37092 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 141 and 142

[FRL–6715–3]

Reopening of Comment Period on

Revisions to the Interim Enhanced

Surface Water Treatment Rule

(IESWTR), the Stage 1 Disinfectants

and Disinfection Byproducts Rule

(Stage 1 DBPR) and Revisions to State

Primacy Requirements to Implement

the Safe Drinking Water Act (SDWA)

Amendments

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule, notice of

reopening of comment period.

SUMMARY: EPA is reopening the

comment period for the proposed rule

revising the Interim Enhanced Surface

Water Treatment Rule (IESWTR), the

Stage 1 Disinfectant and Disinfection

Byproducts Rule (Stage 1 DBPR), and

the Primacy Rule which was published

in the Federal Register April 14, 2000

(65 FR 20314). The reopening of the

comment period will allow all

interested parties to submit written

comments on the proposal.

DATES: Written comments must be

received by July 13, 2000.

ADDRESSES: Send written comments to

the Comment Clerk, docket number W–

99–11, Water Docket (MC 4101), U.S.

Environmental Protection Agency, 401

M Street, SW., Washington, DC 20460.

The record for this proposed rule is

established under docket number W–

99–11. The record is available for

inspection from 9 a.m. to 4 p.m.

Monday through Friday, excluding legal

holidays at the Water Docket, East

Tower Basement, US EPA, 401 M Street,

SW., Washington DC. For access to

docket materials, please call 202–260–

3027 to schedule an appointment.

Comments may be hand-delivered to the

Water Docket, U.S. Environmental

Protection Agency; 401 M Street SW.,

East Tower Basement, Washington, DC

20460. Comments may be submitted

electronically to owdocket@epamail.epa.gov. No facsimiles

(faxes) will be accepted. See

SUPPLEMENTARY INFORMATION section for

further details about comment

submission.

FOR FURTHER INFORMATION CONTACT:

Jennifer Melch, Implementation and

Assistance Division, Office of Ground

Water and Drinking Water (MC–4606),

U.S. Environmental Protection Agency,

401 M Street, SW., Washington DC

20460, (202) 260–7035. Information may

also be obtained from the EPA Safe

Drinking Water Hotline. Callers within

the United States may reach the Hotline

at (800) 426–4791. The Hotline is open

Monday through Friday, excluding

Federal holidays, from 9:00 a.m. to 5:30

p.m. EST.

SUPPLEMENTARY INFORMATION: The

reopened comment period for the

proposed rulemaking now ends July 13,

2000. All comments submitted in

accordance with the instructions in the

Notice of Proposed Rulemaking will be

considered and incorporated into the

Record.

Additional Information for Commenters

Please submit an original and three

copies of your comments and enclosures

(including references). Comments must

be received by July 13, 2000.

Commenters who want EPA to

acknowledge receipt of their comments

should enclose a self-addressed,

stamped envelope. Electronic comments

must be submitted as a WP5/6/7/8 file

or an ASCII File, avoiding the use of

special characters and form and

encryption. Electronic comments must

be identified by the docket number W–

99–11.

Dated: June 8, 2000.

J. Charles Fox,

Assistant Administrator, Office of Water.

[FR Doc. 00–14885 Filed 6–12–00; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 24

[WT Docket No. 97–82; FCC 00–197]

Installment Payment Financing for

Personal Communications Services

(PCS) Licensees

AGENCY: Federal Communications

Commission.

ACTION: Notice of proposed rule making.

SUMMARY: In this document the Federal

Communications Commission

(Commission) tentatively concludes that

it is in the public interest to modify

certain aspects of its rules for the

upcoming C and F block auction. The

Commission seeks public comment on

various issues, including proposals to

reconfigure the size of C block spectrum

licenses; to modify the entrepreneur

eligibility restrictions for certain

licenses in both large and small markets;

and to retain the spectrum cap.

DATES: Comments are due on or before

June 22, 2000 and reply comments are

due on or before June 30, 2000. Final ex

parte presentations are due on July 12,

2000.

ADDRESSES: All comments and reply

comments should be sent to the Office

of the Secretary, Federal

Communications Commission, 445 12th

Street, SW, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT:

Audrey Bashkin, Auctions and Industry

Analysis Division, Wireless

Telecommunications Bureau, at (202)

418–0660.

SUPPLEMENTARY INFORMATION: This is a

summary of a Further Notice of

Proposed Rule Making (Further Notice)

adopted on May 31, 2000, and released

on June 7, 2000. The complete text of

this Further Notice, including

attachments, is available for inspection

and copying during normal business

hours in the FCC Reference Center

(Room CY–A257), 445 12th Street, SW,

Washington, DC. It may also be

purchased from the Commission’s copy

contractor, International Transcription

Services, Inc. (ITS, Inc.), 1231 20th

Street, NW, Washington, DC 20036,

(202) 857–3800. It is also available on

the Commission’s web site at http://

www.fcc.gov/wtb/auctions.

Synopsis of the Further Notice of

Proposed Rule Making

I. Introduction and Overview

1. On January 12, 2000, the Wireless

Telecommunications Bureau (‘‘Bureau’’)

announced that a broadband Personal

Communications Services (‘‘PCS’’) C

and F block auction—Auction No. 35—

would begin on July 26, 2000. Under the

Commission’s current rules, applicants

for C and F block auctions must meet

specified financial size requirements to

qualify as ‘‘entrepreneurs’’ and to be

eligible to compete in the auction.

Following the announcement of Auction

No. 35, the Commission received several

formal requests to waive, modify, or

eliminate the C and F block auction and

service rules. These requests seek,

among other things, modification of the

various C and F block eligibility

requirements for the upcoming auction,

reconfiguration of available 30 MHz C

block licenses, and adoption of an

alternative bidding plan.

2. As justification for the proposed

changes, the petitioners point to the

relatively small percentage of C and F

block licensees that have begun

providing service in the years since the

initial entrepreneurs’ block auctions

were held. They also note the increasing

trend in the wireless marketplace

toward nationwide service, their need

for additional spectrum in order to ease

spectrum capacity constraints, and their

financial readiness to construct and

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules 37093

operate C and F block systems should

they win licenses in the upcoming

auction. Numerous parties have filed

opposing and supportive pleadings in

response to these petitions. Opponents

argue that businesses that qualify as

‘‘entrepreneurs’’ under our rules are

more likely than larger companies to

provide innovative and niche services

and to serve rural areas; that the

Commission’s previous C and F block

installment payment program was

largely responsible for the dearth of

build-out among C and F block

licensees; and that changing the

eligibility criteria at this juncture would

be detrimental to the existing business

plans of current C and F block

‘‘entrepreneur’’ licensees developed

based upon these rules, and to the

ability of small businesses to secure

needed financing to provide valuable

wireless services.

3. Several parties have also asked that

we consider whether we should revise,

waive, or forbear from applying the

Commercial Mobile Radio Service

(‘‘CMRS’’) spectrum cap for Auction 35.

In support of these requests, the

petitioners assert that the demand for

CMRS services has significantly

increased and created substantial

spectrum constraints over the last few

years. Further, petitioners contend that

lifting the spectrum cap would better

enable them to roll out Third Generation

(‘‘3G’’) and other advanced services, as

well as otherwise help ensure the rapid

and efficient development of the C and

F block spectrum. Those opposing these

requests claim that the current spectrum

cap allows sufficient spectrum in local

geographic markets to roll out 3G

services in the foreseeable future and

that petitioners failed to establish any

basis for waiving the spectrum cap.

4. Upon consideration of the petitions

and responsive pleadings received to

date, we have tentatively concluded that

it is in the public interest to revise

certain aspects of the C and F block

rules. Accordingly, we seek comment in

this Further Notice on the following

specific proposals to:

• Reconfigure C Block Spectrum

License Size

We tentatively conclude that we will

reconfigure each 30 MHz C block

license available in future broadband

PCS auctions into three 10 MHz C block

licenses.

• Apply a Tiered Approach to Basic

Trading Areas (BTAs) 

We tentatively conclude that we will

divide BTAs into two tiers according to

the population size of the BTA. Under

this proposal, ‘‘Tier 1’’ would comprise

BTAs at and above a 2.5 million

population threshold; and ‘‘Tier 2’’

would comprise BTAs below that

population threshold.

• Eliminate Eligibility Restrictions For

Certain Licenses In Tiers

We further propose to remove the

auction eligibility restrictions for certain

of the newly reconfigured 10 MHz C

block licenses, thereby establishing

‘‘open’’ bidding for these licenses. We

tentatively conclude that we will allow

‘‘open’’ bidding (i.e., remove the

eligibility restrictions) for two of the

three 10 MHz C Block licenses in Tier

1, and one of the three 10 MHz C Block

licenses in Tier 2. We also invite

comment on whether to allow ‘‘open’’

bidding for all three of the 10 MHz C

Block licenses in Tier 1, and two of the

three 10 MHz C Block licenses in Tier

2.

We tentatively conclude that we will

allow ‘‘open’’ bidding for all available

15 MHz C block licenses, which have

previously been auctioned but not sold.

We seek comment on whether to

allow ‘‘open’’ bidding for all available F

block licenses. We also seek comment

on whether, instead, to adopt a tiered

approach to eligibility for F block

licenses or to retain existing F block

eligibility requirements.

• Retain Our Current License

Grouping for Bidding in the Auction

We tentatively conclude that we will

retain BTA service areas and a licenseby-license bidding design for Auction

No. 35.

• Clarify the Grandfather Exception

We invite comment in this proceeding

on a number of issues raised by parties

seeking reconsideration of the

grandfather exception to the eligibility

rules, which is provided in

§ 24.709(b)(9)(i) of the Commission’s

rules. On the issue of how the exception

applies in a merger situation, we

tentatively conclude that when each of

the merging entities is eligible for the

‘‘grandfather’’ exception, the exception

extends to the resulting entity, but that

when one (or more) of the merging

entities is not eligible for the

‘‘grandfather’’ exception, the exception

does not extend to the resulting entity.

• Revise the Bidding Credits Available

for Auction No. 35

We seek comment on whether to

retain existing small and very small

business bidding credits (15 percent and

25 percent, respectively) for licenses

subject to ‘‘open’’ bidding or whether to

increase them to 25 percent and 40

percent, respectively. We also seek

comment on whether we should change

the bidding credits for licenses subject

to ‘‘closed’’ bidding, i.e., bidding where

eligibility restrictions apply.

• Alter the Transfer Requirements for

Certain Licenses

Licenses Won in ‘‘Open’’ Bidding: We

tentatively conclude that we will

eliminate the § 24.839 eligibility

requirements for the assignment or

transfer of control of C and F block

licenses won in Auction No. 35 ‘‘open’’

bidding.

Licenses Won in ‘‘Closed’’ Bidding:

We seek comment on allowing a

licensee to assign or transfer its license

to any qualified entity, entrepreneur or

not, upon the licensee’s completion of

its first construction benchmark,

whether or not it takes the full five years

allowed under our rules.

Licenses Held by Incumbent

Licensees: We seek comment on

allowing an incumbent licensee to

assign or transfer its license to any

qualified entity, entrepreneur or not,

upon the licensee’s completion of its

first construction benchmark, whether

or not it takes the full five years allowed

under our rules. We also seek comment

on whether we should allow some

flexibility for incumbent licensees to

transfer certain licenses where the

carrier can demonstrate ‘‘substantial

service’’ throughout its system, rather

than on a market-by-market basis.

• Eliminate the License Cap

We tentatively conclude that we will

eliminate the § 24.710 cap on the

number of C and F block licenses a

single entity may win at auction.

• Retain the Spectrum Cap

We tentatively conclude that we will

retain the current spectrum cap.

II. Background

5. In the Omnibus Budget

Reconciliation Act of 1993, Congress

authorized the Commission to use

systems of competitive bidding to award

licenses for rights to use the radio

spectrum. This authorization is codified

as section 309(j) of the Communications

Act. Section 309(j)(3) directs the

Commission to ‘‘seek to promote’’ a

number of objectives, including:

• The development and rapid

deployment of new services for the

benefit of the public, including those

residing in rural areas;

• Promoting economic opportunity

and competition and ensuring that new

and innovating technologies are readily

accessible to the public 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, i.e.,

‘‘designated entities;’’

37094 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules

• Recovery for the public of a portion

of the value of the public spectrum

resource made available for commercial

use;

• Avoidance of unjust enrichment

through the methods employed to award

uses of that resource; and

• Efficient and intensive use of the

electromagnetic spectrum.

6. Section 309(j)(4) directs the

Commission, in prescribing regulations

to implement the objectives of section

309(j)(3), to, inter alia, (i) establish

performance requirements to ensure

prompt delivery of service to rural areas

and prevent warehousing of spectrum

by licensees; (ii) prescribe area

designations and bandwidth

assignments that promote an equitable

geographic distribution of licenses and

services, economic opportunity for a

wide variety of applicants, including

designated entities, and rapid

deployment of services; and (iii) ensure

that designated entities are given the

opportunity to participate in the

provision of spectrum-based services,

and, for such purposes, consider using

bidding preferences and other

procedures.

7. The Commission outlined the

original framework for C and F block

auctions in 1994, establishing the C and

F blocks as ‘‘set-aside’’ blocks for

‘‘entrepreneurs’’ in which eligibility

would be restricted to entities below a

specified financial threshold. The

Commission concluded that if it was to

meet the Congressional goals of

promoting economic opportunity and

competition by dissemination of

licenses among a wide variety of

providers, it should take certain

affirmative steps to mitigate barriers to

entry faced by smaller businesses. The

Commission also stated its intention to

take steps to assure that designated

entities that win licenses have the

opportunity to become strong

competitors in providing service. Thus,

in attempting to address the imbalance

between small businesses’ and large

businesses’ relative abilities to access

capital, the Commission established two

set-aside blocks (C and F) in which large

companies (those over the financial

thresholds) would be prohibited from

bidding or holding licenses for a period

of time.

8. The initial C block licenses were

awarded through two auctions, Auction

No. 5, which ended on May 6, 1996, and

Auction No. 10, which concluded on

July 16, 1996. Auction No. 11, the initial

F block auction, ended on January 14,

1997, and also included D and E block

licenses. Auction No. 22, which

concluded on April 15, 1999, made

available C and F block licenses that

had been returned to, or reclaimed by,

the Commission. Since the

establishment of C and F block rules in

1994, no auctions, other than the C and

F block auctions, have been conducted

on a closed basis due to eligibility

restrictions. Instead, in the other 23

auctions held by the Commission, we

have typically provided opportunities

for small businesses through bidding

credits without a set-aside.

9. Since adoption of the original rules

for auctions of C and F block licenses,

these rules have steadily evolved in

response to legislative changes, judicial

decisions, the needs of licensees striving

to succeed in a rapidly developing

wireless market, and the demand of the

public for greater access to wireless

services. Two-and-a-half years ago, in

this docket, the Commission responded

to requests from some C block auction

winners to revise the auction rules and

procedures for the C and F blocks. In the

1997 C Block Second Report and Order,

as modified by the 1998 C Block

Reconsideration Order, the Commission

created a package of financial

restructuring options to be offered to C

block licensees experiencing financial

difficulties in the wake of Auctions No.

5 and No. 10. See Amendment of the

Commission’s Rules Regarding

Installment Payment Financing for

Personal Communications Services

(PCS) Licenses Second Report and

Order, (C Block Second Report and

Order) 62 FR 55348 (October 24, 1997)

and (C Block Reconsideration Order) 63

FR 17111 (April 8, 1998). The

Commission also decided in the C Block

Second Report and Order, as modified

by the 1998 C Block Fourth Report and

Order, to allow, for a period of two years

from the beginning of the first postrestructuring C block auction (Auction

No. 22), participation in bidding for C

block licenses by entities that had

participated in Auctions No. 5 and 10,

even if such entities had since become

too large to qualify as entrepreneurs

under the Commission’s rules. See

Amendment of the Commission’s Rules

Regarding Installment Payment

Financing for Personal Communications

Services (PCS) Licenses Fourth Report

and Order, (C Block Fourth Report and

Order), 65 FR 14213 (March 16, 2000).

10. Prior to the start of Auction No.

22, three C block licensees filed for

bankruptcy protection. Other C block

licensees defaulted on payments owed

for their licenses. Bankruptcy filings

and payment defaults by other C block

licensees followed the auction; and, to

date, a total of 232 C and F block

licenses, covering a population (‘‘pops’’)

of approximately 191 million, have been

involved in bankruptcy proceedings

and/or defaulted on license payments. It

appears that the vast majority of the

defaulted licenses have never been

placed into service.

11. The Bureau, pursuant to its

delegated authority, announced that we

would be holding a C and F block

auction on July 26, 2000. The current

inventory for this auction includes 93

30-MHz C block licenses, 21 15-MHz C

block licenses and 40 10-MHz F block

licenses for operation on frequencies for

which previous licenses have

automatically cancelled, see 47 CFR

1.2110(f)(4)(iii) and (iv) or have been

returned to the Commission. The

announcement of Auction No. 35

prompted petitions from SBC

Communications Inc. (‘‘SBC’’), Nextel

Communications, Inc. (‘‘Nextel’’), and

other parties asking that we waive,

modify, or eliminate our entrepreneur

eligibility requirements for participation

in the auction. In response to those

filings, a number of parties also

proposed that we make other

modifications to our C and F block

rules. Additionally, US WEST Wireless,

LLC (‘‘US West’’) and Sprint Spectrum

L.P. dba Sprint PCS (‘‘Sprint’’) filed a

joint petition for reconsideration of our,

Order on Reconsideration of the Fourth

Report and Order in WT Docket No. 97–

82. The C Block Fourth Report and

Order addressed certain of the rules

governing auctions of C block licenses.

Sprint and US West request that the

Commission eliminate its eligibility

restrictions for participation in the

upcoming auction as well as modify

other C block rules. In addition, Verizon

Wireless (‘‘Verizon’’) petitioned the

Commission for clarification or

reconsideration of our two-year C block

auction eligibility ‘‘grandfather’’ rule,

§ 24.709(b)(9)(i). The SBC, Nextel, and

US West/Sprint petitions were placed

on public notice, prompting more than

210 comments and other pleadings in

response. A number of parties argue that

all, or at least some portion, of the C and

F block spectrum should be open to all

participants in order to satisfy the

Commission’s obligations under section

309(j)(4). Other parties oppose these

arguments.

12. We have also received petitions

from three parties that, under our

proposed revisions to the C block rules,

would become eligible to bid for

licenses in the upcoming C and F block

auction. These parties request that the

Commission waive, or forbear from

applying, the CMRS spectrum cap with

regard to the spectrum available in

Auction No. 35. We placed these

petitions on public notice and received

comments from 23 parties and reply

comments from 14 parties.

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules 37095

13. Based upon the extensive record

before us, and our continuing obligation

to weigh important spectrum policy

management considerations in

addressing the public interest, we have

tentatively concluded that we will

revise our rules for C and F block

spectrum. We set forth our proposals

and tentative conclusions concerning

possible revisions in the rules in this

Further Notice.

III. Discussion

A. Reconfiguration of C Block Spectrum

License Size

14. Background. In 1994, the

Commission established a band plan for

broadband PCS that provides for 30

MHz ‘‘C block’’ licenses and 10 MHz ‘‘F

block’’ licenses. Each C and F block

license covers a specific geographic

service area known a Basic Trading Area

(‘‘BTA’’). BTAs fall within still larger

geographic service areas known as

Major Trading Areas (‘‘MTAs’’). BTA

and MTA service areas are based on the

Rand McNally 1992 Commercial Atlas

Marketing Guide. As noted, in 1997 the

Commission created a package of

financial restructuring options designed

to provide limited relief to C block

licensees experiencing financial

difficulties in the wake of Auction No.

5. Under one of the available options,

licensees were allowed to disaggregate

15 MHz of each of their 30 MHz C block

licenses in an MTA. In disaggregating a

30 MHz C block license, a licensee

would retain a 15 MHz C block license

and would return the remaining 15 MHz

of C block spectrum to the Commission

for inclusion in the next C block

auction, Auction No. 22. Because

several of the available 15 MHz C block

licenses were not won in Auction No.

22, the license inventory for Auction

No. 35 includes both 15 and 30 MHz C

block licenses, as well as 10 MHz F

block licenses.

15. A number of parties have

suggested various proposals to alter the

Commission’s current band plan.

Several parties propose that we

subdivide each available 30 MHz C

block license into three 10 MHz

licenses. Others suggest that we

subdivide each available 30 MHz C

block license into a 20 MHz and a 10

MHz license. Other parties argue against

subdividing the C block license

spectrum size.

16. Discussion. We tentatively

conclude that each 30 MHz C block

license available in Auction No. 35

should be reconfigured into three 10

MHz C block licenses. We believe that

by increasing the number of available

licenses through this reconfiguration,

taken together with our proposals to lift

certain of our eligibility requirements,

we will promote wider auction

participation and license distribution in

accordance with the goals of section

309(j) of the Communications Act.

Small bidders should find bidding for

10 MHz licenses more affordable, while

large bidders should enjoy greater

flexibility in tailoring their bidding to

their business plans without running

afoul of the spectrum cap. We further

tentatively conclude that a 10 MHz C

block license is a viable minimum size

for voice and some data services

including Internet access and provides

an appropriate building block for

bidders that wish to acquire a larger

amount of spectrum. Accordingly, we

propose to permit bidders to aggregate

the 10 MHz C block licenses, subject

only to the overall 45 MHz CMRS

spectrum cap, and the relevant

remaining eligibility restrictions for

these licenses. We seek comment on this

proposal and our tentative conclusions.

We also seek comment on whether a

different configuration, including

adoption of blocks of 20 MHz where

possible, would be more appropriate to

provide meaningful opportunities for

potential bidders, including new

entrants into particular geographic

markets.

17. Finally, with respect to

aggregation of 10 MHz licenses, we note

that the Wireless Telecommunications

Bureau recently sought comment on

procedures for implementing a

combinatorial (‘‘package’’) bidding

design for the auction of licenses in the

700 MHz bands, which would facilitate

aggregations of complementary licenses

into larger blocks. See Auction of

Licensees in the 747–762 and 777–792

MHz Bands Scheduled for September 6,

2000; Comment Sought on Modifying

the Simultaneous Multiple Round

Auction Design to Allow Combinatorial

(Package) Bidding, 65 FR 35636 (June 5,

2000). While given the much larger

number of licenses in this auction, true

combinatorial bidding would be more

complex and perhaps impractical to

implement in the near term, we invite

parties to suggest ways in which bidders

could efficiently aggregate licenses in

the auction process.

B. Eliminate Eligibility Restrictions for

Certain Licenses Under a Tiered

Approach

18. Background. Under the

Commission’s current rules, only

qualified ‘‘entrepreneurs’’ are permitted

to participate in auctions of C and F

block licenses. To be considered an

entrepreneur eligible for C and F block

auction participation, an applicant

(together with its affiliates and persons

or entities that hold interests in the

applicant and their affiliates) must have

had gross revenues of less than $125

million in each of the last two years and

must have total assets of less than $500

million. See 47 CFR 24.709.

19. We seek comment on proposals to

lift the entrepreneur eligibility

restrictions for some, but not all,

licenses available in Auction No. 35 and

in future C and F block auctions. Our

proposals take into account the

contention of many entrepreneurs and

their representatives that argue that

fairness requires the Commission to

continue to maintain the present

eligibility requirements. These parties

contend that entrepreneurs developed

business plans in the expectation that

the C and F block licenses would

remain set aside for them and that any

auctions of reclaimed C and F block

licenses would be subject to the same

eligibility restrictions that applied in the

original auctions of those licenses.

These parties also point out that

successful entrepreneurs have achieved

substantial public interest benefits by

providing types of services and service

packages not offered by larger providers,

and extending service to rural markets.

These parties also argue that the

continuation of the eligibility

restrictions will better serve their ability

to expand their service area as a

competing carrier and to enter roaming

relationships with other regional

carriers.

20. Our proposals also take into

account some of the arguments of

several CMRS providers seeking to

participate in the upcoming auction that

currently do not qualify for

entrepreneur eligibility. Such providers

argue that opening up the entire auction

to all bidders would be pro-competitive

because it would allow them to acquire

additional spectrum to meet capacity

concerns, provide advanced services,

and increase the size of their subscriber

‘‘footprints.’’ They contend that they,

unlike many entrepreneurs, possess the

operational expertise and substantial

resources necessary to construct and

successfully operate PCS systems in

already highly competitive markets.

These commenters also point to

evidence that suggests that the set-aside

of C and F Block spectrum has not been

successful in encouraging entrepreneurs

to participate in the provision of

spectrum-based services, particularly in

large markets.

21. We note that, in apparent

recognition of the Commission’s

obligation to balance a number of

spectrum policy considerations, many

parties have offered compromise

37096 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules

suggestions as alternatives to the current

C block rules should the Commission

choose not to adopt their preferred

approaches. Some commenters,

including a number of entrepreneurs,

have suggested compromise alternatives

that would eliminate the set-aside (in

whole or in part) for markets with

populations in excess of certain

specified amounts ranging from 700,000

to five million. According to these

commenters, such compromise

alternatives to the current C block rules

would provide companies with greater

financial resources access to licenses for

markets with larger populations,

without foreclosing the opportunity for

entrepreneurs to bid for those licenses.

The suggested alternatives would also

maintain the eligibility restrictions in

markets where entrepreneurs might

have a reasonable chance of success.

22. Some commenters suggest

compromises that would not use tiers,

but would disaggregate the 30 MHz C

block licenses into three 10 MHz blocks

and would open up the bidding on one

or two of the three 10 MHz licenses in

all markets.

23. While most of the commenters

have focused on the Commission’s

treatment of the C block spectrum, as a

general matter, current entrepreneurs

argue in favor of keeping the 10 MHz F

block licenses as restricted. On the other

hand, companies currently ineligible to

participate in Auction 35 argue in favor

of open eligibility for those licenses.

24. Discussion. As the expert agency

charged with the management of the

nation’s radio spectrum, the

Commission must continually evaluate

the provision of service to the American

public, weigh a variety of public interest

considerations, and assess the changing

needs of the industry. In doing so, we

must always remain cognizant of our

statutory obligations. These obligations

often require that we balance a number

of different, and at times competing,

spectrum policy goals. In discharging

these responsibilities, we seek to

provide meaningful opportunities to

small businesses, to speed the

deployment and development of new

services to the public to encourage the

efficient use of spectrum, and to recover

for the public a portion of the value of

spectrum.

25. When we adopted the original

rules for C and F block spectrum in

1994, PCS was in its infancy. Since

1994, circumstances in the industry

have changed. In light of significant

technology developments and increased

demand for spectrum, it is appropriate

for the Commission to consider

reassessing the proper balance of its

spectrum policies including whether its

current C and F block rules continue to

serve the public interest in all respects.

In crafting rules for the upcoming

auction, we recognize that we cannot

overlook the difficulties that followed

the original C block spectrum auction

and our commitment, to promote

opportunities for designated entities.

We maintain our commitment to

provide meaningful opportunities for

entrepreneurs, including those that

participated in our most recent auction

of C block spectrum. We also recognize

that some qualifying entrepreneurs have

been successful innovators, providing

service to rural markets and niche

services in other markets. Our desire to

promote the continued success of such

entities, as they seek to fill in gaps in

their service areas or otherwise strive to

expand their service offerings, also

factor into our decision regarding the

extent to which we should revise our

current rules.

26. Thus, we believe that

entrepreneurs raise legitimate issues

about preserving the eligibility

restrictions on at least a portion of the

spectrum that will be awarded in the

upcoming auction. However, based on

the demand for spectrum to satisfy

congestion, new technology and

competitive needs, we tentatively

conclude that it would serve the public

interest to make some additional

spectrum available to all interested

bidders. In balancing these factors, we

believe parties on both sides of this

debate have suggested a number of

possible compromises that better

advance the public interest than either

maintaining the status quo or,

conversely, eliminating the eligibility

restrictions entirely. In particular, we

think the parties suggesting tiering

approaches have proposed creative

solutions to balancing the competing

interests by recognizing both that the

need for additional unrestricted

spectrum is greatest in the larger

markets and that the track record for

success for smaller entities is strongest

in mid-sized and smaller markets.

27. With these factors in mind, we

seek comment on the following

proposals to lift the entrepreneur

eligibility requirements for some of the

licenses available in Auction No. 35 and

future auctions. Consistent with several

of the recommendations we have

received, these proposals vary in the

amount of spectrum that would remain

set-aside according to the size of both

the available licenses and the markets.

28. Available 30 MHz C block

licenses: For markets with available 30

MHz C block licenses, we seek comment

on a proposal based on our tentative

conclusion to reconfigure these licenses

into three 10 MHz licenses. Our

proposal is further based on dividing

the available BTAs into two tiers: ‘‘Tier

1’’ would comprise BTAs with

populations at or above a certain

threshold, and ‘‘Tier 2’’ would comprise

BTAs below that population threshold.

We tentatively conclude that we should

allow ‘‘open’’ bidding (i.e. remove

eligibility requirements) for two of the

three 10 MHz C block licenses in Tier

1, and one of the three 10 MHz C block

licenses in Tier 2. We seek comment on

this tentative conclusion.

29. We recognize that in balancing the

interests served by preserving

meaningful opportunities for designated

entities and those served by opening up

the spectrum to bidding by all entities,

there may be other proposals we should

consider. Thus, we also seek comment

on whether we should allow ‘‘open’’

bidding for all three of the 10 MHz C

block licenses in Tier 1, and two of the

three 10 MHz C block licenses in Tier

2.

30. Tiers: We also seek comment on

what population threshold we should

use to divide the Tier 1 and Tier 2

BTAs. As discussed, the record provides

some indication that designated entities

have had greater success in markets

with smaller populations, particularly

below the top twenty markets. Markets

with larger populations inevitably

require more capital to build out and

provide service. Moreover, as noted by

commenters, there is evidence that

spectrum is needed by incumbents to

provide new generation wireless

services and to alleviate congestion or

by new entrants to fill out service

footprints. Accordingly, we tentatively

conclude that a population of 2.5

million or greater is the proper cut-off

for Tier 1 BTAs (the 17 largest markets);

however, we also seek comment on

establishing the threshold for Tier 1 at

those BTAs with populations at or

greater than either 2 million (the 23

largest markets) or 1.5 million (the 32

largest markets). We recognize that other

alternatives might also make sense. For

example, we might also create a ‘‘Tier

3’’ for BTAs with populations below

700,000, the demarcation line that SBC

recommends, establishing in this tier a

larger set-aside for entrepreneurs. We

also might instead decline to adopt a

tiered approach at all, instead applying

changes in eligibility restrictions to all

BTAs, regardless of size. We seek

comment on these alternatives, as well

as on other possible tier divisions and

other options for opening the bidding

for some of the available C block

licenses.

31. Available F block licenses: We

seek comment on eliminating the

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules 37097

eligibility requirements for all of the 10

MHz F block licenses available in

Auction No. 35. We note that from a

historical perspective, F block did not

face the same types of problems and

difficulties as C block. This difference is

evidenced by the fact that the

Commission did not see the need to

allow F block licensees to restructure

their spectrum holdings, nor did it

provide for the grandfathering of

eligibility for entrepreneur entities in

future F block auctions. Thus, we have

consistently treated the F block

spectrum differently than C block in

recognition of the fact that the history of

these spectrum blocks evolved in

divergent manners. Accordingly, we

may not be faced with the same equity

considerations in maintaining a setaside of F block spectrum as we are for

C block. Moreover, we note that in

virtually all markets where there is an

available F block license, there is a 30

MHz license held by a current C block

entrepreneur. Thus, there is already

significant set-aside spectrum in each of

these markets. Further, despite the lack

of historical controversy regarding the F

block spectrum, build out of these

licenses has not progressed as quickly as

we may have anticipated, especially in

larger markets. Allowing open eligibility

for all 10 MHz F block licenses might

lead to more expeditious provision of

service to American consumers.

Alternatively, we recognize that we

could adopt a tiered approach similar to

the proposals for C block licenses

discussed, or we could retain the

existing F block eligibility requirements.

We seek comment on these alternatives.

32. 15 MHz C block licenses: Finally,

we propose, and seek comment on,

eliminating the eligibility requirements

for all 15 MHz C block licenses that will

be available in Auction No. 35 and in

future C block auctions. As noted

previously, all of the 15 MHz licenses

available in Auction No. 35 were

available in restricted Auction No. 22,

yet remained unsold. Accordingly, we

believe that it is appropriate to make

these licenses, located principally in

rural markets, immediately available to

any interested bidder.

33. Unsold C and F block licenses: We

also seek comment on whether we

should establish a rule that lifts

eligibility restrictions on any C or F

block licenses that remain unsold after

Auction No. 35 or in other future

auctions. Such licenses could then

promptly be put up for auction under

open bidding.

C. License Grouping for Bids

34. Background. In past C and F block

auctions (as well as D and E block

auctions), participants have bid

separately for each license. Nextel

proposes that all available 30 MHz

licenses be reconfigured into 20 MHz

and 10 MHz licenses and that the newly

created 20 MHz C block licenses and the

available 15 MHz C block licenses be

offered together on a ‘‘bulk bid’’ (i.e.,

winner take all) basis in an expedited

auction.

35. Discussion. We tentatively

conclude that we will take bids

separately on each license in Auction

No. 35 on a simultaneous multiple

round basis as we have done in the past.

We are persuaded by commenters that

the massive scale of Nextel’s bulk bid

proposal (or something similar based

upon a 10 MHz C block license

configuration) would exclude all but a

very few competitors. Small entities

would be hard pressed to obtain the

financing necessary to win and pay for

the licenses and construct the systems

included in the bulk bid proposal. Many

other carriers would be constrained

from participating by the CMRS

spectrum cap. While we agree with

Nextel that bidding for individual

licenses will make it somewhat more

challenging for it to win the very broad

aggregation of licenses it seeks to

acquire, we do not think this requires us

to resort to its bulk bid proposal.

Experience in our auctions to date

demonstrates that significant

aggregations of licenses through the

auction process are feasible. For this

reason, we believe that bidding for each

license separately is unlikely to

preclude carriers from aggregating

licenses on a nationwide or regional

basis, and at the same time provides

carriers who have intense spectrum

needs in a particular market the

opportunity to compete for licenses as

well.

D. Grandfather Exception

36. Background: In the C Block

Second Report and Order, the

Commission established in

§ 24.709(b)(9)(i) a ‘‘grandfather’’

exception to the entrepreneur eligibility

requirement for participation in C block

auctions. Under that exception, all

entities that had been eligible for and

had participated in Auction No. 5 or

Auction No. 10 would be eligible to bid

on C block licenses in Auction No. 22,

regardless of their financial size at the

time of the auction. We declined to

apply the ‘‘grandfather’’ exception to

bidding on F block licenses, based on

our belief that F block licensees did not

have the same need for financial relief.

In the C Block Fourth Report and Order,

we decided, in fairness to other future

bidders, to limit the grandfather

exception to a two-year period

beginning on the start date of Auction

No. 22, i.e., through March 23, 2001. In

the C Block Fourth Report and Order,

we denied a petition by Omnipoint

asking that we extend the grandfather

exception indefinitely.

37. Discussion: In a petition for

reconsideration or clarification of the C

Block Fourth Report and Order, Verizon

asks us to reexamine the grandfather

exception and limit resulting eligibility

to those Auction No. 5 and 10

participants that won licenses in the

auctions and then returned spectrum

pursuant to the Commission’s C block

restructuring options. We seek comment

on the issues raised in the Verizon

petition and, more generally, on

whether the grandfather exception

should be revised or clarified in light of

current circumstances.

38. We note that Nextel makes

arguments similar to Verizon’s in

response to the US West/Sprint petition

and also objects to the fact that the

grandfather exception in that it does not

extend to Auction No. 11 and Auction

No. 22 participants. We have received

notice that currently ‘‘grandfathered’’

companies intend to combine with other

carriers, some of which are also eligible

for the grandfather exception. We

believe that the eligibility of successor

entities for participation in ‘‘closed’’

bidding is a subject that may also be

ripe for clarification in our upcoming

order. Accordingly, we seek comment

on our tentative conclusion that upon

the merger of two entities, each of

which is eligible for the ‘‘grandfather’’

exception, the exception extends to the

resulting entity, but that, upon the

merger of two entities, only one of

which is eligible for the ‘‘grandfather’’

exception, the exception does not

extend to the resulting entity. We

recognize that our tentative conclusion

is based upon simplified examples, and

we encourage comment on how to

determine C and F block eligibility

when faced with more complex

transactions.

E. Bidding Credits

39. Under current rules, a winning C

or F block bidder that qualifies as a

small business (i.e., a business that,

together with its affiliates and persons

or entities that hold interests in such

entity and their affiliates, has had

average annual gross revenues that are

not more than $40 million for the

preceding three years) or a small

business consortium may use a bidding

credit of 15 percent. See 47 CFR

24.712(a); 24.717(a); id.,

1.2110(e)(2)(iii). A winning bidder that

qualifies as a very small business (i.e.,

37098 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules

a business that, together with its

affiliates and persons or entities that

hold interests in such entity and their

affiliates, has had average annual gross

revenues that are not more than $15

million for the preceding three years) or

a very small business consortium may

use a bidding credit of 25 percent. See

47 CFR 24.712(b); 24.717(b); id.,

1.2110(e)(2)(ii).

40. Since the Commission first

established the entrepreneurs’ block setaside and C and F block bidding credits,

its experience has demonstrated that

bidding credits without a set-aside

enable small businesses to compete

effectively in open auctions, even

auctions of broadband PCS licenses.

41. Discussion. A number of

entrepreneurial firms have argued that if

we open eligibility for some portion of

the C block spectrum, we should

increase the bidding credits applicable

to those licenses. We seek comment on

whether we should retain existing small

and very small business bidding credits

(15 percent and 25 percent,

respectively) for licenses subject to

‘‘open’’ bidding or whether we should

increase them to 25 percent and 40

percent, respectively.

42. We also seek comment on whether

we should change the bidding credits

for licenses subject to ‘‘closed’’ bidding,

i.e., bidding where eligibility

restrictions apply. For example, we

could increase the bidding credits for

these licenses, or we could keep them

at their current level since the rationale

for increasing the credits in open

auctions—to provide additional

assistance for small companies bidding

against major wireless providers—does

not apply to restricted auctions. Finally,

we could eliminate bidding credits

altogether on the ground that they are

unnecessary and perhaps even

counterproductive in ensuring

opportunities for small business in the

set-aside auctions. In this regard, we

recognize that among those eligible to

participate in the closed, entrepreneurs’

auctions, some well capitalized new

entities with small gross revenues

qualify for bidding credits, while some

older companies with small total assets

and net revenues but high gross

revenues do not. We seek comment on

these various proposals.

F. Transfer Requirements

43. To ensure that C and F block

licensees did not take advantage of the

eligibility set-aside by immediately

assigning or transferring control of their

licenses to entities that do not meet the

eligibility requirements, the

Commission established a holding rule

for these licenses as well as unjust

enrichment provisions. Under the

current holding rule, C and F block

licensees may, for the first five years

from the date of their initial license

grant, assign or transfer control of their

C and F block licenses only to entities

that meet the eligibility requirements or

to other C and F block licensees that

obtained their licenses while meeting

the requirements. See 47 CFR 24.839.

The Commission set the current holding

period at five years to guarantee that a

C or F block licensee would hold and

build out the license until the first

construction benchmark, which

currently occurs five years after the date

of licensing.

44. Discussion. We propose to modify

our transfer requirements to correspond

to our proposed changes in the

eligibility requirements and to

encourage rapid construction of C and F

block systems. Specifically, we

tentatively conclude that C and F block

licenses won pursuant to open bidding

at Auction No. 35, or any future open

auction for such spectrum, would not be

subject to a transfer holding rule. For

licenses won in closed bidding in any

C or F block auction, past or future, we

seek comment on tying the holding

period to completion of build-out

requirements. Under this proposal, a

licensee would be able to assign or

transfer its license to any qualified

entity, entrepreneur or not, upon the

licensee’s completion of its first

construction benchmark, whether or not

it takes the full five years allowed by

our rules. In this way, we can continue

to minimize the trafficking of C and F

block licenses won pursuant to closed

bidding, while enhancing the likelihood

of early build-out. We seek comment on

these proposals.

45. Additionally, we seek comment

on whether to allow some further

flexibility for incumbent licensees that

may not have fully satisfied their

construction requirements for all their

licenses. We wish to examine whether

we should, under certain circumstances,

evaluate a licensee’s compliance with

construction requirements on a systemwide basis. For example, we seek

comment on whether we should allow

a carrier to exchange and transfer

licenses if the carrier can demonstrate

‘‘substantial service’’ throughout its

system, rather than in that particular

market. We also seek comment on any

other modifications to our transfer

restrictions that would provide

incumbent licensees with the flexibility

to restructure their business plans

without decreasing their incentive to

rapidly construct systems and place

them in operation.

G. License Cap

46. Background. Section 24.710 of the

Commission’s rules prohibits an auction

applicant from winning more than 98 C

and F block licenses. The rule requires

an applicant that is the high bidder for

more than 98 C and F block licenses to

withdraw its bids for a sufficient

number of licenses to comply with the

98-license limit. The limit applies only

to licenses won at auction, not to the

total number of licenses that may be

obtained post auction. When established

in 1994, the license cap was intended to

facilitate a fair distribution of licenses

within the two blocks by preventing an

entity from winning more than

approximately 10 percent of the thentotal of 986 C and F block licenses.

47. Discussion. We tentatively

conclude that we will remove § 24.710

from the Commission’s rules. In 1994,

when the rule was implemented, the

Commission anticipated holding only

one C block and one F block auction. To

date, however, four C and F block

auctions have been held, with the fifth,

Auction No. 35, scheduled and one or

more additional auctions anticipated.

Many different entrepreneurs have won

C and F block licenses at auction, and

substantial diversity among C and F

block licensees continues to exist. The

Commission has achieved its initial

objective of a fair distribution C and F

block licenses. Moreover, our proposal

to reconfigure available 30 MHz C block

licenses, if implemented, would create

an additional 186 C block licenses,

while adoption of our proposal to

eliminate the eligibility restrictions for

many of the available C and F block

licenses would significantly enhance

the likelihood that these licenses would

be won by a variety of entities.

Accordingly, we seek comment on this

tentative conclusion.

H. Spectrum Cap

48. Background. The CMRS spectrum

cap, set forth in § 20.6 of the

Commission’s rules, limits the amount

of cellular, broadband PCS, and digital

Specialized Mobile Radio (‘‘SMR’’)

spectrum in which any entity may have

an attributable interest in any

geographic area. As discussed, we

received petitions from three parties

that request that the Commission waive,

or forbear from applying, the CMRS

spectrum cap with regard to any

spectrum awarded in the upcoming C

and F blocks auction.

49. Discussion. We tentatively

conclude that we should not grant the

petitions seeking waiver of or

forbearance from, the CMRS spectrum

cap rules and, accordingly, we will

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules 37099

apply the cap to licenses of PCS C and

F block spectrum to be auctioned in

Auction No. 35. In September 1999,

after extensive analysis of spectrum

allocation and competitive market

conditions, we determined in our

Biennial CMRS Spectrum Cap Order

that the CMRS spectrum cap, with some

modification, continued to be a

necessary and efficient means to

promote competition and protect the

public interest. Specifically, we

concluded that a cap on this spectrum

serves the public interest by promoting

competition, preventing excessive

concentration of licenses, providing

incentives for licensees to make more

efficient use of their spectrum,

encouraging innovation, and promoting

dissemination of licenses to a wide

variety of applicants. We also concluded

that the ‘‘bright-line’’ test afforded by

the CMRS spectrum cap rule efficiently

promoted regulatory certainty and

regulatory efficiency. For any carrier

with a demonstrable need for additional

spectrum in a particular geographic

area, we established and clarified a

process by which it could obtain a

waiver of the spectrum cap rule.

50. On the basis of the petitions and

the record filed in response, we propose

not to revise the CMRS spectrum cap in

light of the upcoming auction and our

proposed rule changes described herein.

Since its inception in 1994, the cap on

the 180 MHz of CMRS spectrum (i.e.,

cellular A and B blocks, PCS A through

F blocks, and digital SMR) has limited

the amount of spectrum any carrier

could aggregate from any part of the

CMRS spectrum, including spectrum in

the PCS C and F blocks, so as to ensure

the many benefits of competition. The

pleadings filed in connection with the

upcoming auction contain no new

material information regarding the costs

and benefits of the spectrum cap and do

not purport to make a waiver showing

under the standard set forth in the

Biennial CMRS Spectrum Cap Order.

See 1998 Biennial Regulatory Review,

Report and Order 64 FR 54564 (October

7, 1999). Our proposal to revise the

rules pertaining to the PCS C and F

block spectrum helps ease the impact of

the cap in this auction, and thereby

renders cap relief unnecessary. By

proposing to divide the 30 MHz blocks

of C block spectrum into 10 MHz blocks

in the upcoming auction, we would

better enable carriers to obtain

additional spectrum without the need to

exceed the CMRS spectrum cap. Carriers

currently have accumulated spectrum

up to the CMRS spectrum cap limits,

either the general 45 MHz cap or the 55

MHz cap that applies to rural areas, in

only a few locations. With regard to the

C and F block spectrum to be auctioned,

in every market almost all carriers could

obtain additional spectrum in blocks of

10 MHz (or 15 MHz where applicable)

and still comply with the spectrum cap

without any need for disaggregation. As

discussed, for those carriers that require

more than 45 MHz of spectrum in the

near term, we have established a process

for granting waiver of the spectrum cap.

We stated that we would consider

granting a waiver of the spectrum cap in

a particular geographic area to the

extent a carrier could credibly

demonstrate that the spectrum cap was

having a significantly adverse effect on

its ability to provide 3G or other

advanced services. We also note that our

year 2000 biennial review of the

spectrum cap rule commences later this

year. This proceeding will provide us

another opportunity to revisit, in a more

comprehensive manner than the

pleadings before us, issues pertaining to

the CMRS spectrum cap and whether it

should be retained, modified, or

eliminated. We seek comment on our

tentative conclusion to retain the CMRS

spectrum cap on the PCS C and F block

spectrum scheduled for auction.

IV. Conclusion

51. Based on the foregoing, we seek

comment on overall changes to the C

and F block rules that take into account

our competing statutory objectives to

manage spectrum in the public interest.

We conclude that this Further Notice

will provide us with an opportunity to

develop a record on the specific

proposals to open eligibility for this

spectrum and otherwise revise the C

and F block rules for the benefit of

consumers and the economy.

V. Procedural Matters

A. Ex Parte Rules—Permit-But-Disclose

Proceeding

52. 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. See generally 47 CFR 1.1202,

1.1203, and 1.1206.

B. Regulatory Flexibility Act Analysis

53. As required by the Regulatory

Flexibility Act (RFA), the Commission

has prepared an Initial Regulatory

Flexibility Analysis (IRFA) of the

possible impact on small entities of the

proposals and tentative conclusions set

forth in the Further Notice in WT

Docket No. 97–82. Written public

comments are requested on the IRFA.

Comments on the IRFA must have a

separate and distinct heading

designating them as responses to the

IRFA and must be filed by the deadlines

for comments on the Further Notice. In

accordance with the RFA, the

Commission will send a copy of this

Further Notice, including the IRFA, to

the Chief Counsel for Advocacy of the

Small Business Administration.

C. Paperwork Reduction Act Analysis

54. This Further Notice contains

neither a new nor a modified

information collection.

D. Comment Dates

55. Pursuant to §§ 1.415 and 1.419 of

the Commission’s rules, interested

parties may file comments on or before

June 22, 2000, and reply comments on

or before June 30, 2000. 47 CFR 1.415,

1.419. Comments may be filed using the

Commission’s Electronic Comment

Filing System (ECFS) or by filing paper

copies. See Electronic Filing of

Documents in Rulemaking Proceedings,

63 FR 24121 (May 1, 1998).

56. Comments filed through ECFS

may be sent as an electronic file via the

Internet to http://www.fcc.gov/e-file/

ecfs.html. Comments filed through the

ECFS may be sent as an electronic file

via the Internet to http://www.fcc.gov/efile/ecfs.html. Generally, only one copy

of an electronic submission must be

filed; however, if multiple docket or

rulemaking numbers appear in the

caption of this proceeding, commenters

must transmit one electronic copy of the

comments to each docket or rulemaking

number referenced in the caption. When

completing the transmittal screen,

commenters should include their full

name, Postal Service mailing address,

and the applicable docket or rulemaking

number. Parties may also submit an

electronic comment by Internet e-mail.

To receive 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.

57. Parties who choose to file by

paper must file an original and four

copies of each filing. If participants

want each Commissioner to receive a

personal copy of their comments, an

original plus nine copies must be filed.

If more than one docket or rulemaking

number appears in the caption of this

proceeding, commenters must submit

two additional copies for each

additional docket or rulemaking

number. All filings must be sent to the

Commission’s Secretary, Magalie Roman

Salas, Office of the Secretary, Federal

37100 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules

Communications Commission, 445 12th

Street, SW, Room TW–A325,

Washington, DC 20554. A courtesy copy

should be delivered to Audrey Bashkin,

Auctions and Industry Analysis

Division, Wireless Telecommunications

Bureau, Federal Communications

Commission, 445 12th Street, SW, Room

4A–665, Washington, DC 20554. Parties

should reference WT Docket No. 97–82

in their comments. Pursuant to

§ 1.1200(a) of the Commission’s rules,

presentations on issues in this

proceeding will be prohibited after 7

p.m., July 12, 2000, until release of the

Commission’s order dealing with those

issues. 47 CFR 1.1200(a) and 1.1202(a).

All relevant and timely comments will

be considered by the Commission before

final action is taken in this proceeding.

Comments and reply comments will be

available for public inspection during

regular business hours in the FCC

Reference Information Center of the

Federal Communications Commission,

445 12th Street, SW, Washington, DC

20554.

E. Ordering Clauses

58. Authority for issuance of this

Further Notice is contained in sections

4(i), 309(r), and 309(j) of the

Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 303(r), and

309(j).

Initial Regulatory Flexibility Analysis

59. As required by the Regulatory

Flexibility Act (RFA), the Commission

has prepared an Initial Regulatory

Flexibility Analysis (IRFA) of the

possible economic impact on small

entities of the rules proposed in this

Further Notice in WT Docket No. 97–82.

Written public comments are requested

on the IRFA. Comments on the IRFA

must have a separate and distinct

heading designating them as responses

to the IRFA and must be filed by the

deadlines for comments on the Notice.

The Commission will send a copy of the

Further Notice, including this IRFA, to

the Chief Counsel for Advocacy of the

Small Business Administration. See 5

U.S.C. 603(a).

A. Need for, and Objectives, of the

Proposed Rules

60. Section 309(j) of the

Communications Act directs the

Commission to disseminate licenses

among a wide variety of applicants,

including small businesses and other

designated entities. Section 309(j) also

requires that the Commission ensure the

development and rapid deployment of

new technologies, products, and

services for the benefit of the public,

and recover for the public a portion of

the value of the public spectrum

resource made available for commercial

use. To date, the Commission has

received numerous requests to waive,

modify, or eliminate certain of the C and

F block auction and service rules for C

and F block broadband Personal

Communications Services (‘‘PCS’’)

licenses. As discussed more fully in

section E of this IRFA, infra, these

requests seek, among other things,

modification of the C and F block

entrepreneur eligibility requirements for

the upcoming C and F block auction,

reconfiguration of available 30 MHz C

block licenses, and adoption of an

alternative bidding plan. Upon

consideration of these numerous

requests, the Commission has

tentatively concluded that it is in the

public interest to revise certain aspects

of the C and F block rules. This Further

Notice sets forth the Commission’s

proposals and tentative conclusions

concerning possible revisions to the

rules governing the C and F block

spectrum. The Commission believes that

this Further Notice will provide the

Commission with an opportunity to

develop a record on the specific

proposals to open eligibility for this

spectrum and otherwise revise the C

and F block rules for the benefit of

consumers and the economy. In

addition, the Commission believes that

the tentative conclusions and proposals

set forth in this Further Notice help

meet the goals and objectives of section

309(j), and promote competition while

maintaining the fair and efficient

implementation of the auctions

program. Accordingly, the Commission

seeks comment on all proposals,

alternatives, tentative conclusions, and

other issues described in the Further

Notice; and the impact that such

proposals, alternatives, tentative

conclusions, and other issues may have

on small entities.

B. Legal Basis

61. This action is authorized under

sections 4(i), 303(r), and 309(j) of the

Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 303(r), and

309(j).

C. Description and Estimate of the

Number of Small Entities to Which the

Proposed Rules Will Apply

62. The RFA directs agencies to

provide a description of and, where

feasible, an estimate of the number of

small entities that will be affected by the

proposed rules, if adopted. Generally,

the RFA defines the term ‘‘small entity’’

as having the same meaning as the terms

‘‘small business,’’ ‘‘small organization,’’

and ‘‘small governmental jurisdiction.’’

The term ‘‘small business’’ has the same

meaning as the term ‘‘small business

concern’’ under the Small Business Act,

unless the Commission has developed

one or more definitions that are

appropriate for its activities. 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) meets any additional criteria

established by the Small Business

Administration (SBA). A small

organization is generally ‘‘any not-forprofit enterprise which is independently

owned and operated and is not

dominant in its field.’’ Nationwide, as of

1992, there were approximately 275,801

small organizations.’’ ‘‘Small

governmental jurisdiction’’ generally

means ‘‘governments of cities, counties,

towns, townships, villages, school

districts, or special districts, with a

population of less than 50,000.’’ As of

1992, there were approximately 85,006

local governments in the United States.

This number includes 38,978 counties,

cities, and towns; of these, 37,566, or 96

percent, have populations of fewer than

50,000. The Census Bureau estimates

that this ratio is approximately accurate

for all governmental entities. Thus, of

the 85,006 governmental entities, we

estimate that 81,600 (91 percent) are

small entities.

63. The possible rule changes

described in the Further Notice affect all

small entities that choose to participate

in the upcoming auction of C and F

block spectrum and other future

auctions of C and F block spectrum,

including small businesses currently

holding C and F block licenses and

other small businesses that may acquire

licenses through the auction. The

broadband PCS spectrum is divided into

six frequency blocks designated A

through F, and the Commission has

auctioned licenses in each block.

Frequency blocks C and F have been

designated by the Commission as

‘‘entrepreneurs’ blocks,’’ and

participation in auctions of C and F

block licenses is limited to entities

qualifying under the Commission’s rules

as entrepreneurs. The Commission’s

rules define an entrepreneur as an

entity, together with its affiliates, having

gross revenues of less than $125 million

and total assets of less than $500 million

at the time the FCC Form 175

application is filed. For blocks C and F,

the Commission has defined ‘‘small

business’’ as a firm, together with its

affiliates, that had average gross

revenues of not more than $40 million

in the three previous calendar years,

and ‘‘very small business’’ has been

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules 37101

defined as an entity that, together with

its affiliates, has average gross revenues

of not more than $15 million for the

preceding three calendar years. These

definitions have been approved by the

SBA.

64. On May 6, 1996, the Commission

concluded the first broadband PCS C

block auction. On July 16, 1996, the

second C block auction closed. On

January 14, 1997, the broadband PCS D,

E, and F block auction closed. Ninety

bidders (prior to any defaults by

winning bidders) won 493 C block

licenses and 88 bidders won 491 F block

licenses. Small businesses, placing high

bids in these C and F block auctions

were eligible for bidding credits and

installment payment plans. On April 15,

1999, Auction No. 22, which included

347 C and F block licenses, closed. On

January 12, 2000, the Wireless

Telecommunications Bureau announced

the Commission’s intention to auction C

and F block PCS licenses on July 26,

2000. The auction is currently

scheduled to include ninety-three 30

MHz C block licenses, twenty-one 15

MHz C block licenses, and forty 10 MHz

F block licenses. For purposes of our

evaluations and conclusions in this

IRFA, we assume that all of the original

90 C block broadband PCS licensees and

88 F block broadband PCS licensees, a

total of 178 licensees potentially

affected by this Further Notice, are small

entities. In addition to the 178 original

small business licensees that may

participate in the auction of the C block

licenses, a number of additional small

business entities may seek to acquire

licenses through auction; thus, these

business entities would be affected by

these rules.

D. Reporting, Recordkeeping, and Other

Compliance Requirements

65. At this time, the Commission does

not anticipate the imposition of new

reporting, recordkeeping, or other

compliance requirements as a result of

this Notice. We seek comment on this

tentative conclusion. Auction

participants will need to follow the

standard procedural rules used for

broadband PCS spectrum auctions,

including application and payment

rules.

E. Steps Taken to Minimize Significant

Economic Impact on Small Entities, and

Significant Alternatives Considered

66. 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 (among

others): (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 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. 5 U.S.C. 603.

67. The Commission tentatively

concludes that it is in the public interest

to revise certain aspects of the C and F

block rules to encourage participation

by small businesses while at the same

time helping to ensure the best use of

spectrum through the competitive

bidding process.

68. Reconfigure C Block Spectrum

Size: The Commission tentatively

concludes it will reconfigure each 30

MHz C block license available in future

broadband PCS auctions into three 10

MHz C block licenses. The Commission

believes that by increasing the number

of available licenses through this

reconfiguration, taken together with the

Commission’s proposals to lift certain of

our eligibility requirements, the

Commission will promote wider auction

participation and license distribution in

accordance with the goals of section

309(j) of the Communications Act.

Small bidders should find bidding for

10 MHz licenses more affordable, while

large bidders should enjoy greater

flexibility in tailoring their bidding to

their business plans without running

afoul of the spectrum cap. The

Commission also seeks comment on

whether a different configuration would

be more appropriate to provide

meaningful opportunities for potential

bidders, including new entrants into

particular markets.

69. Eliminate Eligibility Restrictions

for Certain Licenses in Tiers: The

Commission proposes to remove the

entrepreneur eligibility restrictions for

some, but not all, licenses available in

Auction No. 35 and in future C and F

block auctions. Based on the demand for

spectrum to satisfy congestion, new

technology and competitive needs, the

Commission tentatively concludes that

it would serve the public interest to

make some additional spectrum

available to all interested bidders. In

light of the Commission’s commitment

to providing meaningful opportunities

for entrepreneurs, the Commission seeks

comment on proposals to lift the

entrepreneur eligibility requirements for

some of the licenses available in

Auction No. 35 and future auctions,

which vary in the amount of spectrum

that would remain set-aside according

to the size of both the available licenses

and the markets. The Commission

tentatively concludes that it will divide

BTAs into two tiers according to

population size of the BTA. ‘‘Tier 1’’

would comprise BTAs at and above a

2.5 million population threshold; ‘‘Tier

2’’ would comprise BTAs below that

population threshold. For available 30

MHz C block licenses, the Commission

tentatively concludes to allow ‘‘open’’

bidding for two of the three 10 MHz C

block licenses in Tier 1, and one of the

three 10 MHz C block licenses in Tier

2. The Commission also seeks comment

on whether there should be ‘‘open’’

bidding for all three of the 10 MHz

licenses in Tier 1, and two of the three

in Tier 2. With respect to available F

block licenses, the Commission seeks

comment on eliminating the eligibility

requirements, or, alternatively, applying

a tiered approach or retaining the

existing eligibility rules. Finally, the

Commission also tentatively concludes

it will allow ‘‘open’’ bidding for all

available 15 MHz C block licenses,

which have previously been auctioned

but not sold. These alternatives would

affect the configuration and set-aside of

spectrum. We seek comment on the

impact of these alternatives on small

businesses.

70. Retain Current License Grouping

for Bidding in Auction: The Commission

tentatively concludes to take bids on

each license separately in Auction No.

35 on a simultaneous multiple round

basis as the Commission has previously

done in the past. The Commission

believes that bidding for each license

separately is unlikely to preclude

carriers from aggregating licenses on a

nationwide or regional basis, and at the

same time will provide carriers that

have intense spectrum needs in a

particular market the opportunity to

compete for licenses as well.

71. Grandfather Exception: The

Commission seeks comment on whether

the grandfather eligibility exception

should be revised or clarified. The

Commission also tentatively concludes

that upon the merger of two entities,

each of which is eligible for the

‘‘grandfather’’ exception, the exception

extends to the resulting entity; but that,

upon the merger of two entities, only

one of which is eligible for the

‘‘grandfather’’ exception, the exception

does not extend to the resulting entity.

72. Revise the Bidding Credits

Available for Auction No. 35: For those

licenses that are not subject to eligibility

restrictions, the Commission seeks

comment on whether to increase

bidding credits for small and very small

businesses, and consortia thereof, to 25

and 40 percent, respectively, or to retain

existing bidding credit levels. We expect

that this departure from previous

37102 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Proposed Rules

procedure will provide small businesses

with a meaningful opportunity to

compete in an open auction.

73. Alter the Transfer Requirements

for Certain Licenses: The Commission

proposes to modify the Commission’s

transfer requirements to correspond to

the Commission’s proposed changes in

the eligibility requirements, and to

encourage rapid construction of C and F

block systems. Specifically, the

Commission tentatively concludes that

C and F block licenses won pursuant to

open bidding at Auction No. 35, or any

future open auction for such spectrum,

would not be subject to a transfer

holding rule. For licenses won in closed

bidding in any C or F block auction, the

Commission seeks comment on a

proposal that will allow a licensee to

assign or transfer its license to any

qualified entity, entrepreneur or not,

upon the licensee’s completion of its

first construction benchmark, whether

or not it takes the full five years allowed

by the rules. The Commission also seeks

comment on whether it should evaluate

a licensee’s compliance with

construction requirements on a systemwide basis.

74. Eliminate the License Cap: The

Commission proposes to remove

§ 24.710 from the Commission’s rules

which prohibits an auction applicant

from winning more than 98 C and F

block licenses. When this rule was

established, the license cap was

intended to facilitate a fair distribution

of licenses within the C and F blocks.

The Commission has achieved this

objective; moreover, the Commission’s

proposal to reconfigure the available 30

MHz C block licenses would create

additional C block licenses, while the

Commission’s proposal to eliminate the

eligibility restrictions would increase

the chances of C and F block licenses

being won by a variety of entities.

75. Retain the Spectrum Cap: The

Commission tentatively concludes that

it should not grant the petitions seeking

waiver of, or forbearance from, the

CMRS spectrum cap rules and,

accordingly, it would apply the

spectrum cap to licenses of PCS C and

F block spectrum to be auctioned in

Auction 35. The Commission’s proposal

to revise the rules pertaining to the PCS

C and F block spectrum helps ease the

impact of the cap in this auction, and

thereby renders cap relief unnecessary.

76. Section 309(j) of the

Communications Act directs the

Commission to disseminate licenses

among a wide variety of applicants,

including small businesses and other

designated entities. Section 309(j) also

requires that the Commission ensure the

development and rapid deployment of

new technologies, products, and

services for the benefit of the public,

and recover for the public a portion of

the value of the public spectrum

resource made available for commercial

use. The Commission believes that the

proposals, alternatives, and tentative

conclusions described in this Notice

promote these goals while maintaining

the fair and efficient execution of the

auctions program. The Commission,

therefore, seeks comment on all issues,

proposals, tentative conclusions, and

alternatives described in the Notice, and

the impact they may have on small

entities.

F. Federal Rules That May Duplicate,

Overlap, or Conflict With the Proposed

Rules

77. None.

List of Subjects in 47 CFR Part 24

Communications common carriers,

Personal communications services,

Radio.

Federal Communications Commission.

William F. Caton,

Deputy Secretary.

[FR Doc. 00–14881 Filed 6–12–00; 8:45 am]

BILLING CODE 6712–01–P

DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Chapter IV

[Docket: 000214043–0043–01]

RIN 1018–AF55, 0648–AL91

Announcement of Draft Policy for

Evaluation of Conservation Efforts

When Making Listing Decisions

AGENCIES: Fish and Wildlife Service,

Interior; National Marine Fisheries

Service, NOAA, Commerce.

ACTION: Announcement of draft policy.

SUMMARY: We, the Fish and Wildlife

Service (FWS) and the National Marine

Fisheries Service (NMFS) (Services),

announce a draft policy for the

evaluation of conservation efforts when

making listing decisions under the

Endangered Species Act of 1973, as

amended (Act). While the Act requires

us to consider all conservation efforts

being made to protect a species, the

policy identifies criteria we will use in

determining whether formalized

conservation efforts contribute to

making listing a species as threatened or

endangered unnecessary. The policy

applies to conservation efforts identified

in conservation agreements,

conservation plans, management plans,

or similar documents developed by

Federal agencies, State and local

governments, Tribal governments,

businesses, organizations, and

individuals.

DATES: Send your comments on the draft

policy to us (see ADDRESSES section) by

August 14, 2000.

ADDRESSES: Send your comments on the

draft policy to the Chief, Division of

Endangered Species, U.S. Fish and

Wildlife Service, 1849 C Street, N.W.,

(MS–420 ARLSQ), Washington, DC

20240, or to

FW9_FWE_DTEFR@fws.gov. You may

examine the comments we receive by

appointment during normal business

hours in Room 420, Arlington Square

Building, 4401 North Fairfax Drive,

Arlington, Virginia.

FOR FURTHER INFORMATION CONTACT:

Nancy Gloman, Chief, Division of

Endangered Species, U.S. Fish and

Wildlife Service at the above address,

telephone 703/358–2171 or facsimile

703/358–1735, or Wanda Cain, Chief,

Endangered Species Division, National

Marine Fisheries Service, 1315 EastWest Highway, 13th Floor, Silver

Spring, Maryland 20910, telephone 301/

713–1401 or facsimile 301/713–0376.

SUPPLEMENTARY INFORMATION:

Draft Policy

Policy Purpose

We have proposed this policy in order

to ensure consistent and adequate

evaluation of formalized conservation

efforts (conservation efforts identified in

conservation agreements, conservation

plans, management plans, and similar

documents) when making listing

decisions under the Act. We have also

proposed this policy to facilitate the

development of conservation efforts that

sufficiently improve a species’ status so

as to make listing the species as

threatened or endangered unnecessary.

Policy Scope

This policy applies to our evaluation

of all formalized conservation efforts

when making listing decisions for

species not listed, including findings on

petitions to list species and decisions on

whether to assign candidate status, to

remove candidate status, to issue

proposed listing rules, and to finalize or

withdraw proposed listing rules. This

policy applies to formal conservation

efforts developed with or without a

specific intent to influence a listing