[Federal Register Volume 69, Number 237 (Friday, December 10, 2004)]
[Proposed Rules]
[Pages 72048-72052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26831]



Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / 
Proposed Rules

[[Page 72048]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 27

[WT Docket No. 03-66; RM-10586; FCC 04-135]


Facilitating the Provision of Fixed and Mobile Broadband Access, 
Educational and Other Advanced Services in the 2150-2162 and 2500-2690 
MHz Bands

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, a Further Notice of Proposed Rulemaking 
(FNPRM), the Federal Communications Commission (FCC) proposes rules 
concerning the Broadband Radio Service (BRS) and the Educational 
Broadband Service (EBS) in the 2496-2690 MHz band. The FNPRM further 
proposes rules to govern the transition of the 2500-2690 MHz band when 
the transition has not occurred according to the timeframes adopted by 
the FCC. The NPRM seeks comment on numerous issues concerning these 
proposals.

DATES: Comments are due on or before January 10, 2005. Reply comments 
are due February 8, 2005. Written comments on the Paperwork Reduction 
Act proposed information collection requirements must be submitted by 
the public, Office of Management and Budget (OMB), and other interested 
parties on or before February 8, 2005.

ADDRESSES: In addition to filing comments with the Secretary, a copy of 
any comments on the Paperwork Reduction Act information collection 
requirements contained herein should be submitted to Judith B. Herman, 
Federal Communications Commission, Room 1-C804, 445 12th Street, SW., 
Washington, DC 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#f7bd82939e839fdab5d9bf92859a9699b7919494d9909881"><span class="__cf_email__" data-cfemail="5b112e3f322f33761975133e29363a351b3d3838753c342d">[email protected]</span></a> 
and to Kristy L. LaLonde, OMB Desk Officer, Room 10234 NEOB, 725 17th 
Street, NW., Washington, DC 20503, or via the Internet to <a href="/cdn-cgi/l/email-protection#307b42594344496f7c1e7c517c5f5e5455705f5d521e555f401e575f46"><span class="__cf_email__" data-cfemail="8dc6ffe4fef9f4d2c1a3c1ecc1e2e3e9e8cde2e0efa3e8e2fda3eae2fb">[email protected]</span></a>, or via fax at 202-395-5167.

FOR FURTHER INFORMATION CONTACT: Genevieve Ross or Nancy Zaczek at 202-
418-2487. For additional information concerning the Paperwork Reduction 
Act information collection requirements contained in this document, 
contact Judith B. Herman at 202-418-0214, or via the Internet at 
<a href="/cdn-cgi/l/email-protection#e6ac93828f928ecba4c8ae83948b8788a6808585c8818990"><span class="__cf_email__" data-cfemail="69231c0d001d01442b47210c1b040807290f0a0a470e061f">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's FNPRM, 
released on July 29, 2004, FCC 04-135. The full text of the FNRM is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, Room CY-A257, 445 12th Street, SW., 
Washington, DC 20554. The complete text may also be purchased from the 
Commission's duplicating contractor, Best Copy and Printing, Inc., 
(BCPI), Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554, 202-488-5300. The complete item is also available on the 
Commission's Web site at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-135A1.doc. The proposed rule was published in the 
Federal Register on June 10, 2003 (68 FR 34560).

I. Summary of Further Notice of Proposed Rulemaking

    1. We seek comment on the following issues in the Further Notice of 
Proposed Rulemaking (FNPRM):
    <bullet> In markets where proponents file transition plans, we 
propose to assign licenses for unassigned spectrum. We seek comment on 
the timing of such auctions, the appropriate geographic area licensing 
definitions for new licenses, the proper grouping of frequency blocks 
for new licenses, and the appropriate bidding credits for such 
licenses.
    <bullet> We also seek comment on alternative methods to transition 
licensees to the extent that licensee-negotiated transitions do not 
occur within the three-year transition period. Specifically, we seek 
comment on utilizing a system whereby existing licenses would be 
exchanged for a modified license and a tradable instrument. Upon 
completion of such exchange, the entire band will be auctioned, and 
entities can utilize these tradable instruments in this or any other 
Commission auction. The tradable instruments would be divisible and 
transferable. Existing licensees would be able to continue operating 
until the new licensee certifies that it is ready to commence service. 
Those licensees who chose to opt-out would receive one six megahertz 
channel in the Middle Band Segment, and new licensees would be required 
to pay for the relocation of licensees that opt-out.
    <bullet> We seek comment on establishing performance requirements 
for BRS and EBS licensees. We tentatively conclude that any performance 
requirements should be based on a ``substantial service'' standard and 
seek comment on appropriate safe harbors that licensees could rely upon 
to demonstrate that they have provided substantial service.
    <bullet> We seek comment on modifying the respective rights of 
grandfathered EBS stations operating on the E and F channel groups and 
BRS stations operating on those channel groups.
    <bullet> We seek comment on eliminating, in markets that have not 
yet transitioned, the rule that limits EBS licensees to four channels, 
from in the same channel group, in a single area of operation. We 
conclude that the rule will not apply in markets that have 
transitioned.
    <bullet> We seek comment on eliminating, in markets that have not 
yet transitioned, the rule that allows wireless cable operators to be 
licensed on EBS channels under certain conditions. We conclude that the 
rule will not apply in markets that have transitioned. Existing 
licenses will be grandfathered.
    <bullet> We seek comment on revising the methodology used to 
calculate regulatory fees for BRS or EBS licensee.
    <bullet> We seek comment on issues relating to the definition of 
the Gulf of Mexico service area and service rules relating to that 
area.
    <bullet> We seek comment on ways to streamline our current 
procedures for reviewing transactions in order to facilitate more 
efficient transactions.
    <bullet> We also seek comment on future trends that licensees, 
equipment manufacturers, and other stakeholders expect for BRS and EBS.

Procedural Matters

Ex Parte Rules
    2. 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 
Commission's rules.

Comment Period and Procedures

    3. Pursuant to applicable procedures set forth in Sec. Sec.  1.415 
and 1.419 of the Commission's rules, interested parties may file 
comments on this Notice on or before January 10, 2005, and reply 
comments on or before February 8, 2005. Comments and reply comments 
should be filed in WT Docket No. 03-66, and may be filed using the 
Commission's Electronic Comment Filing System (ECFS) or by filing paper 
copies. All relevant and timely comments will be considered by the 
Commission before final action is taken in this proceeding.
    4. 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

[[Page 72049]]

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 <a href="/cdn-cgi/l/email-protection#1075737663507673733e777f66"><span class="__cf_email__" data-cfemail="7f1a1c190c3f191c1c51181009">[email protected]</span></a>, 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.
    5. 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 Commission's 
Secretary, Marlene H. Dortch, Office of the Secretary, Federal 
Communications Commission, 445 12th Street, SW., Room TW-A325, 
Washington, DC 20554. Furthermore, parties are requested to provide 
courtesy copies for the following Commission staff: (1) Nancy Zaczek, 
Genevieve Ross, and Stephen Zak, Broadband Division, Wireless 
Telecommunications Bureau, Federal Communications Commission, 445 12th 
Street, SW., Room 3-C124, Washington, DC 20554; and (2) William Huber 
and Erik Salovaara, Auctions and Spectrum Access Division, Wireless 
Telecommunications Bureau, Federal Communications Commission, 445 12th 
Street, SW., Room 4-A760, Washington, DC 20554. One copy of each filing 
(together with a diskette copy, as indicated below) should also be sent 
to the Commission's copy contractor, Best Copy and Printing, Inc, 445 
12th Street, SW., Room CY-B402, Washington, DC, 20554, 1-800-378-3160.
    6. 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 
should be submitted in ``read only'' mode. The diskette should be 
clearly labeled with the commenter's 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 party's pleadings, preferably in a single electronic 
file. In addition, commenters should send diskette copies to the 
Commission's copy contractor, Qualex International, 445 12th Street, 
SW., Room CY-B402, Washington, DC, 20554, 202-863-2893.
    7. The public may view the documents filed in this proceeding 
during regular business hours in the FCC Reference Information Center, 
Federal Communications Commission, 445 12th Street, SW., Room CY-A257, 
Washington, DC 20554, and on the Commission's Internet Home Page: 
http://www.fcc.gov. Copies of comments and reply comments are also 
available through the Commission's duplicating contractor: Best Copy 
and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC, 
20554, 1-800-378-3160. 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 
<a href="/cdn-cgi/l/email-protection#6f0d0206030306012f090c0c41080019"><span class="__cf_email__" data-cfemail="c5a7a8aca9a9acab85a3a6a6eba2aab3">[email protected]</span></a>.

Initial Paperwork Reduction Analysis

    8. This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Pub. L. 104-13. Public and agency comments are 
due on or before November 23, 2004. Comments should address: (a) 
Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information shall have practical utility; (b) the accuracy 
of the Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Pub. L. 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.''
    OMB Control No.: 3060-XXXX.
    Title: Transition of the 2500-2690 MHz band.
    Form No.: N/A.
    Type of Review: New Collection.
    Respondents: Business or other for-profit; State, and local 
government; Not-for-profit institutions; Individuals or household.
    Number of Respondents: 2500.
    Estimated Time Per Response: 1 to 25 hours.
    Frequency of Response: One time reporting requirements.
    Total Annual Burden: 32,000.
    Total Annual Cost: $7,000,000.
    Needs and Uses: The Commission adopted on June 10, 2004 and 
released on July 29, 2004, rules to transition licensees in the 2500-
2690 MHz band. Specifically, licensees in the Multichannel Multipoint 
Distribution Service (MMDS) (renamed the Broadband Radio Service (BRS)) 
and the Instructional Television Fixed Service (ITFS) (renamed the 
Educational Broadband Service (EBS)), must transition to a new band 
plan in the 2500-2690 MHz band. This transition is to take place by 
Major Economic Area (MEA). If a transition in a particular MEA is not 
initiated within three years of the effective date of the rules adopted 
by the Commission, the transition procedure adopted by the Commission 
will not apply and the licensees in that MEA will not be required to 
comply with any of the following paperwork requirements.
    9. If a transition is initiated in a given MEA within three years 
of the effective date of the rules adopted by the Commission, the 
following paperwork requirements apply. First, the proponent or joint 
proponents (hereinafter proponent) must send a notice to every BRS and 
EBS licensee in the MEA seeking information. Second, the BRS and EBS 
licensees must respond to this request by submitting a pre-transition 
data request to the proponent. Third, the proponent must send a 
transition notice to all BRS and EBS licensees in the MEA once the 
proponent has decided to transition a given MEA. Fourth, the proponent 
must provide a transition plan to every BRS and EBS licensee in the 
MEA. Fifth, the proponent must submit an Initiation Plan to the 
Commission once it has decided to transition a given MEA. Sixth, once 
the transition is completed the proponent and BRS and EBS licensees in 
the MEA must jointly file a post-transition notification with the 
Commission. The purpose of collecting this information is to enable a 
proponent to assess whether to transition a particular MEA, to provide 
BRS and EBS licensees with information on how they are to be 
transitioned, and to inform the Commission of the status of the 
transition. BRS and EBS licensees will provide the Commission with 
technical information in the post-transition notification on FCC Form 
601. The FCC Form 601 is a consolidated multi-part application or 
``long form'' for market-based licensing and site-by-site

[[Page 72050]]

licensing in the Universal Licensing System.

Initial Regulatory Flexibility Analysis

    10. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in this Further Notice of Proposed Rule 
Making (FNPRM). Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines specified in the FNPRM for comments. The Commission 
will send a copy of this FNPRM, including this IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration (SBA). In 
addition, the FNPRM and IRFA (or summaries thereof) will be published 
in the Federal Register.

Need for, and Objectives of, the Proposed Rules

    11. In this FNPRM we seek comments on solutions to implement in the 
event that the plan we adopt today for transitioning to the new band 
plan, set forth in section IV. A.5, supra does not reach a satisfactory 
stage of implementation within three years. A quick and efficient 
transition to a segmented, de-interleaved band plan is critical to 
ensuring that the public spectrum resource represented by the 2500-2690 
MHz band does not remain underutilized. We have adopted a new band plan 
to further the public interest in efficient and intensive use of 
spectrum. To prevent undue delay in implementing the new band plan, the 
transition process will sunset in each major economic area where a 
proponent does not timely file within three years of the rules' 
effective date a transition proposal that has resolved, pursuant to the 
Commission's rules, any properly presented objections. This three year 
time limit will provide an incentive for existing users to develop 
transition proposals in a timely manner. Finally, recognizing that 
parties may not be able to control the timing of all aspects of the 
transition, we require only that the proposal be finalized, with any 
objections addressed, and filed within the three-year period.
    12. Irrespective of how well the transition process to the new band 
plan is designed, it may not be possible for private parties to 
transition existing uses to the new band plan in a way that balances 
the public interest in protecting those uses with the public interest 
in the new band plan. There are large numbers of existing users in the 
band with varied and disparate interests. A proponent therefore must 
coordinate large numbers of substantially varying interests in order to 
transition to the new band plan. A proponent may not come forward in 
every major economic area and every proponent that comes forward may 
not be able to resolve all reasonable objections made to its proposal. 
Furthermore, the transition process may not perfectly define reasonable 
transition proposals or rapidly and accurately determine whether 
particular objections to particular transitions are reasonable. 
Consequently, transitions to the new band plan may not occur within one 
or more major economic area within the allotted time.
    13. Consequently, we tentatively conclude herein that in major 
economic areas that are not transitioned to the new band plan pursuant 
to the transition process we have adopted herein, the public interest 
in services made possible by the new band plan will be best served by 
clearing existing users from the spectrum. The transition process we 
have adopted represents the best effort at transitioning existing use 
to facilities compatible with the new band plan. While new transition 
plans, including in areas otherwise without one, might result from 
refinements to the transition process, we conclude that the absence of 
a timely filed Initiation Plan indicates that existing uses cannot be 
reasonably balanced with the new band plan in the relevant area. 
Consequently, the public will receive the benefits of the new band plan 
only if existing users are cleared from the spectrum and the Commission 
grants new licenses to use the spectrum consistent with the new band 
plan. Accordingly, we propose to implement this transition process in 
areas where the requirements we have instituted herein are not met 
within the required time frame.
    14. As stated in the text of the FNPRM, we request comment on a 
number of issues relating to competitive bidding procedures that could 
be used to assign new licenses in this band by auction. We propose to 
conduct any such auction in conformity with the general competitive 
bidding rules set forth in part 1, subpart Q, of the Commission's 
rules, and substantially consistent with many of the bidding procedures 
that have been employed in previous auctions. 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. Under this 
proposal, such rules would be subject to any modifications that the 
Commission may adopt in our part 1 proceeding. In addition, consistent 
with current practice, matters such as the appropriate competitive 
bidding design, as well as minimum opening bids and reserve prices, 
would be determined by the Wireless Telecommunications Bureau pursuant 
to its delegated authority. 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 new licenses in this band, and on whether 
alternative rules would more effectively serve our basic purposes.
    15. We seek comment on the appropriate definition(s) of small 
business that should be used to determine eligibility for bidding 
credits in the auction. With respect to the auction of EBS licenses, we 
further seek comment on any special challenges associated with 
governmental educational institutions or non-governmental non-profit 
educational institutions participating in auctions.
    16. 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. The 
standard schedule appears at section 1.2110(f)(2) of the Commission's 
rules. Are these levels of bidding credits appropriate for this band? 
For this proceeding, we would propose to 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.'' In the event that 
we offer bidding credits on this basis, 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).
    17. Finally, we invite comment on the effect of potentially having 
three small business sizes, and bidding credits, for new licenses in 
this band while having had only one small business size (average annual 
gross revenues for the preceding three years not exceeding $40 million) 
and one credit (15%) in the BRS service. We seek comment on this 
proposal.
    18. We recognize that educational institutions and non-profit 
educational

[[Page 72051]]

organizations eligible to hold EBS licenses may have unique 
characteristics. We therefore invite comment on whether distinctive 
characteristics of EBS licensees require distinct rules for assessing 
the relative size of potential participants in an auction. 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 EBS spectrum but do not have the financial capability to 
compete in an auction for spectrum licenses? We seek comment on whether 
the non-commercial character of EBS 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 EBS licensees and similar 
applicants.
    19. 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 
licensees may be presented with issues and costs involved in 
transitioning incumbents and developing markets, technologies, and 
services.
    20. Commenters also should consider whether the band plan and 
characteristics of the band suggest adoption of other small business 
size definitions and/or bidding credits in this instance.
    21. We believe our proposals will encourage utilization of this 
band and the development of new innovative services to the public such 
as providing wireless broadband services, including high-speed Internet 
access and mobile services. We also believe that our proposals will 
provide licensees flexibility of use which will allow them to adapt 
quickly to changing market conditions and the marketplace.

Legal Basis

    22. The proposed action is authorized under 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, as amended, 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.

Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply

    23. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules. The RFA generally defines the term 
``small entity'' as having the same meaning as the terms, ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (i) Is independently owned 
and operated; (ii) is not dominant in its field of operation; and (iii) 
satisfies any additional criteria established by the SBA.
    24. Nationwide, there are 4.44 million small business firms, 
according to SBA reporting data. 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. The SBA 
has developed small business size standards for wireline and wireless 
small businesses within the three commercial census categories of Wired 
Telecommunications Carriers, Paging, and Cellular and Other Wireless 
Telecommunications. 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.
    25. 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). 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. The MDS 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. 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. 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. Thus, we tentatively conclude that at 
least 1,932 licensees are small businesses.
    26. 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. The Commission established this 
small business definition in the context of this particular service and 
with the approval of SBA. The MDS auction 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. 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. 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 Commission's rules. Some 
of those 440 small business licensees may be affected by the proposals 
in this NPRM & MO&O.
    27. Multipoint Distribution Service, Multichannel Multipoint 
Distribution Service, and Instructional Television Fixed Service. 
Multichannel Multipoint Distribution Service (MMDS) systems,

[[Page 72052]]

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). 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. The SBA has approved of this 
standard. The MDS auction resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 claimed status as 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 have gross revenues that are not more than $40 million 
and are thus considered small entities.
    28. 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. 
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. 
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 proposed rules and policies.
    29. Finally, while SBA approval for a Commission-defined small 
business size standard applicable to ITFS is pending, educational 
institutions are included in this analysis as small entities. There are 
currently 2,032 ITFS licensees, and all but 100 of these licenses are 
held by educational institutions. Thus, we tentatively conclude that at 
least 1,932 ITFS licensees are small businesses.
    30. Cable and Other Program Distribution. This category includes 
cable systems operators, closed circuit television services, direct 
broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems, and subscription television services. 
The SBA has developed small business size standard for this census 
category, which includes all such companies generating $12.5 million or 
less in revenue annually. 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. 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, the 
Commission estimates that the majority of providers in this service 
category are small businesses that may be affected by the rules and 
policies proposed herein.
    31. There are presently 2,032 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. 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. 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 [1,932] of these educational institutions are small 
entities, some of which these providers, specifically those who have 
not met the requirements for transition articulated herein may be 
affected by our spectrum clearing proposal.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    32. There are no new reporting, recordkeeping or other compliance 
requirements proposed in the FNPRM.

Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered

    33. 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: ``(i) the 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (ii) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for such small 
entities; (iii) the use of performance, rather than design standards; 
and (iv) an exemption from coverage of the rule, or any part thereof, 
for small entities.''
    34. In this FNPRM, we seek comment on a spectrum clearing proposal 
to ensure that the 2500-2690 MHz band does not lie fallow. Inasmuch as 
this proposal provides opportunities for new entrants in the band, it 
opens up economic opportunities to a variety of spectrum users, 
including small businesses. In the R&O portion of this document, we 
have adopted an alternative to this spectrum clearing proposal, which 
consists of transitioning current users to the new band plan also 
adopted. Our spectrum clearing proposal could be implemented in the 
event that the plan we adopt is not satisfactorily implemented within 
three years. Therefore, affected parties have been given an alternative 
to our spectrum clearing proposal, and will only be subject thereto in 
the event that they do not comply with our new rules in a reasonable 
amount of time. We also seek comment on significant alternatives 
commenters believe we should adopt.

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule

    35. None

Ordering Clause

    36. 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 Further Notice of Proposed Rulemaking is hereby adopted.
    37. The proposed regulatory changes described in this FNPRM, and 
that comment is sought on these proposals.
    38. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this R&O & FNPRM, 
including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects

47 CFR Part 1

    Administrative practice and procedure, Communications common 
carriers, Radio, Reporting and recordkeeping requirements.

47 CFR Part 27

    Communications common carriers, Radio.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 04-26831 Filed 12-9-04; 8:45 am]
BILLING CODE 6712-01-P


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