Multiple  Address  Systems,  WT
 Docket  No.  97-  81,  Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  7973  (1997).
 542  The  Commission  reserves  the  right  to  classify  amendments  as  major  or  minor  on  a  case-  by-  case  basis.  Unless
 the  Commission  determines  otherwise  in  a  specific  case,  a  minor  amendment  is  an  amendment  that  does  not  fall  within  the  Commissions  definition  of  a  major  amendment,  which  is  codified  at  47  C.  F.  R.  21.23(  c).  See  also
 n.  371.
 543  See,  e.  g.,  Amendment  of  the  Commissions  Rules  Regarding  Maritime  Communications,  PR  Docket  No.  92-257,
 Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  16949,  17015-  17016  (1997).
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 Proposed  Rulemaking  that  do  not  meet  the  above  criteria,  we  tentatively  conclude  that  we  will  dismiss  such  applications  without  prejudice  upon  adoption  of  a  Report  and  Order  in  this  proceeding.  Any
 commenters  proposing  that  we  retain  such  applications  should  address  how  such  applications  should  be  processed,  particularly  in  the  event  of  any  auction  for  spectrum  covered  by  the  application.  544  This  action
 would  be  consistent  with  our  treatment  of  pending  applications  in  other  services  that  we  have  converted  to  geographic  area  licensing.  545  While  we  are  proposing  to  convert  ITFS  to  geographic  area  licensing,  the
 pending  applications  were  filed  in  response  to  a  site-  based  licensing  scheme.  We  seek  comment  on  this  tentative  conclusion.
 229.  These  decisions  are  procedural  in  nature  and  therefore  not  subject  to  the  notice  and  comment  and  effective  date  requirements  of  the  Administrative  Procedure  Act.  546  Moreover,  there  is
 good  cause  for  proceeding  in  this  manner:  to  do  otherwise  would  be  impractical  and  contrary  to  the  public  interest  because  compliance  would  undercut  the  purpose  of  these  interim  measures.  547  It  is  well-established
 that  the  Commission  may  initiate  a  freeze  without  prior  notice  and  hearing  when  the  purpose  is  the  creation  of  conditions  under  which  formal  rulemaking  proceedings  can  be  held  in  an  effective,
 efficient,  and  meaningful  manner.  548  In  this  particular  instance,  we  are  undertaking  a  comprehensive  review  of  the  services  to  provide  licensees  maximum  operational  flexibility  with  minimal  regulatory
 restrictions.  Because  we  seek  comment  on  virtually  every  area  related  to  the  services,  we  believe  that  it  is  appropriate  to  suspend  the  acceptance  and  processing  of  applications.
 H.  Competitive  Bidding  Procedures
 230.  Competitive  Bidding  Authority.  As  discussed  earlier  in  this  NPRM  &  MO&  O,  the  Commission  determined  in  prior  proceedings  that  the  statutory  mandate  to  use  competitive  bidding  to
 resolve  mutually  exclusive  applications  for  licenses  applies  to  MDS  549  and  ITFS  550  applications  under
 544  See,  infra,  para.  231,  regarding  participation  in  auctions  for  licenses  to  use  ITFS  spectrum  in  currently
 unassigned  areas.
 545  See,  e.  g.,  Amendment  of  the  Commissions  Rules  Regarding  Maritime  Communications,  PR  Docket  No.  92-257,
 Second  Memorandum  Opinion  and  Order  and  Fifth  Report  and  Order,  17  FCC  Rcd  22585,  6720    83  (2002).
 546  See  5  U.  S.  C.    553(  b)(  A),  (d);  Kessler  v.  FCC,  326  F.  2d  673  (D.  C.  Cir  1963).
 547  See  5  U.  S.  C.    553(  b)(  B),  (d)(  3).
 548  See  Amendment  of  the  Commissions  Rules  Regarding  the  37.0-  38.6  GHz  and  38.6-  40.0  Bands,
 Implementation  of  Section  309(  j)  of  the  Communications  Act  --  Competitive  Bidding,  37.0-  38.6  GHz  and  38.6-  40.0  GHz  Bands,  Memorandum  Opinion  and  Order,  ET  Docket  No.  95-  183,  PP  Docket  No.  93-  253,  12  FCC  Rcd
 2910,  2915    10  citing  Kessler  v.  FCC,  326  F.  2d  673,  679-  81  (D.  C.  Cir.  1963).
 549  See  supra,  para.  22.
 550  See  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding  for  Commercial
 Broadcast  and  Instructional  Television  Fixed  Service  Licenses,  Reexamination  of  the  Policy  Statement  on  Comparative  Broadcast  Hearings,  Proposals  to  Reform  the  Commissions  Comparative  Hearing  Process  to
 Expedite  the  Resolution  of  Cases,  MM  Docket  No.  97-  234,  GC  Docket  No.  92-  52,  GEN  Docket  No.  90-  264,  First  Report  and  Order,  13  FCC  Rcd  15,920,  15,998-  16,004  (1998)  (  Competitive  Bidding  for  ITFS  Licenses  First
 Report  and  Order),  recon.  granted  in  part,  Memorandum  Opinion  and  Order,  14  FCC  Rcd  8,724  (1999)  (in  relevant  part,  granting  ITFS  applicants  in  future  auctions  a  post-  short-  form  settlement  period  and  clarifying  that
 the  new  entrant  bidding  credit  will  not  be  applied  in  any  ITFS  auction),  and  rule  modified  in  part,  14  FCC  Rcd  (continued.)
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 current  service  rules.  As  the  Commission  recognized,  Congress  has  mandated  expressly  that  if  mutually  exclusive  applications  are  accepted  for  any  initial  license  or  construction  permit,  then,  except  as  provided
 in  paragraph  (2)  [of  47  U.  S.  C.  309(  j)],  the  Commission  shall  grant  the  license  or  permit  to  a  qualified  applicant  through  a  system  of  competitive  bidding[.]    551  The  Commission  originally  concluded  that
 neither  MDS  nor  ITFS  come  within  any  of  paragraph  2s  exceptions  for  public  safety  radio  services;  for  initial  digital  television  licenses  given  to  existing  broadcast  licenses  to  replace  analog  televisions  licenses;
 and  for  noncommercial  educational  broadcast  and  public  broadcast  stations,  as  those  terms  are  defined  in  47  U.  S.  C.  397(  6).  552  The  changes  proposed  in  this  NPRM  &  MO&  O  will  not  bring  MDS  or
 ITFS  licenses  within  any  of  these  exceptions,  which  Congress  has  not  changed  or  expanded.  Accordingly,  we  must  use  competitive  bidding  to  resolve  mutually  exclusive  applications  for  licenses  in
 these  bands.
 231.  Participation  in  Auctions  for  Licenses  to  Use  ITFS  Spectrum  in  Currently  Unassigned  Areas.  What  parties  may  participate  in  an  auction  for  licenses  to  use  ITFS  spectrum  in  currently
 unassigned  areas  is  a  distinct  question  from  what  parties  should  be  eligible  to  hold  ITFS  spectrum  licenses.  553  Citing  prior  Commission  proceedings,  the  Coalition  proposes  that  participation  in  such  an
 auction  should  be  limited  solely  to  parties  with  pending  applications  for  licenses  associated  with  unassigned  ITFS  spectrum.  554  Previously,  the  Commission  observed  that  it  would  not  serve  the  public
 interest  to  accept  additional  competing  ITFS  applications  despite  our  authority  to  do  so  under  Section  309(  j)(  1),  and  therefore  the  only  eligible  bidders  in  any  auction  of  the  pending  ITFS  applications
 ought  to  be  those  with  applications  already  on  file.  555  However,  this  prior  observation  applied  solely  with  respect  to  any  auction  of  the  pending  ITFS  applications[.]  Pursuant  to  this  NPRM  &  MO&  O,  and
 consistent  with  the  Coalition  proposal,  we  now  are  considering  an  auction  of  new  licenses  for  using  ITFS  spectrum  in  geographic  areas  that  will  encompass  currently  unassigned  areas.  As  noted  previously,
 geographic  area  licensing  will  give  licensees  greater  operational  flexibility  to  modify,  move,  and  add  to  their  facilities,  which  may  improve  spectrum  utilization.  556  In  addition,  this  greater  operational  flexibility
 may  result  in  new  and  competing  proposals  for  utilizing  the  public  spectrum  resource  from  parties  not  previously  involved  in  pending  site-  based  licensing  applications.  Applicants  intending  very  different  uses
 of  these  more  flexible  licenses  can  express  the  respective  values  a  particular  license  has  for  their  intended  use  in  easy  to  compare  competitive  bids.  This  enables  the  Commission  rapidly  to  assign  licenses  to
 parties  that  will  put  them  to  their  highest  value  use.  However,  an  auction  must  be  open  to  all  parties  qualified  to  use  the  license  in  order  to  assign  the  license  to  the  party  that  most  highly  values  it.  557  We
 seek  comment  on  whether  the  Commission  should  adopt  the  Coalitions  plan  or  open  participation  to  any  (Continued  from  previous  page)
 12,541  (1999)  (modifying  rules  regarding  attribution  of  ownership  for  determining  eligibility  for  new  entrant  bidding  credit).
 551  Competitive  Bidding  for  ITFS  Licenses  First  Report  and  Order,  14  FCC  Rcd  at  15,999  n.  245  (quoting  and
 adding  emphasis  to  47  U.  S.  C.    309(  j)(  1)).
 552  See  47  U.  S.  C.    309(  j)(  2).
 553  See  supra,  paras.  107-  117.
 554  White  Paper  at  41  and  n.  111  (quoting  13  FCC  Rcd  at  16,002).
 555  Id.
 556  See  supra,  para.  62.
 557  See  generally  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  PP  Docket
 No.  93-  253,  Second  Report  And  Order,  9  FCC  Rcd  2348,  2360-  2361,    70-  71  (1994).
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 party  eligible  to  hold  a  geographic  license.  We  note  that,  in  either  case,  if  the  Commission  determines  that  only  educational  institutions  may  hold  ITFS  licenses,  then  only  those  institutions  may  participate  in
 any  auction  of  ITFS  licenses.  We  further  seek  comment  on  any  special  challenges  associated  with  governmental  educational  institutions  or  non-  governmental  non-  profit  educational  institutions
 participating  in  auctions.  Commenters  proposing  that  auction  participation  be  restricted  to  fewer  than  all  parties  eligible  to  be  licensees  should  address  how  any  such  restrictions  are  consistent  with  the  statutory
 policy  objectives  of  the  Commissions  competitive  bidding  authority.  558
 232.  Potential  Auctions.  As  discussed  further  below,  we  seek  comment  on  three  alternative  potential  auctions:  an  auction  of  new  licenses  to  use  ITFS  spectrum  in  currently  unassigned  areas;  a  two-sided
 auction  to  restructure  the  ITFS  spectrum  with  new  licenses;  and  a  two-  sided  auction  to  restructure  the  MDS  and  ITFS  spectrum  with  new  licenses.  The  term  two-  sided  auction  generally  refers  to
 auctions  with  multiple  sellers  and  buyers.  It  is  used  here  to  refer  to  a  Commission  auction  of  licenses  that  makes  available  rights  to  previously  unassigned  spectrum,  held  by  the  Commission,  and  rights  to
 spectrum  previously  licensed.  In  such  a  two-  sided  auction,  incumbent  licensees  may  bid  on  licenses  that  include  licenses  associated  with  spectrum  previously  licensed  to  them.  As  discussed  further  below,  a
 restructuring  auction  would  attempt  to  further  the  public  interest  in  efficient  and  intensive  use  of  the  spectrum  by  bringing  together  all  parties  that  may  have  an  interest  in  rights  in  the  ITFS  and  MDS
 spectrum,  including  incumbent  licensees  and  prospective  new  licensees.  Each  of  the  potential  auctions  would  include  licenses  to  use  ITFS  spectrum  in  currently  unassigned  areas  and,  accordingly,  procedures
 proposed  for  the  auction  of  such  licenses  will  apply  to  any  of  the  three  potential  auctions,  with  modifications  noted  below  for  two-  sided  auctions  in  the  latter  two  cases.
 I.  An  Auction  of  Currently  Unassigned  ITFS  Spectrum
 233.  Auction  Procedures.  We  request  comment  on  a  number  of  issues  relating  to  competitive  bidding  procedures  that  could  be  used  to  assign  licenses  by  auction  for  ITFS  spectrum  in  areas  not
 covered  by  any  incumbent  licenses.  If  we  decide  on  any  auction  approach,  we  propose  to  conduct  any  auction  of  licenses  to  use  spectrum  in  the  2500-  2690  MHz  band  in  conformity  with  the  general
 competitive  bidding  rules  set  forth  in  Part  1,  Subpart  Q,  of  the  Commissions  rules,  and  substantially  consistent  with  the  bidding  procedures  that  have  been  employed  in  previous  auctions.  559  Specifically,  we
 propose  to  employ  the  Part  1  rules  governing,  among  other  things,  competitive  bidding  design,  designated  entities,  application  and  payment  procedures,  collusion  issues,  and  unjust  enrichment.  560  Under  this
 proposal,  such  rules  would  be  subject  to  any  modifications  that  the  Commission  may  adopt  in  our  Part  1  proceeding.  561  In  addition,  consistent  with  current  practice,  matters  such  as  the  appropriate  competitive
 558  See  47  U.  S.  C.    309(  j)(  3).
 559  See,  e.  g.,  Amendment  of  Part  1  of  the  Commissions  Rules  Competitive  Bidding  Procedures,  WT  Docket  No.
 97-  82,  Order,  Memorandum  Opinion  and  Order  and  Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  5686  (1997);  Third  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374  (1997)  (Part  1
 Third  Report  and  Order);  Order  on  Reconsideration  of  the  Third  Report  and  Order,  Fifth  Report  and  Order,  and  Fourth  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  15293  (2000)  (recon.  pending)  (Part  1  Recon
 Order/  Fifth  Report  and  Order  and  Fourth  Further  Notice  of  Proposed  Rule  Making);  Seventh  Report  and  Order,  16  FCC  Rcd  17546  (2001);  Eighth  Report  and  Order,  17  FCC  Rcd  2962  (2002).
 560  See  47  C.  F.  R.    1.2101  et  seq.
 561  See  Fourth  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  15293  (2000);  see  also  Part  1  Recon
 Order/  Fifth  Report  and  Order,  15  FCC  Rcd  15293  (recon.  pending).
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 bidding  design  for  the  auction  of  ITFS  licenses,  as  well  as  minimum  opening  bids  and  reserve  prices,  would  be  determined  by  the  Wireless  Telecommunications  Bureau  pursuant  to  its  delegated  authority.  562
 We  seek  comment  on  whether  any  of  our  Part  1  rules  or  other  auction  procedures  would  be  inappropriate  or  should  be  modified  for  an  auction  of  ITFS  licenses.
 234.  Designated  Entities.  In  authorizing  the  Commission  to  use  competitive  bidding,  Congress  mandated  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.  563  In  addition,  section  309(  j)(  3)(  B)  of  the  Act  provides  that  in
 establishing  eligibility  criteria  and  bidding  methodologies,  the  Commission  shall  promote  economic  opportunity  and  competition  .  .  .  by  avoiding  excessive  concentration  of  licenses  and  by  disseminating
 licenses  among  a  wide  variety  of  applicants,  including  small  businesses,  rural  telephone  companies,  and  businesses  owned  by  members  of  minority  groups  and  women.  564
 235.  The  Commissions  existing  designated  entity  provisions  apply  based  on  an  entitys  qualification  as  a  small  business.  565  We  note  that  minority-  and  women-  owned  businesses  and  rural
 telephone  companies  that  qualify  as  small  businesses  may  take  advantage  of  the  special  provisions  we  have  adopted  for  small  businesses.  566  We  seek  comment  on  whether  our  small  business  provisions  are
 sufficient  to  promote  participation  by  business  owned  by  minorities  and  women,  as  well  as  rural  telephone  companies.  567  To  the  extent  that  commenters  propose  additional  provisions  to  ensure
 participation  by  minority-  or  women-  owned  businesses,  or  rural  telephone  companies,  they  should  address  how  such  provisions  should  be  crafted  to  meet  the  relevant  constitutional  standards.
 562  See  Amendment  of  Part  1  of  the  Commissions  Rules  -  Competitive  Bidding  Procedures,  Third  Report  and
 Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374,  448-  49,  454-  55,    125,  139  (directing  the  Bureau  to  seek  comment  on  specific  mechanisms  relating  to  auction  conduct  pursuant  to  the
 Balanced  Budget  Act  of  1997)  (Part  1  Third  Report  and  Order).
 563  See  47  U.  S.  C.    309(  j)(  4)(  D).
 564  See  47  U.  S.  C.    309(  j)(  3)(  B).
 565  See  47  C.  F.  R.    1.2110(  a).  Although  the  Commission  previously  extended  designated  entity  preferences  to
 minority-  and  women-  owned  businesses,  as  well  as  to  small  businesses,  following  the  Supreme  Courts  rulings  in  Adarand  Constructors,  Inc.  v.  Pena,  515  U.  S.  200  (1995),  and  United  States  v.  Virginia,  et  al.,  518  U.  S.  515
 (1996),  the  Commission  concluded  that  it  would  not  be  appropriate  to  adopt  special  provisions  for  minority-owned  and  women-  owned  businesses  pending  the  development  of  a  more  complete  record  on  the  propriety  of
 race-  and  gender-  based  provisions  for  future  auctions.  See  Part  1  Fifth  Report  and  Order,  15  FCC  Rcd  at  15318-  20,    45-  50  (discussing  constitutional  standards  and  governmental  interests  that  would  justify  the  use  of  race-  or
 gender-  based  preferences).
 566  See  Part  1  Fifth  Report  and  Order,  15  FCC  Rcd  at  15319,    48;  see  also  FCC  Report  to  Congress  on  Spectrum
 Auctions,  WT  Docket  No.  97-  150,  Report,  FCC  97-  353  at  29  (rel.  Oct.  9,  1997)  (finding  that  special  provisions  for  small  businesses  also  increase  opportunities  for  minority-  and  women-  owned  businesses).
 567  We  recently  issued  a  Notice  of  Inquiry  seeking  information  about  the  effectiveness  of  our  provisions  to
 promote  participation  by  rural  telephone  companies  in  our  competitive  bidding  proceedings.  See  Facilitating  the  Provision  of  Spectrum-  Based  Services  to  Rural  Areas  and  Promoting  Opportunities  for  Rural  Telephone
 Companies  to  Provide  Spectrum-  Based  Services,  WT  Docket  No.  02-  381,  Notice  of  Inquiry,  FCC  02-  325  (rel.  Dec.  20,  2002).
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 236.  We  seek  comment  on  the  appropriate  definition(  s)  of  small  business  that  should  be  used  to  determine  eligibility  for  bidding  credits  in  auctions  involving  ITFS  spectrum.  In  the  Competitive
 Bidding  Second  Memorandum  Opinion  and  Order,  the  Commission  stated  that  it  would  define  eligibility  requirements  for  small  businesses  on  a  service-  specific  basis,  taking  into  account  the  capital  requirements
 and  other  characteristics  of  each  particular  service  in  establishing  the  appropriate  threshold.  568  The  Part  1  Third  Report  and  Order,  while  it  standardizes  many  auction  rules,  provides  that  the  Commission  will
 continue  a  service-  by-  service  approach  to  defining  small  businesses.  569  Generally,  when  establishing  service-  specific  small  business  size  standards,  we  look  to  the  capital  required  to  provide  likely  service
 using  the  spectrum.  We  do  not  know  the  precise  type  of  service  that  new  licensees  may  attempt  to  provide  in  this  band.  The  Coalition  has  suggested  that  the  ITFS  and  MDS  bands  may  be  used  to  provide
 ubiquitous  broadband  services  using  next  generation  low  power,  cellular  systems  on  fixed,  portable  and/  or  mobile  bases.  570  We  invite  comment  on  whether  likely  services  in  this  band  will  have  capital
 requirements  similar  to  current  MDS  services;  or  similar  to  mobile  services,  such  as  Personal  Communications  Services;  or  similar  to  fixed  services,  such  as  services  in  the  24  GHz  and  39  GHz  bands.
 237.  Further,  we  invite  comment  on  whether  distinctive  characteristics  of  licensees  in  the  ITFS  band  require  distinct  rules  for  assessing  the  relative  size  of  potential  participants  in  an  ITFS  auction.  In
 this  regard,  current  ITFS  eligibility  rules  would  limit  participation  in  an  auction  of  ITFS  licenses  for  which  there  are  mutually  exclusive  applications  to  accredited  educational  institutions,  governmental
 organizations  engaged  in  the  formal  education  of  enrolled  students,  and  nonprofit  educational  organizations  providing  educational  and  instructional  television  materials  to  such  accredited  institutions
 or  governmental  organizations.  571  How  do  our  designated  entity  provisions  comport  with  the  unique  challenges  and  status  of  educational  institutions?  Should  we  establish  special  provisions  for  non-  profit
 educational  institutions  that  may  want  to  have  access  to  ITFS  spectrum  but  do  not  have  the  financial  capability  to  compete  in  an  auction  for  spectrum  licenses?  Commenters  that  propose  special  provisions
 for  non-  profit  educational  institutions  should  address  the  statutory  basis  for  such  proposals.  Our  standard  schedule  of  small  business  bidding  credits  provides  for  bidding  credits  based  on  a  calculation  of  bidders
 average  annual  gross  revenues  for  the  three  years  preceding  the  auction.  572  We  seek  comment  on  whether  the  non-  commercial  character  of  current  ITFS  licensees  requires  any  special  procedures  for  determining
 the  average  annual  gross  revenues  of  such  entities.  For  example,  are  our  standard  gross  revenue  attribution  rules  an  appropriate  method  of  evaluating  the  relative  resources  of  universities  and  government
 entities?  We  also  invite  comment  on  whether  some  other  criterion  besides  average  annual  gross  revenues  should  be  used  for  identifying  small  entities  among  eligible  ITFS  applicants.
 238.  Similarly,  if  current  or  revised  licensee  eligibility  rules  significantly  limit  parties  eligible  to  participate  in  an  ITFS  auction,  would  distinguishing  among  eligible  entities  to  grant  bidding  credits  to
 568  Implementation  of  Section  309(  j)  of  the  Communications  Act  Competitive  Bidding,  PP  Docket  No.  93-  253,
 Second  Memorandum  Opinion  and  Order,  9  FCC  Rcd  7245,  7269    145  (1994)  (Competitive  Bidding  Second  Memorandum  Opinion  and  Order);  47  C.  F.  R.    1.2110(  c)(  1).
 569  Part  1  Third  Report  and  Order,  13  FCC  Rcd  at  388    18;  47  C.  F.  R.    1.2110  (c)(  1).
 570  See  White  Paper  at  11.
 571  See  47  C.  F.  R.    74.932,  990-  992.  Wireless  cable  entities  may  be  eligible  to  obtain  licenses  for  ITFS
 frequencies  if  there  are  no  mutually  exclusive  ITFS  applications.  47  C.  F.  R.    74.990(  e).
 572  See  47  C.  F.  R.    1.2110(  b).
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 small  entities  serve  the  statutory  purpose  of  bidding  credits?  573  We  tentatively  conclude  that  if  the  eligibility  of  parties  to  hold  ITFS  licensees  is  determined  by  their  educational  purpose,  providing  bidding
 credits  based  on  the  relative  size  of  participants  may  not  serve  statutory  purposes.  We  seek  comment  on  this  tentative  conclusion.
 239.  In  the  event  that  participation  in  an  ITFS  auction  is  not  significantly  limited  by  eligibility  restrictions,  should  our  standard  schedule  of  bidding  credits  should  be  applied  to  this  service?  In  the  Part
 1  Third  Report  and  Order,  we  adopted  a  standard  schedule  of  bidding  credits  for  certain  small  business  definitions,  the  levels  of  which  were  developed  based  on  our  auction  experience.  574  The  standard  schedule
 appears  at  Section  1.2110(  f)(  2)  of  the  Commissions  rules.  575  Are  these  levels  of  bidding  credits  appropriate  for  ITFS?  Will  they  provide  adequate  opportunities  for  small  businesses  of  varying  sizes  and
 for  educational  institutions,  especially  governmental  and  non-  profit  institutions,  to  participate  in  spectrum  auctions  that  are  open  to  a  wide  variety  of  participants.  576  For  this  proceeding,  we  propose  to  apply  this
 standard  schedule  and  define  an  entity  with  average  annual  gross  revenues  not  exceeding  $40  million  for  the  preceding  three  years  as  a  small  business;  an  entity  with  average  gross  revenues  not  exceeding  $15
 million  for  the  same  period  as  a  very  small  business;  and  an  entity  with  average  gross  revenues  not  exceeding  $3  million  for  the  same  period  as  an  entrepreneur.  577  We  propose  to  provide  qualifying
 small  businesses  with  a  bidding  credit  of  15%,  qualifying  very  small  businesses  with  a  bidding  credit  of  25%;  and  qualifying  entrepreneurs  with  a  bidding  credit  of  35%,  consistent  with  Section
 1.2110(  f)(  2).  578  We  seek  comment  on  this  proposal.
 240.  Given  the  close  relationship  between  MDS  and  ITFS,  we  invite  comment  on  the  effect  of  having  three  small  business  sizes,  and  bidding  credits,  in  ITFS  while  having  only  one  small  business  size
 (average  annual  gross  revenues  for  the  preceding  three  years  not  exceeding  $40  million)  and  one  credit  (15%)  in  MDS.  579  Commenters  proposing  alternative  business  size  standards  should  give  careful
 consideration  to  the  likely  capital  requirements  for  developing  services  in  this  spectrum.  In  this  regard,  we  note  that  new  ITFS  licensees  may  be  presented  with  issues  and  costs  involved  in  transitioning
 incumbents  and  developing  markets,  technologies,  and  services.  Commenters  also  should  consider  whether  the  band  plan  and  characteristics  of  the  ITFS  band  suggest  adoption  of  other  small  business  size
 definitions  and/  or  bidding  credits  in  this  instance.
 573  Cf.  Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for  Personal
 Communications  Services  (PCS)  Licenses,  Sixth  Report  and  Order  and  Order  on  Reconsideration,  WT  Docket  No.  97-  82,  FCC  00-  313,  15  FCC  Rcd  16266,  16288,    45  (2000).
 574  See  Part  1  Third  Report  and  Order,  13  FCC  Rcd  at  403-  04,    47.
 575  See  47  C.  F.  R.    1.2110(  f)(  2).
 576  See  Part  1  Third  Report  and  Order,  13  FCC  Rcd  at  404,    47.
 577  See  47  C.  F.  R.    1.2110(  f)(  2).  We  note  that  we  will  coordinate  the  small  business  size  standards  for  ITFS  in
 this  proceeding  with  the  U.  S.  Small  Business  Administration.
 578  47  C.  F.  R.    1.2110(  f)(  2)(  i)-(  iii).
 579  See  47  C.  F.  R.    21.961(  b).
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 J.  Two-  Sided  Auctions  to  Restructure  Spectrum
 241.  The  Commission  could  conduct  a  two-  sided  auction  to  restructure  spectrum  to  bring  together  all  parties  interested  in  rights  to  ITFS  spectrum,  and  MDS  spectrum  as  well,  including  incumbent
 licensees  and  prospective  new  licensees.  580  Making  available  in  a  single  auction  new  licenses  to  use  ITFS  spectrum  in  currently  unassigned  areas  along  with  spectrum  made  available  by  incumbent  ITFS  licensees,
 and  potentially  incumbent  MDS  licensees  as  well,  would  enable  interested  parties  to  restructure  the  band  rapidly  by  helping  them  learn  the  cost  of  combining  and  obtaining  encumbered  and  unencumbered
 spectrum  for  new  uses,  without  engaging  in  costly  and  time  consuming  bilateral  and  multi-  lateral  negotiations.  581  Thus,  a  restructuring  auction  could  facilitate  the  voluntary  clearing  of  spectrum  by
 incumbent  licensees  and  allow  the  Commission  to  issue  new  licenses,  that  more  efficiently  aggregate  spectrum  rights  and/  or  spectrum  blocks  with  rights  and  blocks  associated  with  existing  licenses.
 242.  Conducting  a  two-  sided  restructuring  auction  may  raise  novel  issues  related  to  competitive  bidding.  To  the  extent  a  restructuring  auction  offers  new  initial  licenses  to  all  interested
 parties,  we  conclude  that  we  can  conduct  such  an  auction  consistent  with  our  mandate  and  authority  under  Section  309(  j).  582  To  the  extent  that  our  auction  process  provides  private  parties  with  a  secondary  market
 for  existing  licenses  that  enhances  the  final  license  assignment  in  a  simultaneous  auction  of  new  licenses,  we  believe  that  we  can  design  such  an  auction  consistent  with  our  mandate  and  authority  under  Sections
 580  As  noted  previously,  see,  supra,  para.  232,  this  potential  auction  would  include  licenses  to  use  ITFS  spectrum
 in  currently  unassigned  areas  and  procedures  proposed  with  respect  to  the  auction  of  such  licenses  would  be  applicable  to  this  auction  as  well.  A  recent  working  paper  published  by  the  Commission  discusses  how  such  two-sided
 auctions  can  be  used  to  transition  rapidly  from  existing  spectrum  band  plans  and  policies  to  new  plans  and  more  flexible  policies.  See,  generally,  Evan  Kwerel  and  John  Williams,  2002,  A  Proposal  for  a  Rapid  Transition
 to  Market  Allocation  of  Spectrum  Office  of  Plans  and  Policy  Working  Paper  No.  38,  Federal  Communications  Commission.  In  the  case  of  ITFS  and  MDS  spectrum,  such  an  auction  should  be  open  to  all  parties  that  may  be
 eligible  to  hold  a  license  to  use  the  spectrum  in  order  to  best  determine  the  market  price.  Otherwise,  the  auction  price  may  not  reflect  significant  demand  for  licenses.
 581  For  example,  an  entity  planning  to  use  ITFS  spectrum  to  provide  mobile  services  in  a  geographic  area  pursuant
 to  newly  proposed  service  rules  currently  has  to  obtain  the  license  to  use  any  spectrum  previously  not  authorized  for  use  in  that  area  and  has  to  negotiate  with  each  incumbent  licensee  within  the  relevant  area.  The  complexity  of
 these  negotiations  likely  will  increase  dramatically  with  their  number,  as  each  incumbent  licensee  seeks  to  obtain  terms  at  least  as  good  as  all  the  others.  Moreover,  competitors  seeking  the  spectrum  for  similar  or  other  uses  may
 enter  into  negotiations  with  the  licensees.  If  so,  it  is  quite  possible  that  the  circumstances  of  negotiation,  rather  than  the  relative  value  of  the  rights  to  the  spectrum,  may  determine  its  final  use.  Even  if  the  negotiations  are
 successful,  they  likely  will  take  considerable  time,  potentially  delaying  deployment  of  new  services  to  the  public  and  burdening  the  business  plans  of  all  the  parties  involved.  In  contrast,  in  an  auction  to  restructure  the  band,  the
 party  planning  new  services  can  easily  determine  the  current  high  bids  for  each  license  that  covers  the  relevant  geographic  area  and  decide  whether  or  not  to  proceed  in  a  very  short  period  of  time.
 582  See  47  U.  S.  C.    309(  j).  The  Commissions  statutory  authority  to  grant  licenses  through  a  system  of
 competitive  bidding  extends  to  initial  licenses  for  use  of  the  spectrum.  In  an  auction  to  restructure  the  band,  the  Commission  would  make  available  initial  licenses  to  use  the  spectrum  pursuant  to  new  service  rules.  New
 services  rules  would  be  applicable,  regardless  of  whether  the  entire  band  plan  has  been  revised.  Thus,  any  restructuring  auction  would  offer  new  licenses,  whether  conducted  without,  before,  or  after  the  adoption  of  a  new
 band  plan.  The  spectrum  associated  with  these  new  initial  licenses  would  include  both  spectrum  previously  licensed  for  use  under  prior  service  rules,  if  the  licensees  have  exchanged  their  original  licenses,  and  spectrum  not
 previously  authorized  for  use.
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 1,  4(  i)  and  303  of  the  Communications  Act.  583  We  further  seek  comment  on  the  feasibility  and  effectiveness  of  a  two-  sided  restructuring  auction  conducted  by  the  FCC,  both  as  described  briefly
 below  and  as  any  commenters  may  propose.  584  We  invite  discussion  of  whether  alternative  mechanisms,  such  as  privately  conducted  secondary  market  auctions,  can  or  should  be  employed  in  conjunction  with
 any  FCC  restructuring  auction.  585  Commenters  should  identify  the  components  of  any  proposals  that  they  believe  are  essential  to  an  effective  restructuring  auction,  the  Commissions  authority  to  conduct  an
 auction  such  as  they  propose,  and  also  discuss  the  probable  effect  of  modifying  any  significant  components.  Commenters  should  consider  whether  a  private  party  could  effectively  conduct  a  two-  sided
 auction  involving  existing  licenses  or  otherwise  facilitate  restructuring  the  band  and  the  likely  efficiency  of  such  a  private  secondary  market  auction  compared  to  one  conducted  by  the  FCC  that  also  includes
 unassigned  ITFS  spectrum.  Could  a  private  auction  be  conducted  in  coordination  with  a  government  auction?  Are  there  any  regulatory  barriers  to  a  privately  conducted  auction?
 243.  A  restructuring  auction  may  enable  a  transition  to  a  more  efficient  and  intensive  use  of  the  ITFS  and  MDS  spectrum  by  enabling  parties  to  aggregate  spectrum  blocks  that  serve  their  specific
 needs.  The  Commission  could  conduct  a  restructuring  auction  in  conjunction  with  or  as  an  alternative  to  the  transition  mechanisms  previously  discussed.  Accordingly,  we  seek  comment  on  whether  a  non-auction
 transition  mechanism  to  a  new  band  plan  (such  as  that  proposed  by  the  Coalition)  is  essential  to  achieving  more  efficient  and  intensive  use  of  this  spectrum  or  whether  a  restructuring  auction  alone  could
 achieve  our  objectives.  If  a  two-  sided  restructuring  auction  is  sufficient,  should  any  aspect  of  the  band  plan  be  reconsidered?  For  example,  if  a  restructuring  auction  is  conducted  to  transition  to  a  new  band
 plan,  would  it  be  appropriate  to  modify  the  amount  of  spectrum  associated  with  each  license?  Are  six  megahertz  channels  the  most  efficient  size  to  auction,  if  an  auction  makes  available  large  amounts  of
 spectrum  and  permits  the  bidders  to  create  customized  spectrum  blocks?  If  a  two-  sided  restructuring  auction  is  used  in  conjunction  with  one  of  transition  mechanisms  discussed  above,  we  seek  comment  on
 whether  the  restructuring  auction  should  take  place  before,  or  after,  the  non-  auction  transition.
 1.  A  Two-  Sided  Auction  to  Restructure  the  ITFS  Spectrum
 244.  We  seek  comment  on  whether  to  conduct  a  two-  sided  auction  to  restructure  the  ITFS  band  that  includes  ITFS  spectrum  in  areas  covered  by  existing  licenses,  provided  that  incumbent  licensees
 583  See  47  U.  S.  C.    151,  154(  i),  and  303(  r).
 584  We  note  that  47  U.  S.  C.    309(  j)(  8)  requires  that  all  proceeds  from  the  use  of  a  competitive  bidding  system
 under  this  subsection  shall  be  deposited  in  the  Treasury  in  accordance  with  chapter  33  of  title  31,  United  States  Code.  Accordingly,  any  two-  sided  auction  must  be  designed  so  that  payments  made  to  incumbent  licensees  are
 not  proceeds  from  the  use  of  competitive  bidding  within  the  meaning  of  Section  309(  j)(  8)  or  moneys  required  to  be  deposited  in  the  Treasury  by  31  U.  S.  C.    3301  et  seq.
 585  The  Commission  continues  to  explore  innovative  policies  and  mechanisms  that  may  further  its  spectrum
 management  objectives.  For  example,  the  Commission  has  found  that  privately-  conducted  secondary  auctions  or  other  such  market-  oriented  mechanisms  could  be  used  to  facilitate  the  voluntary  clearing  of  incumbent
 broadcasters  from  the  700  MHz  bands  and  promote  the  early  recovery  of  that  spectrum  for  new  uses.  See,  e.  g.,  Service  Rules  for  the  746-  776-  794  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions  Rules,  WT  Docket
 No.  99-  168,  Carriage  of  the  Transmissions  of  Digital  Broadcast  Stations,  CS  Docket  No.  98-  120,  Review  of  the  Commissions  Rules  and  Policies  Affecting  the  Conversion  to  Digital  Television,  MM  Docket  No.  00-  39,  Third
 Report  and  Order,  16  FCC  Rcd  2703,  2718-  2721,    37-  44  (2001).  The  Commission  also  considered  employing  a  Commission-  conducted  secondary  auction  in  the  700  MHz  bands,  but  ultimately  decided  that  a  privately-organized
 clearing  mechanism  would  be  better  in  that  context.  See  id.
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 are  willing  to  return  their  licenses  and  receive  payments,  along  with  ITFS  spectrum  in  areas  not  currently  licensed.  The  effectiveness  of  a  restructuring  auction  will  depend  in  part  on  incumbent  ITFS  licensees
 willingness  to  participate.  The  Commission  might  facilitate  participation  by  allowing  incumbent  licensees  to  receive  value  from  wining  bidders  for  their  incumbent  licenses.  Such  a  mechanism  should
 determine  the  amount  incumbent  licensees  would  receive  from  winning  bidders  to  clear  the  spectrum.  For  winning  bids  for  use  of  spectrum  associated  with  one  incumbent  license,  the  incumbent  licensee  could
 receive  the  full  amount  of  the  winning  bid  directly  from  the  buyer  in  return  for  the  incumbents  transfer  of  its  license  to  the  buyer  (subject,  of  course,  to  Commission  approval  under  Section  310(  d)  of  the
 Communications  Act).  The  licensee  would  be  free  to  use  this  payment  as  it  sees  fit,  e.  g.,  to  purchase  less  expensive  spectrum  and  pay  the  costs  of  relocating,  or  to  purchase  new  equipment,  or  to  finance  projects
 unconnected  with  ITFS.  During  the  auction,  incumbents  dissatisfied  with  the  amount  they  would  receive  based  on  current  high  bids  for  their  license  could  place  a  higher  bid.  If,  at  the  end  of  the  auction,  the
 incumbent  licensee  is  the  high  bidder,  the  incumbent  would  pay  themselves  the  amount  of  their  final  bid  and  retain  their  license  at  no  net  cost.  In  the  unlikely  event  that  no  one  bid  on  their  license  or  a
 winning  bidder  defaults  on  its  bid,  the  incumbent  licensee  would  retain  its  license.  These  protections  would  enable  incumbent  licensees  to  participate  in  the  two-  sided  auction  without  committing  to  giving  up
 the  spectrum.  Incumbent  licensees  could  obtain  valuable  information  about  market  prices  during  the  course  of  the  auction  which  could  result  in  a  more  efficient  use  of  the  licensees  resources  and  the  public
 spectrum  resource.
 245.  The  effectiveness  of  a  two-  sided  restructuring  auction  depends  in  part  on  clearly  defining  the  spectrum  rights  associated  with  a  license.  If  the  winner  of  a  license  for  ITFS  spectrum  in  currently
 unassigned  areas  (geographic  licensee)  also  wins  an  existing  ITFS  license  encompassed  by  the  geographic  license,  the  incumbent  license  would  be  subsumed  within  the  geographic  license.  It  is  also  important  to
 clearly  identify  the  parties  that  may  have  rights  with  respect  to  spectrum  associated  with  existing  licenses.  Multiple  parties,  including  licensees  and  their  lessees,  may  assert  claims  to  ITFS  spectrum  associated
 with  existing  licenses.  Potential  claims  by  lessees  may  inhibit  incumbent  licensees  from  offering  existing  licenses  in  an  auction.  Even  if  they  want  to  do  so,  licensees  and  lessees  may  be  unable  to  resolve
 potential  claims  due  to  pre-  auction  uncertainty  regarding  the  value  of  the  license  and  the  lease;  the  cost  of  replacement  spectrum;  and/  or  the  cost  of  new  or  retuned  equipment.  Any  disputed  claims  among  such
 parties  could  reduce  bidders  certainty  that  they  will  receive  all  the  rights  associated  with  the  licenses.  If  such  uncertainty  deters  participation  in  a  restructuring  auction,  the  restructuring  auction  may  be  less
 effective  at  assigning  the  new  licenses  to  parties  that  value  them  most  highly.  Consequently,  the  restructuring  auction  must  take  potential  claims  into  account,  regardless  of  the  ultimate  validity  of  such
 claims.  We  seek  comment  on  the  extent  and  nature  of  probable  claims  and  their  effect,  if  any,  on  the  interest  of  potential  bidders  in  a  restructuring  auction.  Are  there  rules  that  could  be  applied  to  all  parties,
 subject  to  separately  negotiated  agreements,  that  would  resolve  uncertainty  surrounding  potential  claims  and  facilitate  the  sale  of  existing  licenses?
 2.  A  Two-  Sided  Auction  to  Restructure  the  MDS  and  ITFS  Spectrum
 246.  If  a  two-  sided  restructuring  auction  is  feasible,  we  also  could  consider  restructuring  both  the  MDS  and  ITFS  spectrum  in  one  auction.  Including  MDS  spectrum  in  such  a  two-  sided  restructuring
 auction  would  further  enhance  the  opportunities  for  parties  to  learn  the  cost  of  combining  and  obtaining  encumbered  and  unencumbered  spectrum  for  new  uses,  all  without  engaging  in  costly  and  time
 consuming  bilateral  and  multi-  lateral  negotiations.  It  also  might  reduce  the  need  for  complex  transitional  rules  to  migrate  to  a  new  band  plan.  We  seek  comment  on  the  desirability  and  feasibility  of  including
 MDS  spectrum  in  any  restructuring  auction.  Commenters  should  address  the  extent  to  which  incumbent  MDS  licensees  are  more  or  less  likely  than  existing  ITFS  licensees  to  be  willing  and  able  to  exchange
 their  licenses  and  participate  in  a  restructuring  auction.
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 IV.  PROCEDURAL  MATTERS
 A.  Ex  Parte  Rules    Permit-  But-  Disclose
 247.  This  is  a  permit-  but-  disclose  notice  and  comment  rulemaking  proceeding.  Ex  parte  presentations  are  permitted,  except  during  the  Sunshine  Agenda  period,  provided  they  are  disclosed
 pursuant  to  the  Commissions  rules.  586
 B.  Comment  Period  and  Procedures
 248.  Pursuant  to  applicable  procedures  set  forth  in  sections  1.415  and  1.419  of  the  Commissions  rules,  587  interested  parties  may  file  comments  on  this  Notice  on  or  before  [90  days  from
 publication  in  the  Federal  Register],  and  reply  comments  on  or  before  [135  days  from  publication  in  the  Federal  Register].  Comments  and  reply  comments  should  be  filed  in  WT  Docket  No.  03-  66,  and
 may  be  filed  using  the  Commissions  Electronic  Comment  Filing  System  (ECFS)  or  by  filing  paper  copies.  588  All  relevant  and  timely  comments  will  be  considered  by  the  Commission  before  final  action  is
 taken  in  this  proceeding.
 249.  Comments  filed  through  the  ECFS  can  be  sent  as  an  electronic  file  via  the  Internet  to  <http://  www.  fcc.  gov/  e-  file/  ecfs.  html>.  In  completing  the  transmittal  screen,  commenters  should  include
 their  full  name,  Postal  Service  mailing  address,  and  the  applicable  docket  number.  Parties  may  also  submit  an  electronic  comment  by  e-  mail  via  the  Internet.  To  obtain  filing  instructions  for  e-  mail
 comments,  commenters  should  send  an  e-  mail  to  ecfs@  fcc.  gov,  and  should  include  the  following  words  in  the  body  of  the  message:  get  form  <your  e-  mail  address>.  A  sample  form  and  directions  will  be  sent
 in  reply.
 250.  Parties  who  choose  to  file  by  paper  must  file  an  original  and  four  copies  of  each  filing.  If  parties  want  each  Commissioner  to  receive  a  personal  copy  of  their  comments,  they  must  file  an  original
 plus  nine  copies.  All  filings  must  be  sent  to  the  Commissions  Secretary,  Marlene  H.  Dortch,  Office  of  the  Secretary,  Federal  Communications  Commission,  445  12  th  Street,  S.  W.,  Room  TW-  A325,
 Washington,  D.  C.  20554.  Furthermore,  parties  are  requested  to  provide  courtesy  copies  for  the  following  Commission  staff:  (1)  Nancy  Zaczek,  Charles  Oliver  and  Stephen  Zak,  Public  Safety  and  Private
 Wireless  Division,  Wireless  Telecommunications  Bureau,  Federal  Communications  Commission,  445  12  th  Street,  S.  W.,  Room.  3-  C124,  Washington,  D.  C.  20554;  and  (2)  Gary  Michaels  and  Andrea  Kelly,
 Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications  Bureau,  Federal  Communications  Commission,  445  12  th  Street,  S.  W.,  Room.  4-  A760,  Washington,  D.  C.  20554.  One
 copy  of  each  filing  (together  with  a  diskette  copy,  as  indicated  below)  should  also  be  sent  to  the  Commissions  copy  contractor,  Qualex  International,  445  12  th  Street,  SW,  Room  CY-  B402,  Washington,
 DC,  20554,  202-  863-  2893.
 251.  Parties  who  choose  to  file  by  paper  should  also  submit  their  comments  on  diskette.  These  diskettes  should  be  attached  to  the  original  paper  filing  submitted  to  the  Office  of  the  Secretary.  Such  a
 submission  should  be  on  a  3.5  inch  diskette  formatted  in  an  IBM  compatible  format  using  Microsoft  TM  Word  97  for  Windows  or  compatible  software.  The  diskette  should  be  accompanied  by  a  cover  letter  and
 586  See  generally  47  C.  F.  R.    1.1202,  1.1203,  1.1206.
 587  See  47  C.  F.  R.    1.415,  1.419.
 588  Electronic  Filing  of  Documents  in  Rulemaking  Proceedings,  Report  and  Order,  13  FCC  Rcd  11,322  (1998).
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 should  be  submitted  in  read  only  mode.  The  diskette  should  be  clearly  labeled  with  the  commenters  name,  proceeding,  type  of  pleading  (comment  or  reply  comment),  date  of  submission,  and  the  name  of  the
 electronic  file  on  the  diskette.  The  label  should  also  include  the  following  phrase  Disk  Copy    Not  an  Original.  Each  diskette  should  contain  only  one  partys  pleadings,  preferably  in  a  single  electronic  file.
 In  addition,  commenters  should  send  diskette  copies  to  the  Commissions  copy  contractor,  Qualex  International,  445  12  th  Street,  SW,  Room  CY-  B402,  Washington,  DC,  20554,  202-  863-  2893.
 252.  The  public  may  view  the  documents  filed  in  this  proceeding  during  regular  business  hours  in  the  FCC  Reference  Information  Center,  Federal  Communications  Commission,  445  12  th  Street,
 S.  W.,  Room  CY-  A257,  Washington,  D.  C.  20554,  and  on  the  Commissions  Internet  Home  Page:  <http://  www.  fcc.  gov>.  Copies  of  comments  and  reply  comments  are  also  available  through  the
 Commissions  duplicating  contractor:  Qualex  International,  445  12  th  Street,  SW,  Room  CY-  B402,  Washington,  DC,  20554,  202-  863-  2893.  Accessible  formats  (computer  diskettes,  large  print,  audio
 recording  and  Braille)  are  available  to  persons  with  disabilities  by  contacting  Brian  Millin,  of  the  Consumer  &  Governmental  Affairs  Bureau,  at  (202)  418-  7426,  TTY  (202)  418-  7365,  or  at
 bmillin@  fcc.  gov.
 C.  Initial  Regulatory  Flexibility  Analysis
 253.  As  required  by  the  Regulatory  Flexibility  Act  of  1980  (RFA),  589  the  Commission  has  prepared  an  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant  economic  impact  on
 small  entities  of  the  policies  and  rules  proposed  in  the  Notice.  The  analysis  is  found  in  Appendix  A.  We  request  written  public  comment  on  the  analysis.  Comments  must  be  filed  in  accordance  with  the  same
 deadlines  as  comments  filed  in  response  to  the  NPRM  &  MO&  O,  and  must  have  a  separate  and  distinct  heading  designating  them  as  responses  to  the  IRFA.  The  Commissions  Consumer  and  Governmental
 Affairs  Bureau,  Reference  Information  Center,  will  send  a  copy  of  this  NPRM  &  MO&  O,  including  the  IRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration.
 D.  Paperwork  Reduction  Analysis
 254.  This  item  proposes  no  new  information  collections.
 E.  Further  Information
 255.  For  further  information  concerning  this  rulemaking  proceeding,  contact  Nancy  Zaczek  or  Charles  Oliver  at  (202)  418-  0680,  Public  Safety  and  Private  Wireless  Division,  Wireless
 Telecommunications  Bureau,  Federal  Communications  Commission,  445  12  th  Street,  S.  W.,  Room.  4-  C367,  Washington,  D.  C.  20554;  or  via  the  Internet  to  nzaczek@  fcc.  gov  or  coliver@  fcc.  gov.
 V.  ORDERING  CLAUSES
 256.  Accordingly,  IT  IS  ORDERED,  pursuant  to  sections  1,  2,  4(  i),  7,  10,  201,  214,  301,  302,  303,  307,  308,  309,  310,  319,  324,  332,  333  and  706  of  the  Communications  Act  of  1934,  47  U.  S.  C.  
 151,  152,  154(  i),  157,  160,  201,  214,  301,  302,  303,  307,  308,  309,  310,  319,  324,  332,  333,  and  706,  that  this  Notice  of  Proposed  Rulemaking  and  Memorandum  Opinion  and  Order  is  hereby  ADOPTED.
 257.  IT  IS  FURTHER  ORDERED  that  the  five-  year  build-  out  requirements  in  section  21.930  of  our  rules,  47  C.  F.  R.    21.930,  IS  SUSPENDED  until  further  notice.
 589  See  5  U.  S.  C.    603.
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 258.  IT  IS  FURTHER  ORDERED  the  build-  out  requirements  for  site-  based  ITFS  and  MDS  licensees  and  permittees  that  have  not  expired  as  of  the  release  date  of  this  Memorandum  Opinion  and
 Order  ARE  SUSPENDED  until  further  notice.
 259.  IT  IS  FURTHER  ORDERED  that  applications  for  new  MDS  or  ITFS  licenses,  major  modifications  of  MDS  stations,  or  major  changes  to  ITFS  stations  other  than  applications  for  license
 assignments  or  transfers  of  control  WILL  NOT  BE  ACCEPTED  until  further  notice.
 260.  With  regard  to  mutually  exclusive  ITFS  applications,  IT  IS  FURTHER  ORDERED  that  applications  for  acceptance  of  settlement  agreements  filed  after  the  release  date  of  this  Notice  of  Proposed
 Rulemaking  and  Memorandum  Opinion  and  Order  WILL  NOT  BE  ACCEPTED.
 261.  IT  IS  FURTHER  ORDERED  that  NOTICE  IS  HEREBY  GIVEN  of  the  proposed  regulatory  changes  described  in  this  NPRM  &  MO&  O,  and  that  comment  is  sought  on  these  proposals.
 262.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  NPRM  &  MO&  O,  including
 the  Initial  Regulatory  Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration.
 FEDERAL  COMMUNICATIONS  COMMISSION
 Marlene  H.  Dortch  Secretary
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 jurisdiction  is  one  with  a  population  of  fewer  than  50,000.  599  There  are  85,006  governmental  jurisdictions  in  the  nation.  600  This  number  includes  such  entities  as  states,  counties,  cities,  utility  districts
 and  school  districts.  There  are  no  figures  available  on  how  many  of  these  entities  have  populations  of  fewer  than  50,000.  However,  this  number  includes  38,978  counties,  cities  and  towns,  and  of  those,
 37,556,  or  96  percent,  have  populations  of  fewer  than  50,000.  601  The  Census  Bureau  estimates  that  this  ratio  is  approximately  accurate  for  all  government  entities.  Thus,  of  the  85,006  governmental  entities,  we
 estimate  that  96  percent,  or  about  81,600,  are  small  entities  that  may  be  affected  by  our  rules.
 6.  Nationwide,  there  are  4.44  million  small  business  firms,  according  to  SBA  reporting  data.  602  In  this  section,  we  further  describe  and  estimate  the  number  of  small  entity  licensees  and
 regulatees  that  may  be  affected  by  rules  adopted  pursuant  to  this  NPRM.  The  most  reliable  source  of  information  regarding  the  total  numbers  of  certain  common  carrier  and  related  providers  nationwide,  as
 well  as  the  number  of  commercial  wireless  entities,  appears  to  be  the  data  that  the  Commission  publishes  in  its  Trends  in  Telephone  Service  report.  603  The  SBA  has  developed  small  business  size  standards  for
 wireline  and  wireless  small  businesses  within  the  three  commercial  census  categories  of  Wired  Telecommunications  Carriers,  604  Paging,  605  and  Cellular  and  Other  Wireless  Telecommunications.  606
 Under  these  categories,  a  business  is  small  if  it  has  1,500  or  fewer  employees.  Below,  using  the  above  size  standards  and  others,  we  discuss  the  total  estimated  numbers  of  small  businesses  that  might  be
 affected  by  our  actions.
 7.  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  and  ITFS.  Multichannel  Multipoint  Distribution  Service  (MMDS)  systems,  often  referred  to  as  wireless  cable,
 transmit  video  programming  to  subscribers  using  the  microwave  frequencies  of  the  Multipoint  Distribution  Service  (MDS)  and  Instructional  Television  Fixed  Service  (ITFS).  607  In  connection  with  the
 1996  MDS  auction,  the  Commission  established  a  small  business  size  standard  as  an  entity  that  had  annual  average  gross  revenues  of  less  than  $40  million  in  the  previous  three  calendar  years.  608  The  MDS
 599  5  U.  S.  C.    601(  5).
 600  1992  Census  of  Governments,  U.  S.  Bureau  of  the  Census,  U.  S.  Department  of  Commerce.
 601  Id.
 602  See  1992  Economic  Census,  U.  S.  Bureau  of  the  Census,  Table  6  (special  tabulation  of  data  under  contract  to
 Office  of  Advocacy  of  the  U.  S.  Small  Business  Administration).
 603  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service,
 Table  5.3  (May  2002)  (Trends  in  Telephone  Service).
 604  13  C.  F.  R.    121.201,  North  American  Industry  Classification  System  (NAICS)  code  513310  (changed  to
 517110  in  October  2002).
 605  13  C.  F.  R.    121.201,  NAICS  code  513321  (changed  to  517211  in  October  2002).
 606  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002).
 607  Amendment  of  Parts  21  and  74  of  the  Commissions  Rules  with  Regard  to  Filing  Procedures  in  the  Multipoint
 Distribution  Service  and  in  the  Instructional  Television  Fixed  Service  and  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  MM  Docket  No.  94-  131  and  PP  Docket  No.  93-  253,  Report  and
 Order,  10  FCC  Rcd  9589,  9593    7  (1995)  (MDS  Auction  R&  O).
 608  47  C.  F.  R.    21.961(  b)(  1).
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 auctions  resulted  in  67  successful  bidders  obtaining  licensing  opportunities  for  493  Basic  Trading  Areas  (BTAs).  Of  the  67  auction  winners,  61  met  the  definition  of  a  small  business.  MDS  also  includes
 licensees  of  stations  authorized  prior  to  the  auction.  In  addition,  the  SBA  has  developed  a  small  business  size  standard  for  Cable  and  Other  Program  Distribution,  which  includes  all  such  companies  generating
 $12.5  million  or  less  in  annual  receipts.  609  According  to  Census  Bureau  data  for  1997,  there  were  a  total  of  1,311  firms  in  this  category,  total,  that  had  operated  for  the  entire  year.  610  Of  this  total,  1,180  firms  had
 annual  receipts  of  under  $10  million  and  an  additional  52  firms  had  receipts  of  $10  million  or  more  but  less  than  $25  million.  Consequently,  we  estimate  that  the  majority  of  providers  in  this  service  category
 are  small  businesses  that  may  be  affected  by  the  rules  and  policies  adopted  herein.  This  SBA  small  business  size  standard  also  appears  applicable  to  ITFS.  There  are  presently  2,032  ITFS  licensees.  All  but
 100  of  these  licenses  are  held  by  educational  institutions.  Educational  institutions  are  included  in  this  analysis  as  small  entities.  611  Thus,  we  tentatively  conclude  that  at  least  1,932  licensees  are  small
 businesses.
 8.  In  connection  with  the  1996  MDS  auction,  the  Commission  defined  small  business  as  an  entity  that,  together  with  its  affiliates,  has  average  gross  annual  revenues  that  are  not  more  than  $40
 million  for  the  preceding  three  calendar  years.  612  The  Commission  established  this  small  business  definition  in  the  context  of  this  particular  service  and  with  the  approval  of  SBA.  613  The  MDS  auction
 resulted  in  67  successful  bidders  obtaining  licensing  opportunities  for  493  Basic  Trading  Areas  (BTAs).  614  Of  the  67  auction  winners,  61  met  the  definition  of  a  small  business.  At  this  time,  we  estimate
 that  of  the  61  small  business  MDS  auction  winners,  48  remain  small  business  licensees.  In  addition  to  the  48  small  businesses  that  hold  BTA  authorizations,  there  are  approximately  392  incumbent  MDS  licensees
 that  are  considered  small  entities.  615  After  adding  the  number  of  small  business  auction  licensees  to  the  number  of  incumbent  licensees  not  already  counted,  we  find  that  there  are  currently  approximately  440
 MDS  licensees  that  are  defined  as  small  businesses  under  either  the  SBA  or  the  Commissions  rules.  Some  of  those  440  small  business  licensees  may  be  affected  by  the  proposals  in  this  NPRM  &  MO&  O.
 609  13  C.  F.  R.    121.201,  NAICS  code  513220  (changed  to  517510  in  October  2002).
 610  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  513220  (issued  October  2000).
 611  In  addition,  the  term  small  entity  within  SBREFA  applies  to  small  organizations  (nonprofits)  and  to  small
 governmental  jurisdictions  (cities,  counties,  towns,  townships,  villages,  school  districts,  and  special  districts  with  populations  of  less  than  50,000).  5  U.  S.  C.    601(  4)-(  6).  We  do  not  collect  annual  revenue  data  on  ITFS
 licensees.
 612  47  C.  F.  R.    21.961(  b)(  1).
 613  See  MDS  Auction  R&  O,  10  FCC  Rcd  9589.
 614  Basic  Trading  Areas  (BTAs)  were  designed  by  Rand  McNally  and  are  the  geographic  areas  by  which  MDS
 was  auctioned  and  authorized.  See  Id.  at  9608.
 615  47  U.  S.  C.    309(  j).  (Hundreds  of  stations  were  licensed  to  incumbent  MDS  licensees  prior  to  implementation
 of  Section  309(  j)  of  the  Communications  Act  of  1934,  47  U.  S.  C.    309(  j).  For  these  pre-  auction  licenses,  the  applicable  standard  is  SBA's  small  business  size  standard  for  "other  telecommunications"  (annual  receipts  of  $11
 million  or  less)).  See  13  C.  F.  R.  121.201,  NAICS  code  513220.
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 9.  MDS  is  also  heavily  encumbered  with  licensees  of  stations  authorized  prior  to  the  auction.  The  SBA  has  developed  a  definition  of  small  entities  for  pay  television  services  that  includes  all
 such  companies  generating  $11  million  or  less  in  annual  receipts.  616  This  definition  includes  multipoint  distribution  systems,  and  thus  applies  to  MDS  licensees  and  wireless  cable  operators  that  did  not
 participate  in  the  MDS  auction.  Information  available  to  us  indicates  that  there  are  [832]  of  these  licensees  and  operators  that  do  not  generate  revenue  in  excess  of  $11  million  annually.  Therefore,  for
 purposes  of  this  IRFA,  we  find  there  are  approximately  [892]  small  MDS  providers  as  defined  by  the  SBA  and  the  Commissions  auction  rules,  and  some  of  these  providers  may  take  advantage  of  our
 amended  rules  to  provide  two-  way  MDS.
 10.  There  are  presently  [2032]  ITFS  licensees.  All  but  [100]  of  these  licenses  are  held  by  educational  institutions  (these  [100]  fall  in  the  MDS  category,  above).  Educational  institutions  may  be
 included  in  the  definition  of  a  small  entity.  617  ITFS  is  a  non-  profit  non-  broadcast  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.  618  However,  we  do  not  collect,  nor  are  we  aware  of  other  collections  of,  annual  revenue  data  for  ITFS  licensees.  Thus,  we  find  that  up  to  [1932]  of  these  educational
 institutions  are  small  entities  that  may  take  advantage  of  our  amended  rules  to  provide  additional  flexibility  to  ITFS.
 Description  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance  Requirements.
 11.  As  noted  previously,  619  applicants  for  MDS  or  ITFS  licenses  would  be  required  to  apply  through  the  Universal  Licensing  System  using  FCC  Form  601,  620  and  other  appropriate  forms.  621
 Licensees  will  also  be  required  to  apply  for  an  individual  station  license  by  filing  FCC  Form  601  for  those  individual  stations  that  (1)  require  submission  of  an  Environmental  Assessment  of  the  facilities  under
 Section  1.1307  of  our  Rules;  622  (2)  require  international  coordination  of  the  application;  623  or  (3)  require  coordination  with  the  Frequency  Assignment  Subcommittee  (FAS)  of  the  Interdepartment  Radio
 Advisory  Committee  (IRAC).  While  these  requirements  are  new  with  respect  to  potential  licensees  in  the  ITFS  and  MDS  bands,  the  Commission  has  applied  these  requirements  to  licensees  in  other  bands.
 Moreover,  the  Commission  is  also  proposing  to  eliminate  many  burdensome  filing  requirements  that  have  previously  been  applied  to  MDS  and  ITFS.
 624  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and
 616  13  C.  F.  R.    121.201.
 617  See  5  U.  S.  C.    601  (3)-(  5).
 618  See  13  C.  F.  R.    121.210  (SIC  4833,  4841,  and  4899).
 619  See  para  159  supra.
 620  47  C.  F.  R.    1.913(  a)(  1).
 621  47  C.  F.  R.    1.2107.
 622  47  C.  F.  R.    1.1307.
 623  See  e.  g.,  47  C.  F.  R.    1.928  (regarding  frequency  coordination  arrangements  between  the  U.  S.  and  Canada).
 624  See  paras.  161-  170  and  173-  182,  supra.
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 Significant  Alternatives  Considered.
 12.  The  RFA  requires  an  agency  to  describe  any  significant  alternatives  that  it  has  considered  in  reaching  its  proposed  approach,  which  may  include  the  following  four  alternatives:  (  1)  the
 establishment  of  differing  compliance  or  reporting  requirements  or  timetables  that  take  into  account  the  resources  available  to  small  entities;  (2)  the  clarification,  consolidation,  or  simplification  of  compliance  or
 reporting  requirements  under  the  rule  for  such  small  entities;  (3)  the  use  of  performance,  rather  than  design  standards;  and  (4)  an  exemption  from  coverage  of  the  rule,  or  any  part  thereof,  for  small
 entities.  625
 13.  In  this  NPRM  &  MO&  O,  we  seek  comment  on  a  number  of  proposals  and  alternatives  regarding  the  use  of  the  2500-  2690  MHz  band.  This  NPRM  &  MO&  O  seeks  to  adopt  rules  that  will
 reduce  regulatory  burdens,  promote  innovative  services  and  encourage  flexible  use  of  this  spectrum.  It  opens  up  economic  opportunities  to  a  variety  of  spectrum  users,  including  small  businesses.  We  consider
 various  proposals  and  alternatives  partly  because  we  seek  to  minimize,  to  the  extent  possible,  the  economic  impact  on  small  businesses.
 14.  We  have  reduced  the  burdens  wherever  possible.  To  minimize  any  further  negative  impact,  however,  we  propose  certain  exclusive  incentives  for  small  entities  that  will  redound  to  their
 benefit.  We  propose  the  use  of  bidding  credits  for  small  entities  that  participate  in  auctions  of  licenses  that  are  conducted  pursuant  to  the  rules  proposed  in  this  NPRM  &  MO&  O.  We  propose  to  define  a  small
 business  as  an  entity  with  average  annual  gross  revenues  for  the  preceding  three  years  not  exceeding  $40  million,  a  very  small  business  as  an  entity  with  average  gross  revenues  for  the  preceding  three  years  not
 exceeding  $15  million,  and  an  entrepreneur  as  an  entity  with  average  annual  gross  revenues  for  the  preceding  three  years  not  exceeding  $3  million.  626  We  propose  that  entities  qualifying  as  small  businesses
 will  receive  a  15%  bidding  credit,  that  entities  qualifying  as  very  small  businesses  will  receive  a  25%  bidding  credit,  and  that  entities  qualifying  as  entrepreneurs  will  receive  a  35%  bidding  credit.  Qualifying
 small  businesses,  very  small  businesses,  and  entrepreneurs  can  reduce  their  winning  bids  by  the  amount  of  their  bidding  credits.  We  believe  that  these  bidding  credits  will  help  small  entities  compete  in  our
 auctions  and  acquire  licenses.  We  seek  comment  on  our  proposed  small  business  definitions  and  bidding  credits,  including  information  on  factors  that  may  affect  the  capital  requirements  of  the  type  of  services  a
 licensee  may  seek  to  provide.
 15.  The  regulatory  burdens  contained  in  the  NPRM  &  MO&  O,  such  as  filing  applications  on  appropriate  forms,  are  necessary  in  order  to  ensure  that  the  public  receives  the  benefits  of  innovative  new
 services,  or  enhanced  existing  services,  in  a  prompt  and  efficient  manner.  We  will  continue  to  examine  alternatives  in  the  future  with  the  objectives  of  eliminating  unnecessary  regulations  and  minimizing  any
 significant  economic  impact  on  small  entities.  We  seek  comment  on  significant  alternatives  commenters  believe  we  should  adopt.
 Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rule
 16.  None.
 625  See  5  U.  S.  C.    603(  c).
 626  See  supra  para.  234.
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 APPENDIX  B
 PROPOSED  RULES
 1.  For  the  reasons  discussed  in  the  preamble,  the  Federal  Communications  Commission  proposes  to  amend  47  CFR  Parts  1,  21,  73,  74,  and  101  as  follows:
 2.  Part  1  of  Title  47  of  the  Code  of  Federal  Regulations  is  proposed  to  be  amended  as  follows:
 PART  1    PRACTICE  AND  PROCEDURE
 1.  The  authority  citation  for  Part  1  continues  to  read:
 Authority:  47  U.  S.  C.  151,  154(  i),  154(  j),  155,  225,  303,  309  and  325(  e).
 2.  Section  1.933(  c)  is  amended  to  add  subparagraphs  (8)  and  (9)  as  follows:
 *  *  *  *  *  (8)  Multipoint  Distribution  Service.
 (9)  Instructional  Television  Fixed  Service.
 3.  Section  1.1102  is  amended  by  amending  paragraph  20  to  read  as  follows:
 20.  Multipoint  Distribution  Service  (including  Multi-  channel  MDS)
 a.  New  Station  601  &  159  220.00  CJM  Federal  Communications  Commission,  Wireless  Bureau  Applications,
 P.  O.  Box  358155,  Pittsburgh,  PA  15251-  5155.
 b.  Major  Modification  of  License  601  &159  220.00CJM  Federal  Communications  Commission,
 Wireless  Bureau  Applications,  P.  O.  Box  358994,
 Pittsburgh,  PA  15251-  5155.  c.  Certification  of  Completion  of
 Construction  601  &  159  80.00  CJM  Federal  Communications  Commission,  Wireless  Bureau  Applications,
 P.  O.  Box  358155,  Pittsburgh,  PA  15251-  5155.
 d.  License  Renewal  601  &  159  220.00  CJM  Federal  Communications  Commission,  Wireless  Bureau  Applications,
 P.  O.  Box  358155,  Pittsburgh,  PA  15251-  5155.
 e.  Assignment  or  Transfer:
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 (b)  First  Station  on  Application  603  &  159  8  0.  00  C  CM
 Federal  Communications  Commission,  Wireless  Bureau  Applications,
 P.  O.  Box  358155,  Pittsburgh,  PA  15251-  5155.
 (ii)  Each  Additional  Station  ................  603  &  159  50.00  CAM  Federal  Communications  Commission,
 Wireless  Bureau  Applications,  P.  O.  Box  358155,
 Pittsburgh,  PA  15251-  5155.
 f.  Extension  of  Construction
 Authorization  ..........  601  &  159  185.00  CHM  Federal  Communications  Commission,  Wireless  Bureau  Applications,
 P.  O.  Box  358155,  Pittsburgh,  PA  15251-  5155.
 g.  Special  Temporary  Authority  or  Request
 for  Waiver  of  Prior  Construction
 Authorization  ..........  Corres  &  159  100.00  CEM  Federal  Communications  Commission,  Wireless  Bureau  Applications,
 P.  O.  Box  358155,  Pittsburgh,  PA  15251-  5155.
 (b)  *  *  *  *
 Under  the  authority  47  U.  S.  C.    154,  amend  47  C.  F.  R.  chapter  I  by  removing  Part  21.
 3.  Part  74  of  Title  47  of  the  Code  of  Federal  Regulations  is  proposed  to  be  amended  as  follows:
 PART  74    EXPERIMENTAL  RADIO,  AUXILIARY,  SPECIAL  BROADCASTING  AND  OTHER  PROGRAM  DISTRIBUTIONAL  SERVICES
 1.  The  authority  citation  for  Part  74  continues  to  read  as  follows:
 AUTHORITY:  47  U.  S.  C.  154,  303,  307,  336(  f),  336(  h)  and  554.
 (b)  Section  74.1  is  revised  to  read  as  follows:
 b)  Rules  in  Part  74  which  apply  exclusively  to  a  particular  service  are  contained  in  that  service  subpart,  as  follows:  Experimental  Broadcast  Stations,  Subpart  A;  Remote  Pickup  Broadcast  Stations,
 Subpart  D;  Aural  Broadcast  STL  and  Intercity  Relay  Stations,  Subpart  E;  TV  Auxiliary  Broadcast  Stations,  Subpart  F;  Low  Power  TV,  TV  Translator  and  TV  Booster  Stations,
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 Subpart  G;  Low  Power  Auxiliary  Stations,  Subpart  H;  FM  Broadcast  Translator  Stations  and  FM  Broadcast  Booster  Stations,  Subpart  L.
 3.  Subpart  I  is  reserved.  4.  Part  101  of  Title  47  of  the  Code  of  Federal  Regulations  is  proposed  to  be  amended  as
 follows:
 1.  The  authority  citation  for  Part  101  continues  to  read  as  follows:
 AUTHORITY:  47  U.  S.  C.  154  and  303,  unless  otherwise  noted.
 2.  Section  101.3  is  amended  to  add  the  following  definitions:
 *  *  *  *
 Instructional  Television  Fixed  Service.  A  fixed  or  mobile  service  intended  primarily  for  video,  data,  or  voice  transmissions  of  instructional,  cultural,  and  other  types  of  educational  material  to  one
 or  more  receiving  locations.
 (b)  *  *  *
 Multipoint  Distribution  Service.  A  domestic  public  radio  service  rendered  on  microwave  frequencies  from  one  or  more  stations  transmitting  to  multiple  receiving  facilities.
 (b)  Section  101.101  of  the  Commissions  Rules  is  amended  to  read  as  follows:
 Radio  service
 Frequency  band  Common  Private  Broadcast  Other  Notes  (MHz)  carrier  radio  auxiliary  (Parts  15,  22,  24
 (Part  101)  (Part  101)  (Part  74)  25,  74,  78,  and  100)
 *  *  *  *  2450-  2500  LTTS  OFS  TV  BAS  ISM  F/  M/  TF
 2500-  2650  ITFS  MDS  ITFS  MDS  2650-  2690  ITFS  MDS  OFS  MDS/  ITFS
 (b)  *  *  *  -------------------------------------------------------------------------------
 BAS:  Broadcast  Auxiliary  Service(  Part  74)  CARS:  Cable  Television  Relay  Service  (  Part  78)
 CC:  Common  Carrier  Fixed  Point-  to-  Point  Microwave  Service(  Part  101,  Subparts  C  &  I)
 DBS:  Direct  Broadcast  Satellite(  Part  100)  DEMS:  Digital  Electronic  Message  Service(  Part  101,  Subpart  G)
 ISM:  Industrial,  Scientific  &  Medical(  Part  18)  ITFS:  Instructional  Television  Fixed  Service(  Part  101,  Subpart  P)
 LTTS:  Local  Television  Transmission  Service(  Part  101,  Subpart  J)
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 MAS:  Multiple  Address  System(  Part  101)  MDS:  Multipoint  Distribution  Service(  Part  101,  Subpart  Q)
 OFS:  Private  Operational  Fixed  Point-  to-  Point  Microwave  Service(  Part  101,  Subparts  C  &  H)
 PCS:  Personal  Communications  Service(  Part  24)  PET:  Emerging  Technologies  (per  ET  Dkt.  No.  92-  9,  not  yet  assigned)
 PRS:  Paging  and  Radiotelephone  Service  (Part  22,  Subpart  E)
 SAT:  Fixed  Satellite  Service(  Part  25)
 4.  Part  101  is  amended  to  add  a  new  Subpart  P,  as  follows:
 Subpart  P:  Instructional  Television  Fixed  Service
 101.1401  Purpose  and  Permissible  Service:
 (a)(  1)  Instructional  television  fixed  stations  are  intended  primarily  through  video,  data,  or  voice  transmissions  to  further  the  educational  mission  of  accredited  public  and  private  schools,  colleges
 and  universities  providing  a  formal  educational  and  cultural  development  to  enrolled  students.  Authorized  instructional  television  fixed  station  channels  must  be  used  to  further  the  educational  mission  of
 accredited  schools  offering  formal  educational  courses  to  enrolled  students.  (2)  In  furtherance  of  the  educational  mission  of  accredited  schools,  instructional  television
 fixed  station  channels  may  be  used  for:  (b)  In-  service  training  and  instruction  in  special  skills  and  safety  programs,  extension  of
 professional  training,  informing  persons  and  groups  engaged  in  professional  and  technical  activities  of  current  developments  in  their  particular  fields,  and  other  similar  endeavors.
 (ii)  Transmission  of  material  directly  related  to  the  administrative  activities  of  the  licensee,  such  as  the  holding  of  conferences  with  personnel,  distribution  of  reports  and  assignments,  exchange  of
 data  and  statistics,  and  other  similar  uses.  (iii)  Response  channels  transmitting  information  associated  with  formal  educational  courses
 offered  to  enrolled  students,  including  uses  described  in  paragraphs  (a)(  2)(  i)  and  (ii)  of  this  section,  from  ITFS  response  stations  to  response  station  hubs
 (b)  Stations  may  be  licensed  in  this  service  as  originating  or  relay  stations  to  interconnect  instructional  television  fixed  stations  in  adjacent  areas,  to  deliver  instructional  and  cultural  material  to,
 and  obtain  such  material  from,  commercial  and  noncommercial  educational  television  broadcast  stations  for  use  on  the  instructional  television  fixed  system,  and  to  deliver  instructional  and  cultural  material  to,
 and  obtain  such  material  from,  nearby  terminals  or  connection  points  of  closed  circuit  educational  television  systems  employing  wired  distribution  systems  or  radio  facilities  authorized  under  other  parts  of
 this  Chapter,  or  to  deliver  instructional  and  cultural  material  to  any  CATV  system  serving  a  receiving  site  or  sites  which  would  be  eligible  for  direct  reception  of  ITFS  signals  under  the  provisions  of  paragraph  (a)
 of  this  section.  (3)  When  an  ITFS  licensee  makes  capacity  available  on  a  common  carrier  basis,  it  will  be
 subject  to  common  carrier  regulation.  (1)  A  licensee  operating  as  a  common  carrier  is  required  to  comply  with  all  policies  and  rules
 applicable  to  that  service.  Responsibility  for  making  the  initial  determination  of  whether  a  particular  activity  is  common  carriage  rests  with  the  ITFS  licensee.
 (2)  An  ITFS  licensee  also  may  alternate,  without  further  authorization  required,  between  rendering  service  on  a  common  carrier  and  non-  common  carrier  basis,  provided  that  the  licensee  notifies
 the  Commission  of  any  service  status  changes  at  least  30  days  in  advance  of  such  changes.  The  notification  shall  state  whether  there  is  any  affiliation  or  relationship  to  any  intended  or  likely  subscriber
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 or  program  originator.
 101.1402  BTA  license  authorization.
 (a)  Winning  bidders  must  file  an  application  (FCC  Form  601)  for  an  initial  authorization  in  each  market  and  frequency  block.
 (b)  Blanket  licenses  are  granted  for  each  market  and  frequency  block.  Blanket  licenses  cover  all  mobile  and  response  stations.  Blanket  licenses  also  cover  all  fixed  stations  anywhere  within  the
 authorized  service  area,  except  as  follows:  (1)  A  fixed  station  (other  than  a  response  station)  would  be  required  to  be  individually
 licensed  if:  (i)  International  agreements  require  coordination;
 (ii)  Submission  of  an  Environmental  Assessment  is  required  under    1.1307  of  this  chapter;  (iii)  The  station  would  affect  the  radio  quiet  zones  under    1.924  of  this  chapter.
 (2)  Any  antenna  structure  that  requires  notification  to  the  Federal  Aviation  Administration  (FAA)  must  be  registered  with  the  Commission  prior  to  construction  under    17.4  of  this  chapter.
 101.1403  Service  areas.
 Most  ITFS  service  areas  are  Basic  Trading  Areas  (BTAs).  BTAs  are  based  on  the  Rand  McNally  1992  Commercial  Atlas  &  Marketing  Guide,  123rd  Edition,  at  pages  38-  39.  The
 following  are  additional  ITFS  service  areas  in  places  where  Rand  McNally  has  not  defined  BTAs:  American  Samoa;  Guam;  Northern  Mariana  Islands;  Mayaguez/  Aguadilla-  Ponce,
 Puerto  Rico;  San  Juan,  Puerto  Rico;  and  the  United  States  Virgin  Islands.  The  Mayaguez/  Aguadilla-  Ponce,  PR,  service  area  consists  of  the  following  municipios:  Adjuntas,
 Aguada,  Aguadilla,  Anasco,  Arroyo,  Cabo  Rojo,  Coamo,  Guanica,  Guayama,  Guayanilla,  Hormigueros,  Isabela,  Jayuya,  Juana  Diaz,  Lajas,  Las  Marias,  Maricao,  Maunabo,  Mayaguez,
 Moca,  Patillas,  Penuelas,  Ponce,  Quebradillas,  Rincn,  Sabana  Grande,  Salinas,  San  German,  Santa  Isabel,  Villalba  and  Yauco.  The  San  Juan  service  area  consists  of  all  other  municipios  in
 Puerto  Rico.
 101.1404  Conversion  of  incumbent  ITFS  stations  to  geographic  area  licensing.
 (a)  Any  ITFS  station  licensed  by  the  Commission  prior  to  [date  to  be  decided]  as  well  as  assignments  and  transfers  approved  by  the  Commission  and  consummated  as  of  [date  to  be  decided]  shall
 be  considered  incumbent  and  grandfathered  (may  continue  to  operate  under  their  licensed  parameters).  (b)  As  of  [date  to  be  decided],  all  incumbent  ITFS  licenses  shall  be  converted  to  a  blanket
 license.  Pursuant  to  that  geographic  area  license,  such  incumbent  licensees  may  modify  their  systems  provided  the  signal  level  [specific  level  to  be  decided]  does  not  increase  outside  their  pre-  existing
 protected  service  area.  The  blanket  license  covers  all  fixed  stations  anywhere  within  the  authorized  service  area,  except  as  follows:
 (1)  A  fixed  station  (other  than  a  response  station)  would  be  required  to  be  individually  licensed  if:
 (i)  International  agreements  require  coordination;  (ii)  Submission  of  an  Environmental  Assessment  is  required  under    1.1307  of  this  chapter;
 (iii)  The  station  would  affect  the  radio  quiet  zones  under    1.924  of  this  chapter.  (2)  Any  antenna  structure  that  requires  notification  to  the  Federal  Aviation  Administration
 (FAA)  must  be  registered  with  the  Commission  prior  to  construction  under    17.4  of  this  chapter.  Incumbent  operators  and  geographic  area  licensees  may  negotiate  alternative  criteria.
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 (c)  The  frequencies  associated  with  incumbent  authorizations  that  have  been  cancelled  automatically  or  otherwise  been  recovered  by  the  Commission  will  automatically  revert  to  the  applicable
 BTA  licensee.
 101.1405  Performance  Requirements
 (a)  Incumbent  site-  based  licensees  are  subject  to  the  construction  requirements  set  forth  in    101.63.
 (b))  All  ITFS  BTA  licensees  must  demonstrate  substantial  service  at  the  time  of  license  renewal.  A  licensees  substantial  service  showing  should  include,  but  not  be  limited  to,  the  following
 information  for  each  channel  for  which  it  holds  a  license,  in  each  BTA  or  portion  of  a  BTA  covered  by  their  license,  in  order  to  qualify  for  renewal  of  that  license.  The  information  provided  will  be  judged  by
 the  Commission  to  determine  whether  the  licensee  is  providing  service  which  rises  to  the  level  of  substantial.
 (1)  A  description  of  the  ITFS  licensees  current  service  in  terms  of  geographic  coverage;  (2)  Copies  of  all  orders  or  other  adjudications  that  the  licensee  has  violated  the
 Communications  Act  or  the  Commissions  Rules  or  policies;  (  3)  A  description  of  the  ITFS  band  licensees  current  service  in  terms  of  population  served,  as
 well  as  any  additional  service  provided  during  the  license  term;  (4)  A  description  of  the  ITFS  licensees  investments  in  its  system(  s)  (type  of  facilities
 constructed  and  their  operational  status  is  required);  (b)  Any  ITFS  licensees  adjudged  not  to  be  providing  substantial  service  will  not  have  their
 licenses  renewed.
 101.1406  Partitioning  and  Disaggregation
 a)  Eligibility.  (1)  Parties  seeking  approval  for  partitioning  and  disaggregation  shall  request  from  the
 Commission  an  authorization  for  partial  assignment  of  license.  Geographic  area  licensees  may  participate  in  aggregation,  disaggregation,  and  partitioning  within  the  bands  licensed  on  a  geographic  area  basis.
 (2)  Eligible  ITFS  licensees  may  apply  to  the  Commission  to  partition  their  licensed  geographic  service  areas  to  eligible  entities  and  are  free  to  determine  the  portion  of  their  service  areas  to  be
 partitioned.  Eligible  ITFS  licensees  may  aggregate  or  disaggregate  their  licensed  spectrum  at  any  time  following  the  grant  of  a  license.
 (b)  Technical  standards  (b)  There  is  no  limitation  on  the  amount  of  spectrum  that  an  ITFS  licensee  may  aggregate.
 (2)  Spectrum  may  be  disaggregated  in  any  amount.  A  licensee  need  not  retain  a  minimum  amount  of  spectrum.
 (3)  In  the  case  of  partitioning,  applicants  and  licensees  must  file  FCC  Form  603  pursuant  to    1.948  of  this  chapter  and  list  the  partitioned  service  area  on  a  schedule  to  the  application.  The  geographic
 coordinates  must  be  specified  in  degrees,  minutes,  and  seconds  to  the  nearest  second  of  latitude  and  longitude,  and  must  be  based  upon  the  1983  North  American  Datum  (NAD83).
 (4)  Combined  partitioning  and  disaggregation.  The  Commission  will  consider  requests  from  geographic  area  licensees  for  partial  assignment  of  licenses  that  propose  combinations  of  partitioning  and
 disaggregation.  (c)  Construction  requirements.
 (1)  Disaggregation.  Partial  assignors  and  assignees  for  license  disaggregation  have  two  options  to  meet  construction  requirements.  Under  the  first  option,  the  disaggregator  and  Disaggregate  would
 certify  that  they  each  will  share  responsibility  for  meeting  the  applicable  construction  requirements  set  forth  in    101.1406  for  the  geographic  service  area.  If  parties  choose  this  option  and  either  party  fails  to
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 demonstrate  substantial  service,  both  licenses  would  be  subject  to  forfeiture  at  renewal.  The  second  option  allows  the  parties  to  agree  that  either  the  disaggregator  or  isaggregate  would  be  responsible  for  meeting
 the  requirements  in    101.1405  for  the  geographic  service  area.  If  parties  choose  this  option,  and  the  party  responsible  for  meeting  the  construction  requirement  fails  to  do  so,  only  the  license  of  the  non-  performing
 party  would  be  subject  to  forfeiture  at  renewal.  (2)  Partitioning.  Partial  assignors  and  assignees  for  license  partitioning  have  two  options  to
 meet  construction  requirements.  Under  the  first  option,  the  partitionor  and  partitionee  would  each  certify  that  they  will  independently  provide  substantial  service  for  their  respective  partitioned  areas.  If  either
 licensee  fails  to  meet  its  requirement  in    101.1405,  only  the  non-  performing  licensees  renewal  application  would  be  subject  to  dismissal.  Under  the  second  option,  the  partitionor  certifies  that  it  has  met
 or  will  meet  the  requirement  in    101.1405  for  the  entire  market.  If  the  partitionor  fails  to  meet  the  requirement  in    101.1405,  however,  only  its  license  would  be  subject  to  forfeiture  at  renewal.
 (3)  All  applications  requesting  partial  assignments  of  license  for  partitioning  or  disaggregation  must  certify  in  the  appropriate  portion  of  the  application  which  construction  option  is  selected.
 (4)  Responsible  parties  must  submit  supporting  documents  as  required  by    101.1405.  (d)  License  term.  The  license  term  for  a  partitioned  license  area  and  for  disaggregated
 spectrum  shall  be  the  remainder  of  the  original  licensees  license  term.
 (b)  Remote  Control  Operation.
 Licensed  ITFS  stations  may  be  operated  by  remote  control  without  further  authority.
 101.1408  Unattended  Operation
 Unattended  operation  of  licensed  ITFS  stations  is  permitted  without  further  authority.  An  unattended  relay  station  may  be  employed  to  receive  and  retransmit  signals  of  another  station  provided
 that  the  transmitter  is  equipped  with  circuits  which  permit  it  to  radiate  only  when  the  signal  intended  to  be  retransmitted  is  present  at  the  receiver  input  terminals.
 101.1409  License  Term
 (a)  Incumbent  ITFS  licenses  shall  be  issued  for  a  period  of  10  years  beginning  with  the  date  of  grant.
 (b)  A  BTA  authorization  shall  be  issued  for  a  period  of  ten  years  from  the  date  the  Commission  declared  bidding  closed  in  the  ITFS  auction.
 (b)  Part  101  is  amended  to  add  a  new  Subpart  Q,  as  follows:
 Subpart  Q:  Multipoint  Distribution  Service:
 101.1501  Purpose  and  Permissible  Service:
 Multipoint  Distribution  Service  stations  may  provide  any  fixed  or  mobile  services  for  which  its  frequency  bands  are  allocated,  subject  to  the  technical  and  other  rules  contained  in  this  part  and
 subpart.
 101.1502  BTA  license  authorization.
 (a)  Winning  bidders  must  file  an  application  (FCC  Form  601)  for  an  initial  authorization  in
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 each  market  and  frequency  block.  (b)  Blanket  licenses  are  granted  for  each  market  and  frequency  block.  Blanket  licenses
 cover  all  mobile  and  response  stations.  Blanket  licenses  also  cover  all  fixed  stations  anywhere  within  the  authorized  service  area,  except  as  follows:
 (1)  A  fixed  station  (other  than  a  response  station)  would  be  required  to  be  individually  licensed  if:
 (i)  International  agreements  require  coordination;  (ii)  Submission  of  an  Environmental  Assessment  is  required  under    1.1307  of  this  chapter;
 (iii)  The  station  would  affect  the  radio  quiet  zones  under    1.924  of  this  chapter.  (2)  Any  antenna  structure  that  requires  notification  to  the  Federal  Aviation  Administration
 (FAA)  must  be  registered  with  the  Commission  prior  to  construction  under    17.4  of  this  chapter.
 101.1503  Service  areas.
 MDS  service  areas  are  Basic  Trading  Areas  (BTAs).  BTAs  are  based  on  the  Rand  McNally  1992  Commercial  Atlas  &  Marketing  Guide,  123  rd  Edition,  at  pages  38-  39,  with  the  following  additions
 licensed  separately  as  BTA-  like  areas:  American  Samoa;  Guam;  Northern  Mariana  Islands;  Mayaguez/  Aguadilla-  Ponce,  Puerto  Rico;  San  Juan,  Puerto  Rico;  and  the  United  States  Virgin  Islands.
 The  isaggre/  Aguadilla-  Ponce  BTA-  like  service  area  consists  of  the  following  municipios:  Adjuntas,  Aguada,  Aguadilla,  Anasco,  Arroyo,  Cabo  Rojo,  Coamo,  Guanica,  Guayama,  Guayanilla,  Hormigueros,
 Isabela,  Jayuya,  Juana  Diaz,  Lajas,  Las  Marias,  isaggre,  Maricao,  Maunabo,  Moca,  Patillas,  Penuelas,  Ponce,  Quebradillas,  isagg,  Sabana  Grande,  Salinas,  San  German,  Santa  Isabel,  Villalba  and  Yauco.
 The  San  Juan  BTA-  like  service  area  consists  of  all  other  municipios  in  Puerto  Rico.
 101.1504  Conversion  of  incumbent  MDS  stations  to  geographic  area  licensing.
 (a)  Any  MDS  station  licensed  by  the  Commission  prior  to  [date  to  be  decided]  as  well  as  assignments  and  transfers  approved  by  the  Commission  and  consummated  as  of  [date  to  be  decided]  shall
 be  considered  incumbent  and  grandfathered  (may  continue  to  operate  under  their  licensed  parameters).  (b)  As  of  [date  to  be  decided],  all  incumbent  MDS  licenses  shall  be  converted  to  a  blanket
 license.  Pursuant  to  that  geographic  area  license,  such  incumbent  licensees  may  modify  their  systems  provided  the  signal  level  [specific  level  to  be  decided]  does  not  increase  outside  their  pre-  existing
 protected  service  area.  The  blanket  license  covers  all  fixed  stations  anywhere  within  the  authorized  service  area,  except  as  follows:
 (1)  A  fixed  station  (other  than  a  response  station)  would  be  required  to  be  individually  licensed  if:
 (i)  International  agreements  require  coordination;  (ii)  Submission  of  an  Environmental  Assessment  is  required  under    1.1307  of  this  chapter;
 (iii)  The  station  would  affect  the  radio  quiet  zones  under    1.924  of  this  chapter.  (2)  Any  antenna  structure  that  requires  notification  to  the  Federal  Aviation  Administration
 (FAA)  must  be  registered  with  the  Commission  prior  to  construction  under    17.4  of  this  chapter.    The  frequencies  associated  with  incumbent  authorizations  that  have  been  cancelled
 automatically  or  otherwise  been  recovered  by  the  Commission  will  automatically  revert  to  the  applicable  BTA  licensee.
 101.1505  Performance  Requirements
 (a)  Incumbent  site-  based  licensees  are  subject  to  the  construction  requirements  set  forth  in    101.63.
 (b))  All  MDS  BTA  licensees  must  demonstrate  substantial  service  at  the  time  of  license
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 renewal.  A  licensees  substantial  service  showing  should  include,  but  not  be  limited  to,  the  following  information  for  each  channel  for  which  it  holds  a  license,  in  each  BTA  or  portion  of  a  BTA  covered  by
 their  license,  in  order  to  qualify  for  renewal  of  that  license.  The  information  provided  will  be  judged  by  the  Commission  to  determine  whether  the  licensee  is  providing  service  which  rises  to  the  level  of
 substantial.  (1)  A  description  of  the  MDS  licensees  current  service  in  terms  of  geographic  coverage;
 (2)  Copies  of  all  orders  or  other  adjudications  that  the  licensee  has  violated  the  Communications  Act  or  the  Commissions  Rules  or  policies;
 (  3)  A  description  of  the  MDS  licensees  current  service  in  terms  of  population  served,  as  well  as  any  additional  service  provided  during  the  license  term;
 (4)  A  description  of  the  MDS  licensees  investments  in  its  system(  s)  (type  of  facilities  constructed  and  their  operational  status  is  required);
 (b)  Any  MDS  licensees  adjudged  not  to  be  providing  substantial  service  will  not  have  their  licenses  renewed.
 101.1506  Partitioning  and  Disaggregation
 a)  Eligibility.  (1)  Parties  seeking  approval  for  partitioning  and  disaggregation  shall  request  from  the
 Commission  an  authorization  for  partial  assignment  of  license.  Geographic  area  licensees  may  participate  in  aggregation,  disaggregation,  and  partitioning  within  the  bands  licensed  on  a  geographic  area  basis.
 (2)  Eligible  MDS  licensees  may  apply  to  the  Commission  to  partition  their  licensed  geographic  service  areas  to  eligible  entities  and  are  free  to  determine  the  portion  of  their  service  areas  to
 be  partitioned.  Eligible  MDS  licensees  may  aggregate  or  disaggregate  their  licensed  spectrum  at  any  time  following  the  grant  of  a  license.
 (b)  Technical  standards  (b)  There  is  no  limitation  on  the  amount  of  spectrum  that  an  MDS  licensee  may  aggregate.
 (2)  Spectrum  may  be  disaggregated  in  any  amount.  A  licensee  need  not  retain  a  minimum  amount  of  spectrum.
 (3)  In  the  case  of  partitioning,  applicants  and  licensees  must  file  FCC  Form  603  pursuant  to    1.948  of  this  chapter  and  list  the  partitioned  service  area  on  a  schedule  to  the  application.  The  geographic
 coordinates  must  be  specified  in  degrees,  minutes,  and  seconds  to  the  nearest  second  of  latitude  and  longitude,  and  must  be  based  upon  the  1983  North  American  Datum  (NAD83).
 (4)  Combined  partitioning  and  disaggregation.  The  Commission  will  consider  requests  from  geographic  area  licensees  for  partial  assignment  of  licenses  that  propose  combinations  of  partitioning  and
 disaggregation.    Construction  requirements.
 (1)  Disaggregation.  Partial  assignors  and  assignees  for  license  disaggregation  have  two  options  to  meet  construction  requirements.  Under  the  first  option,  the  disaggregator  and  isaggregate  would
 certify  that  they  each  will  share  responsibility  for  meeting  the  applicable  construction  requirements  set  forth  in    101.1505  for  the  geographic  service  area.  If  parties  choose  this  option  and  either  party  fails  to
 demonstrate  substantial  service,  both  licenses  would  be  subject  to  forfeiture  at  renewal.  The  second  option  allows  the  parties  to  agree  that  either  the  disaggregator  or  isaggregate  would  be  responsible  for  meeting
 the  requirements  in    101.1505  for  the  geographic  service  area.  If  parties  choose  this  option,  and  the  party  responsible  for  meeting  the  construction  requirement  fails  to  do  so,  only  the  license  of  the  non-  performing
 party  would  be  subject  to  forfeiture  at  renewal.  (2)  Partitioning.  Partial  assignors  and  assignees  for  license  partitioning  have  two  options  to
 meet  construction  requirements.  Under  the  first  option,  the  partitionor  and  partitionee  would  each  certify  that  they  will  independently  provide  substantial  service  for  their  respective  partitioned  areas.  If  either
 licensee  fails  to  meet  its  requirement  in    101.1505,  only  the  non-  performing  licensees  renewal
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 application  would  be  subject  to  dismissal.  Under  the  second  option,  the  partitionor  certifies  that  it  has  met  or  will  meet  the  requirement  in    101.1505  for  the  entire  market.  If  the  partitionor  fails  to  meet  the
 requirement  in    101.1505,  however,  only  its  license  would  be  subject  to  forfeiture  at  renewal.  (3)  All  applications  requesting  partial  assignments  of  license  for  partitioning  or  disaggregation
 must  certify  in  the  appropriate  portion  of  the  application  which  construction  option  is  selected.  (4)  Responsible  parties  must  submit  supporting  documents  as  required  by    101.1405.
 (d)  License  term.  The  license  term  for  a  partitioned  license  area  and  for  disaggregated  spectrum  shall  be  the  remainder  of  the  original  licensees  license  term.
 (b)  Remote  Control  Operation.
 MDS  stations  may  be  operated  by  remote  control  without  further  authority.
 101.1508  Unattended  Operation
 Unattended  operation  of  licensed  MDS  stations  is  permitted  without  further  authority.  An  unattended  relay  station  may  be  employed  to  receive  and  retransmit  signals  of  another  station  provided
 that  the  transmitter  is  equipped  with  circuits  which  permit  it  to  radiate  only  when  the  signal  intended  to  be  retransmitted  is  present  at  the  receiver  input  terminals.
 101.1509  License  Term
 (a)  Incumbent  MDS  licenses  shall  be  issued  for  a  period  of  10  years  beginning  with  the  date  of  grant.
 (b)  A  BTA  authorization  shall  be  issued  for  a  period  of  ten  years  from  the  date  the  Commission  declared  bidding  closed  in  the  MDS  auction.
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 APPENDIX  C
 THE  COALITION  PLAN
 1.  The  Coalition  proposes  to  split  the  2500-  2690  MHz  band  into  three  segments,  with  the  middle  segment  being  reserved  for  high-  powered  MDS  and  ITFS  stations  and  the  two  segments  above  and
 below  it  reserved  for  low-  powered  operations.  Transition  to  the  new  band  plan  would  proceed  on  a  market-  by-market  basis  at  the  instigation  of  parties  (  Proponents)  offering  to  pay  the  conversion  costs  of  all  affected
 ITFS  operators.  No  deadlines  would  apply  unless  and  until  a  Proponent  offered  to  fund  a  markets  transition.  Instead,  the  Coalition  provides  a  detailed  description  of  nine  safe  proposals;  if  a  Proponent  offers  any  of  the
 nine  compensation  schemes,  the  incumbent  would  be  required  to  accept  it.  The  Coalition  proposes  that  every  MDS  and  ITFS  licensee  be  assigned  a  geographic  service  area.  Existing  circular  protected  service  areas  would
 be  converted  to  geographic  service  areas  with  signal  strength  limits  applied  at  their  boundaries.
 Coalition  Band  Plan
 2.  ITFS  and  all  but  two  of  the  MDS  channels  are  located  in  the  2500    2690  MHz  band.  The  Coalition  has  requested  the  adoption  of  a  new  plan  for  this  band,  which  consists  of  multiple
 interleaved  6-  MHz  channels.  According  to  the  Coalition,  the  intermixing  of  the  two  types  of  system  designs  (high-  power/  high  site  and  low-  power  cellular  systems)  causes  interference  problems  because  the
 two  system  designs  are  fundamentally  incompatible.  627  To  eliminate  this  interference  problem,  the  Coalition  proposes  that  we  establish  a  new  band  plan  that  isolates  high-  power,  high-  site  systems  from
 two-  way  cellular  systems  by  separating  the  two  different  uses  into  different  segments  within  the  band.  628  The  Coalition  notes  that  the  plan  allows  entities  to  obtain  contiguous  spectrum  and  best  provides  for  two
 promising  technologies    Frequency  Division  Duplex  (FDD)  and  Time  Division  Duplex  (TDD)  technologies.
 3.  The  Coalition  proposes  to  divide  the  band  into  three  major  band  segments  consisting  of  the  Lower  Band  Segment  (LBS),  the  Middle  Band  Segment  (MBS)  and  the  Upper  Band  Segment  (UBS)
 and  three  minor  segments  consisting  of  the  I,  J  and  K  bands.  The  LBS  would  have  twelve  5.5-  megahertz  wide  channels  extending  from  2500    2566  MHz,  the  MBS  would  have  seven  6-  megahertz  wide  channels
 extending  from  2572    2614  MHz  629  and  the  UBS  would  have  twelve  5.5-  megahertz  wide  channels  extending  from  2620    2686  MHz.  The  Coalition  proposes  to  permit  low-  power  operations  in  the  LBS
 627  Coalition  Proposal  at  14.  The  Coalition  states  that  high-  power,  high-  site  one-  way  operations  tend  to
 cause  two  types  of  problems.  First,  high-  power,  high-  site  one-  way  operations  tend  to  cause  interference  to  co-channel  cellular  system  base  stations  that  are  located  quite  far  away.  This  is  because  those  base  stations  feature
 relatively  sensitive  reception  antennas  (to  hear  signals  from  low-  power  subscriber  equipment)  and  those  base  station  antennas  generally  are  located  above  the  ground  clutter  (and  thus  more  likely  to  have  an  uninterrupted
 transmission  path  from  the  co-  channel  high-  power,  high-  site  station  in  a  neighboring  market).  Thus,  these  base  stations  are  by  their  nature  sensitive  to  co-  channel  interference.  Second,  transmissions  from  portable,  nomadic
 and  mobile  subscriber  equipment  in  cellular  networks  pose  the  potential  to  cause  brute  force  overload  of  close-  by  equipment  used  to  receive  high-  power,  high-  site  services.  See  Coalition  Proposal  at  10.
 628  While  comments  filed  in  response  to  our  public  notice  support  the  Coalition  plan,  including  transition,
 in  general,  several  commenters  disagreed  with  parts  of  the  Coalition  plan.  See  e.  g.,  MMDS  Licensee  Coalition  comments  and  Alliance  of  Independent  Wireless  Video  Operators  comments.
 629  The  Coalition  states  that  it  considered  the  possibility  of  reducing  the  size  of  the  MBS  allocation  on  a
 market-  by-  market  basis.  It  concluded,  however,  that  the  benefits  of  a  fixed  42  megahertz  wide  MBS  far  outweigh  any  possible  benefits  from  a  market-  by-  market  approach.  See  Coalition  Proposal  at  17.
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 and  UBS  segments  while  permitting  high-  power  video  operations  in  the  MBS.  630  However,  low-  power  systems  could  use  the  MBS  segment  if  the  demand  were  to  arise.  631  In  addition,  to  protect  MBS  high-power
 operations,  the  Coalition  proposes  special  restrictions  on  the  operation  of  channels  closest  to  the  MBS.  The  Coalition  seeks  to  provide  each  licensee  with  the  same  quantity  of  spectrum  it  has  now  but  to
 distribute  it  differently.  632  The  Coalition  states  that  a  licensee  that  presently  has  four  interleaved  6  MHz  channels  and  four  interleaved  125  kHz  channels  will  have  16.5  MHz  of  contiguous  spectrum  in  either  the
 LBS  or  UBS,  6  MHz  of  spectrum  in  the  MBS,  500  kHz  of  contiguous  spectrum  in  the  I  Band  and  1.5  MHz  of  contiguous  spectrum  in  a  transition  band  633  after  the  transition.  634  We  invite  comments  on  all
 aspects  of  the  proposed  Coalition  band  plan  and  transition  process.
 The  I  band  under  the  Coalition  proposal  would  have  thirty-  two  125  KHz-  wide  channels  extending  from  2686-  2690  (response  channels).  The  J  band  would  have  four  1.5  MHz-  wide  channels  extending  from
 2566-  2572  MHz.  The  J  band  is  located  between  the  LBS  and  the  MBS.  The  K  band  would  have  four  1.5  MHz-  wide  channels  extending  from  2614-  2620  MHz.  Both  the  J  and  K  bands  will  serve  as  transition
 bands.  The  K  band  is  located  between  the  MBS  and  the  UBS.  635  In  addition  to  reducing  interference,  the  Coalition  argues  that  a  fixed  band  for  high-  powered  operations  (i.  e.,  the  MBS)  translates  directly  into
 less  complex,  less  expensive  cellular  system  equipment,  particularly  customer  equipment  and  promotes  roaming.  636
 Coalition  Band  Plan  Chart
 Lower  Band  (LBS)  Band  Middle  Band  (MBS)  Band  Upper  Band  (UBS)  Band
 500  566  572  614  2620  686  690
 630  Coalition  Proposal  at  12.
 631  It  could  be  used  for  downstream  transmissions  in  a  FDD  system  so  long  as  the  licensee  meets  the
 MBS  technical  and  operational  rules.  Also,  with  the  consent  of  impacted  licensees,  it  could  be  used  for  upstream  communications.  See  Coalition  Proposal  at  17  and  Appendix  B  at  3.
 632  Coalition  Proposal,  Appendix  B  at  2.
 633  Under  the  Coalition  plan,  each  licensee  contributes  spectrum  to  the  Transition  Bands  (500  kHz  for
 every  channel  in  the  LBS  or  UBS).  See  Coalition  Proposal  at  16,  n43.  Also,  the  Coalition  notes  that  it  has  not  agreed  as  of  yet  on  a  system  of  licensing  and  technical  rules  for  the  Transition  Bands.  See  Coalition  Proposal  at
 19,  n.  47.
 634  Coalition  Proposal  at  12.
 635  The  Coalition  asserts  that  a  6  megahertz  separation  is  required  between  MBS  operations  and  two-  way
 services  operating  in  close  proximity  to  an  MBS  receive  site  in  order  to  protect  reception  of  MBS  video  signals  from  beat  interference.  See  Coalition  Proposal  at  14,  n.  35.  It  also  argues  that  operations  in  these  two  bands  be
 secondary  to  operations  in  the  LBS,  MBS  and  UBS  bands  unless  otherwise  agreed  upon.  See  Coalition  Proposal  at  22.  We  note  that  the  3G  Final  Report  noted  only  that  a  guardband  of  at  least  two  megahertz  was  needed  to
 protect  incumbent  high-  powered  systems  from  adjacent  channel  interference.  See  3G  Final  Report  at  47-  52.
 636  Coalition  Proposal  at  17-  18.
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 it,  should  be  allowed  to  opt  out  of  the  transition  process.  643  For  other  stations,  the  Coalition  says  that  many  of  the  recoverable  costs  involved  will  be  unknown  to  the  Proponent  at  the  time  it  issues  a  transition
 notice  and  that  one  of  the  purposes  of  the  transition  planning  period  should  be  to  provide  the  Proponent  an  opportunity  to  identify  all  of  the  recoverable  costs  it  will  be  responsible  for  should  the  transition  occur.
 The  Coalition  says  we  should  allow  the  Proponent  at  any  time  during  the  transition  planning  period  to  decide  not  to  proceed  with  the  transition  due  to  transition  cost  considerations,  and  that  the  Proponent
 should  be  allowed  to  make  that  decision  in  its  sole  discretion.  They  further  argue  that  the  Proponent  should  be  allowed  to  terminate  the  process  in  whole  or  in  part  with  respect  to  any  licensee  that  it
 voluntarily  brought  into  the  process  and  any  other  licensee  that  is  required  to  be  a  participant  solely  because  of  a  GSA  overlap  with  the  licensee  voluntarily  brought  in  by  the  Proponent.  644
 9.  The  Coalition  notes  that  a  Proponent  will  not  be  able  to  determine  the  TIAs  of  ITFS  stations  based  on  Commission  records  because  the  Commission  does  not  maintain  ITFS  reception  site
 records  of  the  sort  necessary  to  determine  eligibility  for  replacement  downconvertes.  They  say  that  a  Proponent  will  only  be  able  to  determine  fully  the  TIA  of  an  ITFS  licensee  by  securing  the  necessary
 information  from  individual  ITFS  licensees.  Therefore,  they  say,  prior  to  the  commencement  of  any  transition  process  any  potential  Proponent  should  be  permitted  to  serve  upon  any  ITFS  licensee  at  its
 address  of  record  in  the  Commissions  licensing  database  a  pre-  transition  data  request  to  elicit  this  information.  They  say  we  should  require  that  such  requests  include  the  Proponents  full  name,  postal
 mailing  address,  contact  person,  email  address,  phone  and  fax  number,  and  that  the  recipient  of  the  request  provide  the  potential  Proponent  with  a  listing  that  identifies  the  location  (by  street  address  and,  if
 known,  geographic  coordinates)  of  every  constructed  ITFS  reception  site  that,  as  of  the  date  of  receipt  of  the  request,  would  be  entitled  to  a  replacement  downconverter  upon  transition.  In  addition,  they  say,  the
 listing  should  indicate  whether  the  downconverter  is  mounted  on  a  structure  attached  to  the  building  or  on  a  free-  standing  structure,  and  the  approximate  height  above  ground  level  of  the  downconverter.  They  say
 that,  if  known,  the  response  should  also  specify  the  adjacent  channel  D/  U  ratio  that  can  be  tolerated  by  any  receiver(  s)  at  the  reception  site.  Finally,  they  say  we  should  require  that  the  response  identify  the
 number  of  ITFS  video  programming  or  data  transmission  tracks  the  ITFS  licensee  is  entitled  to  receive  in  the  high-  power  band  and  whether  the  ITFS  licensee  will  accept  fewer  tracks  in  the  high-  power  band.
 They  say  that  the  response  should  be  considered  a  representation  not  only  to  the  potential  Proponent,  but  also  to  the  Commission,  and  should  be  sent  by  certified  mail  with  return  receipt  requested,  courier,
 overnight  delivery,  or  other  service  that  provides  evidence  of  receipt.  They  say  we  should  require  that  the  recipient  provide  the  requested  information  to  the  potential  Proponent  by  any  delivery  service  that
 provides  evidence  of  receipt  no  later  than  21  calendar  days  after  delivery  of  the  request.  645
 10.  The  Coalition  goes  on  to  recommend  that,  in  the  absence  of  a  timely  response,  we  should  require  the  potential  Proponent  to  make  at  least  two  attempts  to  contact  both  the  licensee  by  telephone
 during  normal  business  hours  to  ensure  receipt  of  the  request.  They  further  recommend  that,  if  the  potential  Proponent  makes  contact  with  the  licensee  and  the  licensee  requests  additional  time  to  respond,
 we  should  allow  the  licensee  an  additional  fifteen  calendar  days  to  respond.  In  the  absence  of  a  response,  they  say,  the  potential  Proponent  should  be  permitted  to  proceed  with  the  transition  without  having  to
 provide  for  the  migration  of  any  of  the  licensees  programming  tracks  to  the  high-  power  band,  without
 643  Coalition  Supplemental  Proposal,  filed  November  14,  2002,  at  4-  5;  Coalition  Proposal  at  Appendix  B,
 16-  18.
 644  Id.,  Appendix  B  at  14.
 645  Id.,  Appendix  B  at  14-  15.
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 additional  documented  costs  incurred  by  the  Proponent  that  were  (i)  over  and  above  what  the  Proponent  proposed  in  its  Transition  Plan,  and  (ii)  directly  related  to  implementing  the  counterproposal.  This
 approach,  they  say,  will  assure  that  licensees  do  not  create  a  dispute  merely  to  frustrate  a  transition  and/  or  force  the  payment  of  greenmail.  648
 Physically  Shifting  Educational  ITFS  Programming  Tracks  to  New  Channels  and  Outfitting  Eligible  ITFS  Reception  Sites  with
 Improved  Downconverters
 13.  The  Coalition  transition  plan  requires  MDS  licensees  to  pay  their  own  expenses  to  transition  to  its  proposed  band  plan.  However,  to  implement  the  objective  of  protecting  those  ITFS
 licensees  that  choose  to  continue  traditional  high-  power,  high-  site  downstream  video  and  data  distribution  systems  against  interference  from  LBS  and  UBS  cellularized  operations,  the  Coalition  recommends  that
 the  Proponent  be  required,  at  its  cost,  to  satisfy  two  fundamental  responsibilities:  (1)  installing  at  eligible  ITFS  receive  sites  improved  downconverters  designed  to  limit  the  reception  of  potentially-  interfering
 signals  from  outside  the  MBS;  and  (2)  physically  shifting  every  ITFS  video  programming  or  data  transmission  tracks  currently  being  transmitted  to  appropriate  transmission  facilities  operating  on  MBS
 channels.  The  intent  is  that  the  Proponent  will  bear  all  equipment,  installation  and  other  direct  costs  incurred  to  provide  for  the  continued  reception  of  the  ITFS  video  programming  and  data  transmission
 tracks  at  the  eligible  receive  sites.  649
 Terminating  Existing  Operations  in  Transitioned  Markets  That  Do  Not  Comport  with  the  New  Rules
 14.  Once  the  transition  process  is  complete,  licensees  in  the  market  will  hold  spectrum  called  for  under  the  plan  and  be  subject  to  the  new  rules.  650  The  Coalition  says  that,  in  the  process  of
 transitioning  the  nation  to  the  new  bandplan,  some  licensees  will  be  required  to  cease  their  current  service  offerings  before  they  are  in  a  position  to  launch  new  services  under  the  new  bandplan.  They  say  that  it
 may  be  necessary  for  licensees  in  one  market  to  cease  high-  power,  high-  site  operations  in  the  LBS  and  UBS  in  order  to  avoid  cochannel  interference  to  next  generation  operations  in  markets  quite  some
 distance  away.  The  Coalition  says  that  the  only  build-  out  requirement  under  such  circumstances  should  be  that  a  licensee  demonstrate  substantial  service  at  the  expiration  of  its  license.  Thus,  says  the  Coalition,
 licensees  who  have  yet  to  construct  facilities  should  not  have  their  authorizations  jeopardized  by  a  failure  to  construct  during  this  transitional  period  but  should  instead  be  judged  under  the  substantial  service
 standard  that  is  applied  to  other  services  regulated  by  the  Wireless  Telecommunications  Bureau.  If  the  Commission  chooses  to  apply  Section  27.66  or  some  similar  rule  regarding  the  discontinuance,  reduction
 or  impairment  of  existing  service,  says  the  Coalition,  the  Commission  should  clarify  the  application  of  that  rule  to  the  MDS/  ITFS  transition  process.  Specifically,  the  Coalition  proposes  that  the  Commission
 issue  a  blanket  waiver  of  that  rule  for  all  MDS  and  ITFS  licensees,  require  the  filing  of  a  notice  when  service  is  commenced  by  a  transitioned  licensee  operating  under  the  new  bandplan  and  thereafter  apply
 the  rule  to  that  licensee  in  accordance  with  its  terms.  In  this  manner,  they  say,  MDS  and  ITFS  licensees  will  be  able  to  smooth  the  transition  process  without  fear  that  licenses  will  be  jeopardized  as  stations
 cease  operations  to  facilitate  the  transition.  In  addition,  the  Coalition  says  we  should  clarify  that  when  a
 648  Id.,  Appendix  B  at  20-  21.
 649  Coalition  Proposal  Appendix  B  at  5-  11.  A  number  of  MDS  licenses  contend  that  all  MDS  and  ITFS
 licensees  shoulds  be  required  to  transition  at  their  own  expense.  See  MMDS  Licensee  Coalition  comments  at  3.
 650  See  Coalition  Proposal,  Appendix  B  for  a  more  detailed  description  of  the  transition  process.
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 licensed  MDS  or  ITFS  channel  is  used  as  a  guard  band  rather  than  for  transmissions,  no  filings  will  be  required  to  safeguard  the  license  for  the  channel  being  utilized  as  a  guard  band.  651
 Response  Channels
 15.  As  noted  above,  the  seven  125  kHz  response  channels  (part  of  the  R  channels  under  the  Coalition  band  plan)  associated  with  MDS  channels  E3,  E4,  F3,  F4,  H1,  H2,  and  H3  were  allocated  to  the
 Private  Operational  Fixed  Service  (POFS).  The  Coalition  proposes  to  return  these  channels  for  MDS  use.  652  There  are  no  POFS  licensees  currently  on  these  channels.  As  the  Coalition  notes,  the  R  channels
 taken  from  MDS  licensees  were  never  licensed  as  OFS  channels,  probably  because  they  are  too  narrow  to  be  usable  by  themselves.  The  Coalition  contends  that  returning  those  channels  to  their  original  licensees,
 i.  e.,  MDS  operators,  would  enable  them  to  accumulate  the  channels  with  other  R  channels,  increasing  the  probability  that  the  channels  would  be  used.  653  On  that  basis,  they  propose  to  reallocate  the  seven
 response  channels    2686.9375,  2687.9375,  2688.5625,  2688.6875,  2688.9375,  2689.5625  and  2689.6875    for  MDS  (broadband)  use.
 16.  The  Coalition  recommends  that  operation  on  the  response    channels  be  secondary  to  operation  on  the  LBS,  MBS,  and  UBS  channels.  In  other  words,  operation  on  the  response  channels
 would  not  be  allowed  to  cause  harmful  interference  to  operations  on  the  LBS,  MBS,  and  UBS  channels  and  would  be  required  to  accept  any  interference  caused  by  an  LBS,  MBS,  or  UBS  licensee  operating  in
 accordance  with  the  Commissions  Rules.  654
 Geographic  Area  Licensing
 17.  The  Coalition  argues  that  elimination  of  site-  by-  site  licensing  and  adoption  of  a  geographic  area-  licensing  concept  for  low-  power  operations  will  promote  deployment  of  advanced  low-power
 systems  because  a  site-  by-  site  licensing  system  is  cumbersome  and  the  transaction  costs  are  too  high  to  permit  competitive  businesses  to  flourish  using  next  generation  technology.  655  It  notes  that  high-powered,
 one-  way  operations  could  benefit  from  a  streamlined  site-  by-  site  licensing  approach.  656
 18.  MDS  auction  winners  already  hold  geographic  service  area  (  GSA)  authorizations.  The  Coalition  proposes  to  give  existing  site-  based  MDS  and  ITFS  licensees  a  geographic  service  area  or  GSA,
 based  on  the  current  rules.  657  Applicants  for  new  stations  on  ITFS  channels  must  provide  protection  to  incumbents  based  on  a  Protected  Service  Area  (PSA).  658  MDS  incumbents  that  obtained  their  licenses
 651  Coalition  Proposal,  Appendix  B  at  4  n.  9.
 652  Coalition  Proposal  at  12,  n.  30
 653  Id.
 654  Coalition  Proposal  at  31.
 655  See  Coalition  Proposal  at  19.
 656  Id.
 657  Coalition  Proposal  at  20.
 658  47  C.  F.  R.    74.903,  21.902(  d).  An  ITFS  licensees  protected  service  area  includes  the  area  within  a
 35-  mile  radius  of  its  transmitter  site  plus  any  reception  sites  beyond  that  radius  that  were  registered  with  the  Commission  on  September  17,  1998.  Beginning  on  September  15,  1995,  the  initial  service  boundaries  were
 (continued.)
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 prior  to  our  1996  MDS  BTA  auction  have  35-  mile  PSAs  around  their  main  stations.  659
 19.  The  Coalition  also  proposes  that  we  grandfather  certain  ITFS  receive  sites  located  outside  the  PSA.  660  Under  the  Coalitions  proposal,  ITFS  licensees  must  provide  technical  information  to  co-channel
 and  adjacent  channel  licensees  concerning  the  receive  sites  within  twenty-  one  days  of  a  request.  661
 20.  In  discussing  the  issue  of  a  protected  area  for  incumbents,  the  Coalition  points  out  that  the  rules  defining  a  protected  area  have  changed  over  the  years.  As  a  result,  the  protected  service  areas
 assigned  co-  channel  incumbent  MDS  and  ITFS  licensees  can  overlap.  662  The  Coalition  argues  that  since  none  of  the  licensees  with  service  areas  that  overlap  can  satisfy  the  interference  protection  criteria  in  the
 overlap  area,  no  one  can  operate  in  these  areas.  663  According  to  the  Coalition,  the  MDS/  ITFS  industry  has  informally  developed  a  method  for  handling  this  problem.  The  Coalition  notes  that  the  general
 method  for  dividing  the  overlap  area  is  to  draw  a  straight-  line  (chord)  beginning  and  ending  at  the  two  points  where  the  protected  service  areas  intersect.  664  This  approach  has  the  effect  of  drawing  a  boundary
 along  the  line  connecting  the  ends  of  the  football-  shaped  overlap  area,  with  the  licensees  on  either  side  agreeing  to  limit  the  interference  they  generate  outside  their  boundaries.  The  Coalition  proposes  that  we
 codify  this  approach.
 Treatment  of  Incumbent  Licensees
 21.  The  Coalition  would  have  the  transition  proceed  on  a  market-  by-  market  basis,  triggered  by  Proponent  offers  to  compensate  incumbents  for  changing  their  operations  from  high-  power  to  low-power.
 Rather  than  apply  a  deadline,  the  Coalition  describes  nine  safe  harbors    offers  that  incumbents  would  be  required  to  accept  if  Proponents  offer  them.
 22.  The  Coalition  says  that  implementing  market  transitions  should  be  a  relatively  simple  process  where  all  of  the  2.5  GHz  channels  are  collocated  and  operating  with  matched  technical
 parameters  and  all  of  the  ITFS  licensees  are  using  just  one  6  MHz  channel  for  the  transmission  of  (Continued  from  previous  page)
 frozen,  i.  e.,  the  circular  PSA  boundaries  were  not  to  be  changed  regardless  of  whether  or  not  the  licensee  subsequently  moved  its  transmitter.  Id.
 659  See  47  C.  F.  R.    21.902(  d),  21.933(  a).
 660  Coalition  Proposal  at  35.
 661  ITFS  licensees  must  identify  the  location  of  such  receive  sites,  the  antenna  make  and  model  and  the
 antenna  height  above  ground  and,  if  known,  the  adjacent  channel  D/  U  ratio  that  can  be  tolerated.  See  Coalition  Proposal  at  35-  36.
 662  Effective  September  15,  1995,  the  Commission  expanded  the  protected  service  areas  of  incumbent  site-based
 MDS  and  ITFS  licensees  from  fifteen  miles  to  thirty-  five  miles.  Amendment  of  Parts  21,  43,  74,  78,  and  94  of  the  Commissions  Rules  Governing  Use  of  the  Frequencies  in  the  2.1  and  2.5  GHz  Bands  Affecting:  Private
 Operational-  Fixed  Microwave  Service,  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  Instructional  Television  Fixed  Service,  &  Cable  Television  Relay  Service,  Second  Order  on
 Reconsideration,  10  FCC  Rcd  7074  (1995).  In  doing  so,  it  created  a  number  of  overlaps  between  licensees  whose  PSAs  had  not  overlapped  before  the  standard  PSA  radius  was  increased.
 663  Coalition  Proposal  at  20-  21  (e.  g.,  the  rule  changes  have  created  a  no  mans  land).
 664  See  Coalition  Proposal  Appendix  A  for  a  detailed  explanation.
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 one  or  more  of  its  channels  for  studio-  to-  transmitter  links.  In  such  a  case,  they  say,  we  should  consider  the  Transition  Plan  to  be  reasonable  if  it  provides  for  either  of  the  following:
 o  the  use  of  one  of  the  low-  power  band  segments  for  the  point-  to-  point  transmission  of  the  ITFS  video  or  data  (through  superchannelization  of  the  licensees  contiguous  low-  power
 channels),  provided  the  Proponent  commits  to  re-  tune  the  existing  point-  to-  point  equipment  to  operate  on  those  channels  or  to  replace  the  existing  equipment  with  new
 equipment  tuned  to  operate  on  those  channels  and  the  proposal  complies  with  the  low-power  technical  and  interference  protection  rules;
 o  the  migration  of  the  ITFS  programming  to  the  high-  power  band  by  re-  tuning  the  existing  point-  to-  point  equipment  to  operate  in  the  high-  power  band  or  replacing  it  with
 equipment  tuned  to  operate  in  the  high-  power  band;
 o  the  replacement  of  the  point-  to-  point  link  with  point-  to-  point  equipment  licensed  to  the  ITFS  licensee  in  alternative  spectrum,  so  long  as  the  replacement  facilities  meet  the
 definition  of  comparable  facilities  set  out  in  Section  101.75(  b)  of  the  Commissions  rules.  673
 673  Id.,  Appendix  B  at  26-  27.
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 APPENDIX  D
 LIST  OF  PLEADINGS
 The  following  documents  were  filed  in  response  to  the  Public  Notice:  Wireless  Telecommunications  Bureau  Seeks  Comment  on  Proposal  to  Revise  Multichannel  Multipoint  Distribution  Service  and  the
 Instructional  Television  Fixed  Service  Rules,  RM-  10586,  17  FCC  Rcd  20526  (WTB  2002).
 LIST  OF  PARTIES  RESPONDING  TO  THE  PUBLIC  NOTICE
 Comments
 Adams  Telecom,  Inc.  Archdiocese  of  Chicago
 Archdiocese  of  Detroit  Archdiocese  of  Hartford
 Archdiocese  of  Los  Angeles  Education  and  Welfare  Corporation  Atlanta  Educational  Services,  Inc.  and  Atlanta  Board  of  Education
 Bellsouth  Corporation  et  al.  Board  of  Trustees  of  the  Leland  Standard  Junior  University
 Burns,  Patrick  J.  Caritas  Telecomunications
 Catholic  Telemedia  Network  Central  Texas  Communications  Inc.
 Clarendon  Foundation  Clearwire  Equipment,  LLC
 ClearwireTechnologies,  Inc.  CNI  Wireless,  Inc.
 Comspec  Corporation  Counterpoint  Communications,  Inc.
 Crowell  &  Moring  Dallas  MDS  Partners
 Department  of  education  Archdiocese  of  New  York  Diocese  of  Dallas
 Diocese  of  Orange  F  Corporation
 Illinois  Institute  of  Technology  Independent  &  Wireless  Video  Operators
 IP  Wireless,  Inc.  IT&  E  Overseas,  Inc.
 ITFS  Parties  ITFS  Spectrum  Development  Alliance
 Kessler  and  Gehman  Associates  Leano  Rural  Telephone  Cooperative  Inc.
 Maui  Sky  Fiber,  LLC  Michael  Kelly  Revocable  Trust,  d/  a/  a  Shannondale  Wireless
 MMDS  License  Coalition  National  Telecommunications  Cooperative  Association
 Navini  Networks,  Inc.
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 Network  for  Instructional  TV,  Inc.  Nokia  Inc.
 Nucentrix  Broadband  Networks  Inc.  Qualcomm  Incorporated
 Rioplex  Wireless,  Ltd  Roman  Catholic  Diocese  of  Rockville  Centre
 Sprint  Corporation  The  Alliance  of  Independent  Wireless  Video  Operators
 Texas  State  Technical  College,  Harlingen  University  of  Colorada
 W.  A.  T.  C.  H.  TV  Company  Wireless  Communications  Association  (WCA),  National  Instructional  Television  Fixed  Service  (NIA)
 and  Catholic  Television  Network  (CTN)  WH-  TV,  Inc.  d/  b/  a  Digital  TV  One
 Winbeam,  Inc.  Worldcom,  Broadband  Solutions,  Inc.
 Reply  Comments  Intel  Corporation
 ITFS  Spectrum  Development  Alliance,  Inc.  Microsoft  Corporation
 Network  for  Instructional  TV,  Inc.  Nucentrix  Broadband  Networks,  Inc.
 NTELOS,  Inc.  Polar  Communications  Mutual  Aid  Corporation
 Sprint  Corporation
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