[Federal Register Volume 62, Number 215 (Thursday, November 6, 1997)]
[Rules and Regulations]
[Pages 60025-60034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29346]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 21 and 74

[MM Docket No. 97-217; FCC 97-360]


MDS and ITFS Two-Way Transmissions

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this Notice of Proposed Rulemaking (``NPRM''), the 
Commission seeks comment on the proposed amendment of its rules to 
enable Multipoint Distribution Service (``MDS'') and Instructional 
Television Fixed Service (``ITFS'') licensees to engage in fixed two-
way transmissions. The Commission seeks comment on its proposals to 
enhance the flexibility of MDS and ITFS operations through facilitated 
use of response stations, use of booster stations with program 
origination capability in a cellular configuration, and use of variable 
bandwidth (``subchanneling'' or ``superchanneling''). Comment is sought 
regarding the technical, procedural and economic effects of 
implementing the proposed rule changes.

DATES: Comments must be filed on or before December 9, 1997, and reply 
comments on or before January 8, 1998. Written comments by the public 
on the Initial Regulatory Flexibility Analysis are due December 9, 
1997.

ADDRESSES: Office of the Secretary, Federal Communications Commission, 
1919 M Street, N.W., Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Michael J. Jacobs, (202) 418-7066 or 
Dave Roberts, (202) 418-1600, Video Services Division, Mass Media 
Bureau.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking, MM Docket No. 97-217, adopted October 7, 
1997, and released October 10, 1997. The full text of this NPRM is 
available for inspection and copying during normal business hours in 
the FCC Reference Center (Room 239), 1919 M Street, N.W., Washington, 
D.C., and also may be purchased from the Commission's copy contractor, 
International Transcription Services, Inc., (202) 857-3800, 1231 20th 
Street, N.W., Washington, D.C. 20036.

Synopsis of Notice of Proposed Rulemaking on MDS and ITFS Two-Way 
Transmissions

    1. This NPRM was issued in response to a petition for rulemaking 
filed by a group of 111 educators and participants in the wireless 
cable industry (collectively, ``Petitioners''), comprised of MDS and 
ITFS licensees, wireless cable operators, equipment manufacturers, and 
industry consultants and associations. In this proceeding, Petitioners 
are asking that we implement a series of technical rule changes that 
would give MDS and ITFS licensees the needed flexibility to fully 
exploit digital technology in delivering two-way communications 
services. Currently, MDS and ITFS licensees are authorized to use 
digital technology in order to increase the number of usable one-way 
channels available to them, leased ITFS frequencies and MDS channels 
may be used for asymmetrical high speed digital data applications so 
long as such usage complies with the Commission's technical rules and 
its declaratory ruling on the use of digital modulation by MDS and ITFS 
stations (``Digital Declaratory Ruling,'' 11 FCC Rcd 18839 (1996)), and 
MDS licensees have been permitted to provide two-way service on a 
limited basis. While 125 kHz response channels are currently allocated 
for use in association with most MDS and ITFS stations, Petitioners 
anticipate that many MDS and ITFS licensees and wireless cable 
operators engaging in two-way transmissions will require more capacity 
for return paths than is available through such 125 kHz channels. 
Moreover, because these 125 kHz response channels must be individually 
licensed under the

[[Page 60026]]

Commission's existing rules, Petitioners argue that the existing rules 
are too cumbersome and impose too great a financial burden on licensees 
seeking to implement two-way wireless services. Instead, Petitioners 
propose a system under which MDS and ITFS licensees would be permitted 
to utilize all or part of a 6 MHz channel for return path transmissions 
from subscriber premises, to cellularize their transmission systems to 
take advantage of spectrally efficient frequency reuse techniques, and 
to employ modulation schemes consistent with bandwidths either larger 
or smaller than 6 MHz, all while providing incumbent MDS and ITFS 
licensees interference protection equivalent to what they currently 
receive.
    2. Petitioners emphasized that they are not seeking a reallocation 
of spectrum, but instead are seeking to modify the technical rules 
governing the spectrum already allotted to MDS and ITFS. We placed the 
petition for rulemaking on public notice, and received comments and 
reply comments from wireless cable industry participants that generally 
supported Petitioners' proposals. While many ITFS commenters expressed 
concern over the details of Petitioners' proposals, the comments and 
reply comments reflected a consensus in the MDS and ITFS communities 
that the concept of two-way offerings would greatly aid both services. 
We believe that several of Petitioners' proposals may be in the public 
interest in that they would enhance the MDS and ITFS services by 
providing licensees additional flexibility in order to implement two-
way services. Such flexibility would be facilitated by changing certain 
of our technical rules, amending some of our programming rules, and 
modifying some of our current application procedures for MDS and ITFS 
facilities. The NPRM seeks comment on the various issues raised by 
these proposals, and puts forth some counter-proposals to those 
proffered by Petitioners.
    3. Revised Definitions of Service. The ITFS/MDS spectrum is used 
primarily for the provision of either one-way video service to 
students, in the ITFS context, or, in the MDS context, wireless cable 
service to subscribers, which likewise historically has constituted 
primarily the provision of one-way video services. While our Rules 
already permit MDS licensees to provide non-video services, under our 
current regulatory scheme, MDS operators typically only provide two-way 
service to subscribers using telephone return links or individually 
licensed subscriber premises stations. This is an outgrowth of the 
basic one-way approach to MDS transmission from which our current rules 
originated.
    4. We propose changes to MDS and ITFS service definitions to fully 
incorporate the concept of two-way transmission and which reflect the 
reorientation of the regulatory approach to a flexible service, from 
that of an essentially one-way service. A regulatory system would be 
created authorizing the use of response stations and response station 
hubs to enable the two-way operation of wireless cable systems. We 
solicit comment on this new service paradigm.
    5. Specifically, we propose to amend the definition of a ``response 
station'' to indicate that licensees may use all or part of any of 
their 6 MHz channels as a response channel. Response stations would be 
the means of transmission from a subscriber's premises, and could use 
either separate transmitting antennas for return paths or combined 
transmitting/receiving antennas. The concept of a response station hub 
is added, and these hubs would serve as the collection points for 
signals from the response stations in a multipoint-to-point 
configuration for upstream signal flow. Thus, response stations would 
not need to be licensed individually, and they could operate at lower 
power because the response station hubs would be located closer to 
subscriber premises than are current transmitter sites. Commenter 
Caritas Telecommunications, Inc. (``Caritas'') proposed that we limit 
the availability of response channels to MDS channels 1, 2 and 2A, 
converting those channels from their current use for point-to-
multipoint transmissions to subscribers' homes to use for transmission 
return paths. We tentatively decline to adopt this counter-proposal and 
agree with Petitioners that it would both artificially limit the amount 
of spectrum that could be used for return paths and unnecessarily 
prevent ITFS licensees from using their own channels for return paths. 
We solicit comment on the response station hub concept and its 
implications. We also solicit comments on our proposals regarding the 
expanded definition of response stations, including provision for 
transmissions on all available MDS and ITFS channels, and on Caritas' 
counter-proposal.
    6. We further propose to amend the definition for ``signal booster 
stations'' to allow such stations to originate transmissions, as well 
as to relay transmissions from other stations. Booster stations would 
be used to cellularize wireless cable operations, which now may operate 
in areas too large to be served by a single station. Permitting 
boosters to originate as well as relay programming would facilitate 
frequency reuse cellular configurations and two-way high speed Internet 
access and other services. We seek comment on the proposal to expand 
the role of booster stations in this manner. Flexible subchannelization 
(i.e., the division of a channel of a particular bandwidth into 
multiple channels of smaller bandwidth) also would be permitted to 
allow more efficient channel reuse within a given service area, and 
superchannelization (i.e., the combining of more than one channel into 
a single, wider channel) would be allowed and could be used for the 
transmission of high data rates and/or the use of spread spectrum 
emissions. Superchannels also would be licensed to multiple entities in 
many instances, due to the fact that the interleaved, non-contiguous 
channels in this band generally are licensed to different entities.
    Subchannels and superchannels would be limited to digital 
transmissions with uniform spectral power density across the bandwidth, 
in order to make possible the use of spectral density analysis as part 
of the interference analysis process. We seek comment on these 
channelization proposals.
    7. Finally, as noted above, 125 kHz channels are currently 
allocated as response channels for use in association with most MDS and 
ITFS stations, and as such they would provide further capacity as 
return paths in the cellularized two-way scheme. In their Comments, 
Petitioners add that the Commission should also permit the use of the 
125 kHz channels for point-to-multipoint transmissions. Petitioners 
explain that for systems using digital technologies, there is a need to 
transmit downstream control signals over side channels that require 
less than a full 6 MHz channel, for instance for control over digital 
set top decoders or control over two-way communication systems. 
Petitioners maintain that use of the 125 kHz channels for such 
applications is beneficial in that it preserves the 6 MHz channels for 
transmissions that require greater bandwidth, and it can lead to 
reduced equipment costs. Petitioners also propound that to further 
offer flexibility to create channels with bandwidths exceeding 125 kHz, 
the Commission should remove the current rule provisions which require 
that the 125 kHz channels only be used in conjunction with their 
associated 6 MHz channels. While also proposing that the 125 kHz 
channels be used for additional point-to-multipoint spectrum, Caritas 
goes a step further than Petitioners, advancing that the Commission 
should

[[Page 60027]]

reallocate the 125 kHz channels to be combined into one continuous 
piece of spectrum to be used for such purposes. We are proposing rules 
in accordance with the most flexible framework ultimately requested by 
Petitioners for use of the 125 kHz channels, including allowing 
superchannelization or subchannelization of these stations regardless 
of whether they are used as response stations or for point-to-
multipoint transmissions. We believe that these changes are sufficient 
to derive the benefits explained by Petitioners, and that a 
reallocation and the complications associated with that is not 
necessary. We solicit comment on these proposals regarding use of the 
125 kHz channels.
    8. Interference Considerations. In the Digital Declaratory Ruling, 
we waived our rules with respect to out-of-band emissions and permitted 
the use of a somewhat relaxed spectral mask for digital transmission 
modes. This action was taken because the Commission concluded that the 
application of the current analog emission mask to digital emissions 
would be unnecessarily restrictive and could increase the cost of 
digital equipment while providing no benefit. In addition, the results 
of laboratory tests submitted in connection with the Commission's 
consideration of this issue demonstrated that a digital station using 
the relaxed mask is less likely to cause interference than an analog 
station using the existing, more restrictive, mask.
    9. In the NPRM, we propose to permanently incorporate into the 
Rules the spectral mask waiver provisions of the Digital Declaratory 
Ruling, specifically for primary system transmitters and single channel 
booster transmitters with a power greater than -9 dBW EIRP; masks are 
further specified, albeit with certain modifications, for sub-and 
superchannels, response stations, and booster stations transmitting on 
multiple non-contiguous channels carrying separate signals and with an 
EIRP greater than -9 dBW (``broadband boosters''). As an exception to 
the spectral masks for the 125 kHz channels, discrete spurious 
emissions above the upper and below the lower authorized channel edges 
would be permitted under certain conditions. And Petitioners request 
that no spectral mask whatsoever be applicable to booster stations with 
an EIRP of -9 dBW or less. Petitioners argue that such low power 
stations have only a very limited potential for interference, and that 
applying strict emission limitations to them would significantly 
increase the price of equipment with no benefit to the user or nearby 
licensees in terms of added interference protection. We seek comment on 
whether the degree of attenuation proposed for these various schemes is 
sufficient to provide adequate adjacent channel interference 
protection. We also request comment on whether eliminating a spectral 
mask for low power boosters presents an undue interference risk, and, 
if so, which additional interference safeguards should be adopted.
    10. As in the Digital Declaratory Ruling, all spectral mask 
calculations involving digital emissions will use the average power of 
the emission across its bandwidth, and steps must be taken to ensure 
substantially uniform power density across the bandwidth in use, 
including constant power per unit of bandwidth for sub-and 
superchannels. We also propose to place a limit of 18 dBW EIRP on 
response station transmitters in cellularized systems, and that higher 
power facilities be authorized separately and require a site specific 
interference analysis. Given the extremely complex interference 
situation attendant to cellularized operations and the heavily 
encumbered nature of MDS and ITFS environments, we do not believe that 
it would be prudent to permit essentially unlimited numbers of response 
station transmitters with 2000 watts (33 dBW EIRP) of radiated power, 
as Petitioners requested. However, while current MDS and ITFS rules 
limit booster power to 18 dBW EIRP, we propose to allow boosters to 
operate up to 33 dBW EIRP, the maximum power level for MDS and ITFS. We 
seek comment on this approach to transmitter power within the two-way 
scheme. We also seek comment on rule proposals with respect to 
frequency tolerance requirements for digital transmissions, type 
acceptance of response station transmitters and boosters, and radio 
frequency (``RF'') emissions for MDS/ITFS return path transmissions.
    11. The Commission's current regulations in ITFS and MDS for 
interference protection were designed to minimize the potential for 
destructive cochannel and adjacent channel interference between systems 
located in proximity to each other. The specific criteria for 
protection are of two forms, namely, (1) cochannel and adjacent channel 
desired-to-undesired signal (D/U) ratios and (2) limits on the 
magnitude of a station's free space field as measured at the edge of 
the station's protected service area. For cochannel interference 
protection, an applicant must configure its system so that the signals 
from each of its transmitters are at least 45 dB weaker than the 
signals of the existing licensee's transmitters within the licensee's 
protected service area and/or, in the case of ITFS licensees, at the 
licensee's protected receiver sites. For adjacent channel protection, 
the ratio must be at least 0 dB. In order to meet the second form of 
protection, an applicant generally must be able to demonstrate that the 
magnitude of the free space radiated field from each transmitter does 
not exceed a particular limit (i.e., a power flux density -73 dBW/
m<SUP>2</SUP>) at the boundary of the applicant's service area.
    12. Petitioners propose to apply the existing interference criteria 
in essentially unchanged form, and to supplement them with similar new 
criteria to be applied to hub, booster, and response stations. 
Petitioners further propose to aggregate the power from a primary 
station and all associated booster stations for one set of interference 
calculations, and that a separate set of interference calculations be 
performed using the aggregated power from response stations. However, 
we counter-propose that a calculation of the combined field produced by 
the primary station transmitter, all boosters, and the aggregated power 
from response stations within a system be utilized to determine 
compliance with interference standards. We seek comment on the relative 
merits of Petitioners' proposed approach and our counter-proposal. We 
also emphasize that where an interfered-with receive antenna meets the 
antenna characteristics set forth in our MDS and ITFS rules, the 
station causing the harmful interference is responsible for curing it.
    13. Interference Prediction Methodology. In order to predict the 
interference potential of response stations in the proposed 
cellularized scheme, Petitioners seek to employ a three-step process 
using statistical analysis and worst-case assumptions. In step one, the 
hub station response service area (``RSA'') is defined and a grid of 
points is located within this area representative of the expected 
actual distribution of response station transmitters within the area. 
Regions within the area are defined so that an adequate population 
uniformity exists for purposes of predicting interference from a 
distribution of response station transmitters. Population uniformity is 
determined using a complex formula involving evaluation of the 
population density within each ZIP Code within the planned boundaries 
of a region. Population uniformity is an important facet of each region 
because Petitioners assume, a priori, that the distribution of response 
station transmitters will be

[[Page 60028]]

closely matched to population distribution within each region.
    14. In step two, Petitioners propose to identify the technical 
characteristics of response stations which will be associated with each 
point in the RSA grid. One or more classes of response stations would 
be identified within the RSA and its regions, with each class being a 
function of several variables, such as transmitted power (EIRP), 
antenna height, frequency, bandwidth, and maximum number of assumed 
simultaneously operated response stations in the regional class; these 
characteristics and others would be specified in the response hub 
application. Differentiating between classes is asserted by Petitioners 
to be essential for accurately calculating the interference potential 
of the response stations within an RSA, because differentiable 
technical characteristics between classes likely will lead to 
differentiable potentials for causing interference to neighboring 
systems.
    15. The final step in calculating response station interference 
would require combining the radiated fields of all response stations of 
all classes, regions and RSAs within the primary station's protected 
service area. In order to simplify this calculation, the statistical 
population uniformity within each region would be used as a basis for 
grouping response stations of all classes in proximity at the grid 
points laid out within each RSA; multiple classes could share the same 
grid points. For each class of response stations assigned to a grid 
point, a set of worst-case assumptions would be made concerning the 
transmitting antenna radiation pattern, transmitter power (EIRP) and 
antenna height. Several complex calculations, including procedures for 
checking the initial calculations, combining the radiated field for all 
of the transmitters for each class of response station at each grid 
point from all RSAs would then be used to evaluate compliance with the 
interference criteria. Thus, whereas under current rules such 
compliance is calculated on a per-transmitter basis, Petitioners' 
proposed system would necessitate that it be calculated on an 
aggregated basis, covering hundreds or thousands of transmitters and 
their combined interference potential to neighboring systems. 
Petitioners argue that licensees should be free, upon notification to 
the Commission, to continue adding response station transmitters within 
their systems until calculations indicate that permissible interference 
values would be exceeded, and that using worst-case assumptions in 
their methodology has built in an interference protection buffer for 
situations where more stations or a different mix of stations than 
anticipated are activated in an RSA.
    16. In the NPRM, we caution that the interference prediction 
methodology is based solely on assumptions, thus leading to a 
statistical picture of response station interference potential which 
gives an uncertain approximation of the operating environment, although 
Petitioners also claim that this approximation is conservative. In 
addition, we discuss how the small scale test conducted by Petitioners 
in the flat and relatively unimpeded terrain of Tucson, AZ, while 
useful, may not be generally applicable to the very diverse 
geographical and interference environments in which MDS and ITFS 
systems operate. We also express concern that the proposed methodology 
is so complex that it may be very difficult to implement and enforce, 
and may lead to numerous filings updating system configurations, which 
would present severe burdens upon existing licensees and operators 
needing to analyze these filings in order to verify that no harmful 
interference will result to their systems. Notwithstanding these 
reservations, however, we express our belief that Petitioners' overall 
goal of facilitating cellularization of the services is very forward-
looking, and warrants an opportunity to proceed despite the 
complications and uncertainties which could arise. Thus, we propose to 
adopt the methodology and seek comment on it, but we also specifically 
solicit suggestions for alternative methods for prediction of 
interference to and from cellularized systems. For example, we ask to 
what extent ``worst case'' analysis could serve a sufficient 
approximation to a more exact analysis, such as a determination of 
noninterference based solely on terrain shadowing, and to what 
geographical extent individual response station areas should be 
aggregated in large BTAs.
    17. Modulation Methods. In the Digital Declaratory Ruling, we 
authorized the use of Quadrature Amplitude Modulation (``QAM'') and 
Vestigial Sideband (``VSB'') modulation. While we declined to consider 
the use of other digital modulation methods in the context of that 
proceeding, we stated that we would consider future requests for 
declaratory rulings where the requesters submit appropriate data to 
demonstrate that other modulation techniques could be used in a manner 
that would not interfere with MDS and ITFS analog and digital 
operations. In the current rulemaking proceeding, Pace 
Telecommunications Consortium (``Pace'') commented that the Commission 
should immediately grant ITFS and MDS licensees the flexibility to use 
whatever digital techniques best serve their needs, with interference 
controlled through the use of power spectral density limits and 
spectral masks.
    18. As in the Digital Declaratory Ruling, in the NPRM we decline to 
adopt one or more ``standard'' digital technologies. We will retain or 
add provisions for accommodating the use of different modulation types, 
as requested by Petitioners. In addition, because we wish to encourage 
parties to continue to identify different digital modulation schemes 
that could be useful in MDS and ITFS, we emphasize that we remain open 
to considering future requests for declaratory rulings in accordance 
with the Digital Declaratory Ruling, upon submission of appropriate 
data. We further invite comment on whether there is a basis for 
concluding that use of particular digital modulation types by MDS and 
ITFS stations other than VSB and QAM would not be prone to 
interference, based on the current 45 dB/0 dB protection ratios for 
cochannel and adjacent channel interference respectively, i.e. that 
such modulation formats should be permitted without requiring test 
data. For example, one modulation type may be a subset of VSB and QAM 
and, therefore, is covered under the industry tests used to support the 
Digital Declaratory Ruling. 
    19. Application Procedures. Petitioners set forth an application 
processing scheme, governing the filing of applications for new or 
modified response station hubs or boosters, that would substantially 
shift review of applications from Commission staff and leave much of 
the interference environment to be worked out among licensees. 
Petitioners propose that we adopt a rolling, one-day filing window 
system. While each applicant would be required to demonstrate 
protection of existing or previously proposed facilities, all 
acceptable applications filed on the same day would be granted and the 
filers left to resolve incompatibilities amongst themselves with little 
or no intervention by Commission staff. Specifically, Petitioners 
propose that applications would be placed on public notice without 
prior staff review of interference studies, and that the applications 
would be automatically granted on the 61st day after that notice unless 
a petition to deny was filed or the Commission notified the applicant 
prior to that date that a grant would not be made.

[[Page 60029]]

    20. Petitioners speculate that a large number of applications are 
likely to be filed once the new rules become effective and that many of 
the applications submitted at that time will conflict with others filed 
simultaneously. In order to smooth the transition to the rolling one-
day filing window application processing system, Petitioners propose 
that a special one-week window be employed when the new rules first go 
into effect, and that all applications filed during this window be 
deemed filed as of the same day. Following the publication of a public 
notice announcing the tendering for filing of applications submitted 
during that window, applicants would have a period of 60 days to amend 
their applications to resolve conflicts. During this 60-day period, no 
additional applications could be filed, affording those who filed 
during the one-week window an opportunity to resolve any conflicts 
without fear that, during the pendency of settlement discussions, third 
parties will propose facilities that will have to be protected if the 
original applicants amend their applications. After this initial 60 day 
period, public notice and automatic grant procedures akin to those 
proposed by Petitioners for the rolling one-day filing windows would be 
implemented. Following Petitioners' plan, on the 61st day after the 
publication of the second public notice, applications for 
authorizations for response station hubs and for booster stations 
henceforth would be accepted and processed under the rolling one-day 
filing window approach.
    21. Although we tentatively accept Petitioners' proposal to place 
the applications on public notice without prior staff review of the 
interference studies, we tentatively reject their proposal for 
automatic grant of the applications. We believe that placing the 
applications on public notice without prior interference analysis will 
serve to speed the review process by making the relevant data available 
to all interested parties as quickly as possible. However, we believe 
that an automatic grant at the end of the proposed 60 day public notice 
period will not provide an adequate opportunity for interested parties 
or, where necessary, for Commission staff, to review the interference 
studies or for the Commission to make a reasoned determination in 
complex cases. We solicit comment on our conclusions.
    22. In addition, while Petitioners' proposal in this area presents 
a promising start, it still leaves a number of concerns and questions 
unresolved. Commenter Catholic Television Network (``CTN'') raised the 
concern that the one-day rolling filing window will create an undue 
burden on ITFS licensees, who may find themselves required to evaluate 
a continuing stream of applications. We solicit comment on how such a 
concern could be resolved in the context of the one-day rolling filing 
window. We also solicit comment on whether we should retain our current 
periodic filing window system used for ITFS applications and what 
advantages and disadvantages exist between the existing system and the 
proposed system. Furthermore, Petitioners' proposal leaves a number of 
significant questions unresolved regarding the processing of 
conflicting applications. For example what should be the result in the 
event that same-day filers of closely-spaced conflicting applications 
cannot resolve their differences? Should the applicants be ordered into 
binding arbitration for which they will assume the cost and whose 
outcome will be finally subject to Commission approval? Should the 
Commission simply freeze the applications until the parties are able to 
resolve their differences? Should the Commission's staff function as a 
referee in such cases and, if so, should it adopt any sort of 
comparative criteria to guide its decisions? Should the staff adopt 
some type of point system to rate competing applicants? We seek comment 
on these questions.
    23. We tentatively propose the following processing rules, taking 
into consideration the concerns of the various commenters. Under these 
rules, applicants would file an original and two copies of their system 
proposal and serve a copy of the proposal on any party whose MDS/ITFS 
interests may be affected by the proposal. A complete application would 
then be placed on public notice for a 60-day initial comment period. 
Prior to the expiration of the 60-day period, interested parties could 
file comments, petitions to deny or requests for extension of time to 
file comments or petitions to deny. Although it is our policy that 
requests for extension of time shall not be granted, and we do not 
propose to change that policy, we anticipate that the limited resources 
available to an ITFS party to review a potentially complex two-way 
service proposal will be a factor considered in whether we grant a 
request for extension of time. In the alternative, we would consider 
adopting a 120-day initial comment period, with requests for extensions 
of time considered only in extraordinary circumstances. We seek comment 
on these proposals and solicit detailed alternate proposals. We 
especially seek comment on what time period parties believe would be 
necessary to adequately review a service proposal without unduly 
delaying the processing of such a proposal.
    24. We believe that the adoption of the one-week initial filing 
window will lessen the burden on all affected parties, including the 
Commission's staff, during the first round of application filing. We 
also believe that providing parties with an initial 60-day period 
during which they can resolve any apparent conflicts and then amend 
their applications without prejudice will provide for quicker and 
easier processing. We believe that issuing a public notice announcing 
the acceptance for filing of all applications as amended will serve an 
important notice function for all potentially affected parties. As 
discussed above, however, we do not propose to accept Petitioners' 
automatic grant proposal. Rather than adopt Petitioners' proposed 
automatic grant, we tentatively conclude that, at the end of any 
comment period that we may adopt and following any further staff 
review, the Commission staff, pursuant to delegated authority, would 
issue a grant or denial of any authorization pursuant to the revised 
rules. If no oppositions have been filed in a particular proceeding and 
the Commission staff has determined that a service proposal would not 
cause interference in violation of our Rules, we anticipate that such a 
grant would be accomplished quickly. We seek comment on both our 
proposed approach and on Petitioners' proposed automatic grant.
    25. We also solicit comment on ways to make information on actual 
system operating parameters available to third-party applicants who 
need such information for analysis of the interference environment, and 
on how to conform our MDS and ITFS rules to provide for amendment of 
booster station and response station hub applications. Finally, in 
their Comments, Petitioners urge that we adopt a system whereby an 
applicant, once authorization for service has been granted, may switch 
from common carrier to non-common carrier service and back without 
seeking subsequent authorization. We seek comment on this aspect of 
Petitioners' proposal, and on whether operators should be required to 
give the Commission notice when they are switching back and forth 
between common carrier and non-common carrier service, even if prior 
approval is not required.
    26. Issues Specific to ITFS. Under Sec. 74.931 of the Commission's 
Rules, ITFS stations are operated by

[[Page 60030]]

educational organizations and are ``intended primarily to provide a 
formal educational and cultural development in aural and visual form,'' 
to students enrolled for credit in accredited secondary schools, 
colleges and universities. An ITFS licensee who leases excess channel 
capacity to a wireless cable operator must provide a total average of 
at least 20 hours per channel per week of ITFS programming on its 
authorized channels. ITFS licensees in such lease arrangements also 
retain the right to recapture ``an average of an additional 20 hours 
per channel per week for simultaneous programming on the number of 
channels for which it is authorized.'' In addition, an ITFS licensee 
may shift its required educational programming onto fewer than its 
authorized number of channels via channel loading or channel mapping. 
The licensee may further agree to transmission of recapture time on 
channels not authorized to it but which are included in the wireless 
cable system of which it is a part.
    27. Petitioners propose changes which would revise the absolute 20 
hours per channel per week recapture time requirement to provide that 
the ITFS programming requirements constitute a total of 40 hours per 
channel per week, including both actual programming and recapture time. 
The Petition does not contemplate any changes to the required minimum 
of 20 hours per channel per week of actual ITFS programming. Thus, 
under the proposed changes, if an ITFS licensee actually provides more 
than an average of 20 hours per channel per week of ITFS programming, 
reserved recapture time would only need to make up the difference to 
achieve a total of 40 hours per channel per week. CTN commented that 
retaining the 20 hour minimum actual programming requirement is 
inadequate, and insisted that as digital compression increases the 
number of channel paths, there must be a proportionate increase in the 
number of paths available for education, including data services. In 
their reply, Petitioners claimed that many ITFS licensees are finding 
it difficult to satisfy the existing ITFS minimum programming 
requirements. Petitioners further posed that adoption of CTN's proposal 
would create a disincentive for ITFS licensees to introduce the new 
technologies contemplated by the Petition. We solicit comment from ITFS 
licensees on these comments. In the NPRM, we find no grounds for 
retreat from the absolute 20 hour recapture time requirement, 
especially at this juncture when several wireless cable systems 
currently enjoy or imminently stand to reap the benefits of increased 
spectrum capacity through use of digital compression techniques. While 
we acknowledge the great value to wireless cable operators of 
maximization of spectrum available for leasing, we also emphasize the 
primary educational purpose of ITFS and the importance of maintaining 
sufficient capacity for programming by ITFS licensees which fulfills 
that purpose.
    28. In the NPRM, we specifically seek comment on several issues 
related to the question of whether to change our ITFS programming 
requirements in light of the use of digital technology by ITFS 
licensees. Should there be different rules depending on whether the 
wireless cable system employs digital transmissions? Should a change 
take the form of an increase in required levels of actual ITFS 
programming, an increase in ready recapture time, or both? How should 
any increased requirements be measured, e.g., additional hours or 
additional paths? With the flexibility in implementation of ITFS 
programming requirements currently allowed or proposed, such as channel 
loading and shifting of required programming onto other channels within 
a wireless cable system, should we retain our existing program content 
requirements and, if not, how should they be modified? For example, 
should data transmission count towards minimum ITFS programming 
requirements? Should voice transmission count? If data and/or voice 
transmission were to count, how would they be measured with respect to 
fulfillment of minimum ITFS programming requirements? Should time-of-
day requirements be instituted for these uses to help ensure that they 
are really being put towards ITFS programming? Furthermore, should 
counting one or both of them have an effect on the amount of actual 
programming or ready recapture time required? We also invite comment on 
whether education-related uplink transmissions should be applied 
towards satisfaction of minimum ITFS programming requirements. While we 
note our initial impression that counting uplink transmissions will be 
overly complicated and impractical, given the anticipated multitudes of 
response stations and the difficulty in predicting or tracking exactly 
when they are being used for educational purposes, we nonetheless 
welcome suggestions on how they would be measured with respect to 
fulfillment of minimum ITFS programming requirements.
    29. Petitioners anticipate that system developers will attempt to 
utilize contiguous 6 MHz channels for two-way services in order to 
minimize the amount of spectrum that would be lost to the proposed 
spectral mask whenever a return path is adjacent to a downlink channel. 
Furthermore, entire ITFS channel groups may need to be devoted for 
return paths. Thus, Petitioners propose that we allow ITFS licensees to 
satisfy their programming requirements on other channels within the 
wireless cable system. This proposal would be the next step in a 
progression of rule changes, following our allowance of channel mapping 
and channel loading, that have afforded ITFS licensees increased 
flexibility in the implementation of their minimum programming 
requirements. Because this proposal would enhance the two-way scheme, 
and because it would not call for any dilution or elimination of 
minimum ITFS programming requirements, we are considering implementing 
it. The flexibility that the suggested changes would accord to ITFS 
licensees to lease their channel capacity, along with the maintenance 
of minimum ITFS programming requirements, could also encourage 
educators to apply for new ITFS stations and lead to more educational 
programming. Several commenters put forth ideas for refinements to this 
proposal. Arizona State Board of Regents, et al. (``Arizona'') 
suggested that each ITFS licensee be required to preserve at least one 
downstream video channel, and that the Commission institute a procedure 
whereby it would routinely grant applications by ITFS licensees to 
exchange individual ITFS channels between channel groups. Instructional 
Telecommunications Foundation, Inc. (``Foundation'') would require that 
each ITFS licensee devote at least half of its capacity for downstream 
use. Schwartz, Woods & Miller (``SWM'') prompted the Commission to 
facilitate the ``trading'' of channels between the ITFS and MDS bands.
    30. Several of the ITFS commenting parties expressed concern that 
the proposed two-way scheme presents threats to the independence of 
ITFS licensees and their future ability to use spectrum capacity for 
instructional purposes. Pace, for instance, cautioned that because the 
Petition proposes a massive shift towards industry control over ITFS 
applications, the Commission must ensure that individual ITFS licensees 
``do not lose their freedom of choice'' over the use of their channels, 
through coercion by neighboring licensees or strong wireless cable 
operators. However, Charlotte-Mecklenburg Public Broadcasting Authority 
(``CMPBA''), an ITFS licensee, took the view that the proposed rules

[[Page 60031]]

adequately protect the interests of ITFS entities, primarily because 
the rules do not obligate ITFS licensees to take part in the two-way 
system, enter into a lease agreement, file FCC applications, or accept 
harmful signal levels. Some of the concerned ITFS commenting parties 
focused on the effect that the proposed rules may have on the 
engineering autonomy of ITFS licensees. Arizona posed the question of 
what would happen if an excess capacity agreement comes to an end, and 
the ITFS licensee has previously converted its channels to two-way use 
and has shifted some or all of its programming onto other channels in 
the wireless cable system. Similarly, CTN asked what the impact of 
cellularization of a market would be on one or more ITFS licensees 
within it who elect not to cellularize, as well as whether a single 
ITFS licensee who strives to cellularize its operations would be 
dependent on other licensees in the market.
    31. In the NPRM, we emphasize that cellularization by ITFS 
licensees would be permissive only, and not mandatory. We particularly 
seek comment on the effects of allowing complete flexibility in the 
number of channels ``turned around'' for return paths, and in the 
shifting of required ITFS programming onto other channels in the 
wireless cable system and what restrictions, if any, should be adopted. 
We also seek comment on whether we should require ITFS licensees to 
retain one or more channels for downstream transmissions and the 
ramifications of such a requirement. Further, we seek comment on 
whether ITFS channel swaps should only be just between ITFS channels, 
or whether ITFS licensees should be able to swap their spectrum for 
channels in the MDS band. We seek additional comment on specific 
potential threats to the engineering autonomy of ITFS licensees which 
could result from institution of the proposed two-way framework; in 
conjunction with such comment, we further seek proposed solutions. Some 
proposed solutions include channel swapping and reimbursement of costs 
of channel changes, upholding that participation of ITFS licensees in 
cellularization is not mandatory, and potentially increasing 
reservation of ready recapture time for ITFS programming. Do any of 
these ideas individually, or a combination of them, provide a 
sufficient foundation for meeting the expanding needs of some ITFS 
licensees? Commenters are also encouraged to address the general 
question of whether the Commission should establish solutions by rule, 
or whether solutions should be achieved by contract, as advocated by 
Petitioners.
    32. Several commenters also addressed the degree of oversight the 
Commission should maintain in regulating the wireless cable industry 
and ITFS. In the past, the Commission has adopted rules and procedures 
to accommodate and protect the special needs of educational 
institutions and organizations, believing that educational institutions 
should be treated differently from commercial entities in many 
situations due to limited financial and staff resources. In addition, 
ITFS licensees and applicants are required to file their excess 
capacity lease agreements, which are reviewed by the staff for overly 
restrictive provisions affecting the licensee's rights and obligations, 
and compliance with the Commission's leasing policies.
    33. In order to ensure that educators retain control of their 
facilities and to protect their interests, the Foundation proposed that 
the Commission require that two-way digital applications and 
interference consents be reviewed by legal and engineering counsel that 
do not represent commercial interests, and that these independent 
advisors ``certify that in their professional opinion the submission 
will not be harmful to future instructional service.'' We have declined 
in the past to require all leasing parties to hire separate counsel, 
finding this ``safeguard'' unnecessary and relying instead on the 
staff's review and monitoring of leases. We see no reason to change our 
position on this issue and seek comment on this issue. SWM also 
proposed that in order to protect the rights of incumbent ITFS 
licenses, the Commission require that leases approved or submitted 
under the previous rules ``be amended to make clear that the wireless 
cable lessee and the ITFS licensee have together considered the rule 
changes adopted and made any appropriate changes to lease terms, prior 
to the commencement of commercial operations on the frequencies using 
cellularization, sectorization or differing channelization plans.'' 
Petitioners opposed this proposal, stating that the parties to the 
excess capacity lease agreements, and not the Commission, are best 
positioned to determine whether proposed system changes require 
contract revisions. Accordingly, we seek comment on SWM's proposal.
    34. We also seek comment on what impact the proposed rule changes 
would have on our requirements regarding excess capacity lease 
agreements. For example, the Commission consistently has maintained 
that an ITFS licensee should be permitted to purchase the ITFS 
equipment necessary to maintain its operation in the event the lease is 
terminated. In addition, we also require that the licensee maintain 
ultimate control over its licensed facilities. Several commenters have 
expressed concern that given the complexity and cost of Petitioner's 
proposal, ITFS licensees will be unable to sever their relationship 
with the wireless cable operator and acquire the equipment to either 
continue cellular operations or return to non-two-way transmissions. We 
particularly seek comment on this matter and on what type of equipment 
MDS lessees of ITFS channels should be required to make available to 
the ITFS licensees upon termination of a lease. For example, should it 
only be digital equipment comparable to that in use on the system at 
the time the lease is terminated or should it be equipment that would 
make it possible for the ITFS licensee to restore analog video 
operation, if necessary? Furthermore, with respect to Petitioners' 
proposal that ITFS licensees be allowed to utilize their entire channel 
for return paths and shift their ITFS programming to other channels, we 
request comment on whether the parties should be required to file 
written agreements governing the ITFS licensee's lease of an ITFS 
programming channel, and whether our present requirements for excess 
capacity leases, including those dealing with control issues, length of 
lease, and rights on termination, should apply.
    35. We also revisit our channel loading rules, and propose to 
retain them. We request that interested parties comment on whether 
these rules have been beneficial to ITFS licensees and wireless cable 
operators, or whether they have been detrimental. Because we believe 
that they have provided additional much-needed flexibility to ITFS 
licensees and wireless cable operators, any parties commenting that 
these rules have been detrimental should also focus on solutions to 
permit the continued application of them while rendering them more 
universally beneficial. Finally, we also consider issues related to 
retention of ITFS call sign transmission requirements and 
accountability of ITFS licensees.
    36. In this NPRM, we propose to amend our rules to give MDS and 
ITFS licensees the needed flexibility to fully exploit digital 
technology in delivering two-way communications services. Growth in the 
wireless cable industry has remained slow despite the increased channel 
capacity offered by digital compression and facilitated by the Digital 
Declaratory Ruling. Meanwhile, convergence of different information

[[Page 60032]]

delivery systems, including video and Internet access, is occurring in 
other industries, such as cable and DBS. Thus, one of our primary goals 
in instituting this proceeding is to enhance the competitiveness of the 
wireless cable industry. Another of our chief underlying goals in this 
proceeding is to provide benefits to the educational community through 
the use of two-way services, such as high speed Internet service. 
Besides proposing to amend our technical rules to facilitate such usage 
over ITFS frequencies, we note that the growth of wireless cable has 
led to the continued development of ITFS by supporting and funding 
approximately 95 percent of all new ITFS applicants. Thus, we believe 
that enhancing the competitive viability of wireless cable service 
through maximization of flexibility and service offerings promotes the 
underlying educational purpose of ITFS.
    37. 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 as provided in the 
Commission's Rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).
    38. For information regarding proper filing procedures for 
comments, see 47 CFR 1.415 and 1.419. To file formally in this 
proceeding, participants must file an original and five copies of all 
comments, reply comments, and supporting comments. If participants want 
each Commissioner to receive a personal copy of their comments, an 
original plus ten copies must be filed. Comments and reply comments 
will be available for public inspection during regular business hours 
in the FCC Reference Center (Room 239) at the Federal Communications 
Commission, 1919 M Street, N.W., Washington, D.C. 20554.
    39. Authority. This NPRM is issued pursuant to authority contained 
in Sections 4(i) and (j), 301, 303(g) and (r), and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 154(j), 
301, 303(g), 303(r), and 403.

Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act (RFA),<SUP>1</SUP> 
the Commission has prepared this present Initial Regulatory Flexibility 
Analysis (IRFA) of the expected significant economic impact on small 
entities by the policies and rules proposed in this Notice of Proposed 
Rulemaking in MM Docket No. 97-217 (``NPRM''). Written public comments 
are requested on this IRFA. Comments must be identified as responses to 
the IRFA and must be filed by the deadlines for comments on the NPRM 
provided above. The Commission will send a copy of the NPRM, including 
this IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). See 5 U.S.C. Sec. 603(a). In addition, the NPRM 
and IRFA (or summaries thereof) will be published in the Federal 
Register. See id.
---------------------------------------------------------------------------

    \1\ See 5 U.S.C. Sec. 603. The RFA, see 5 U.S.C. Sec. 601 et 
seq., has been amended by the Contract With America Advancement Act 
of 1996, Public Law 104-121, 110 Stat. 847 (1996) (CWAAA). Title II 
of the CWAAA is the Small Business Regulatory Enforcement Fairness 
Act of 1996 (SBREFA).
---------------------------------------------------------------------------

Need for, and Objectives of, the Proposed Rules

    The Commission is instituting this rulemaking to determine whether, 
and if so, how, to amend its rules to promote the ability of MDS and 
ITFS licensees to provide two-way digital services. The objective of 
this proceeding is to encourage the efficient use of the spectrum 
allotted to MDS and ITFS by simplifying our current two-way licensing 
system and providing greater flexibility in the use of the allotted 
spectrum where such flexibility would best serve the needs of the 
public. In addition, we intend to enhance the competitiveness of the 
wireless cable industry and the resultant choices available to 
consumers, and to increase Internet access for educational institutions 
and their students via ITFS frequencies.

Legal Basis

    Authority for the action proposed in this proceeding may be found 
in Sections 4(i) and (j), 301, 303(g) and (r), and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 
154(j), 301, 303(g), 303(r), and 403.

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

    The RFA generally defines ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small business concern.'' <SUP>2</SUP> In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.<SUP>3</SUP> A small business concern is 
one which: (1) is independently owned and operated; (2) is not dominant 
in its field of operation; and (3) satisfies any additional criteria 
established by the SBA.<SUP>4</SUP>
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    \2\ 5 U.S.C. Sec. 601(6).
    \3\ 5 U.S.C. Sec. 601(3) (incorporating by reference the 
definition of ``small business concern'' in 15 U.S.C. Sec. 632). 
Pursuant to 5 U.S.C. Sec. 601(3), the statutory definition of small 
business applies unless an agency after consultation with the Office 
of Advocacy of the Small Business Administration and after an 
opportunity for public comment, establishes one or more definitions 
of such term which are appropriate to the activities of the agency 
and publishes definitions in the Federal Register.
    \4\ Small Business Act, 15 USC Sec. 632.
---------------------------------------------------------------------------

MDS

    The Commission has defined ``small entity'' for the auction of MDS 
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.<SUP>5</SUP> This definition of a small entity in 
the context of MDS auctions has been approved by the SBA.<SUP>6</SUP> 
The Commission completed its MDS auction in March 1996 for 
authorizations in 493 basic trading areas (BTAs). Of 67 winning 
bidders, 61 qualified as small entities.<SUP>7</SUP>
---------------------------------------------------------------------------

    \5\ 47 CFR 21.961(b)(1).
    \6\ See Amendment of Parts 21 and 74 of the Commission's Rules 
With Regard to Filing Procedures in the Multipoint Distribution 
Service and in the Instructional Television Fixed Service and 
Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, MM Docket No. 94-31 and PP Docket No. 93-253, 
Report and Order, 10 FCC Rcd 9589 (1995), 60 FR 36524 (July 17, 
1995).
    \7\ One of these small entities, O'ahu Wireless Cable, Inc., was 
subsequently acquired by GTE Media Ventures, Inc., which did not 
qualify as a small entity for purposes of the MDS auction.
---------------------------------------------------------------------------

    MDS is also heavily encumbered with licensees of stations 
authorized prior to the auction. The SBA has developed a definition of 
small entities for pay television services, which includes all such 
companies generating $11 million or less in annual 
receipts.<SUP>8</SUP> This definition includes multipoint distribution 
systems, and thus applies to MDS licensees and wireless cable operators 
which did not participate in the MDS auction. Information available to 
us indicates that there are 832 of these licensees and operators that 
do not generate revenue in excess of $11 million annually. We 
tentatively conclude that for purposes of this IRFA, there are 
approximately 892 small MDS providers as defined by the SBA and the 
Commission's auction rules, and some of these providers may be impacted 
by the outcome of this NPRM. We seek comment on this tentative 
conclusion.
---------------------------------------------------------------------------

    \8\ 13 CFR 121.201.
---------------------------------------------------------------------------

ITFS

    There are presently 2032 ITFS licensees. All but 100 of these 
licenses are held by educational institutions (these 100 fall in the 
MDS category, above). Educational institutions may be included in the 
definition of a small entity.<SUP>9</SUP> ITFS is a non-pay, non-

[[Page 60033]]

 commercial 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.<SUP>10</SUP> 
However, we do not collect, nor are we aware of other collections of, 
annual revenue data for ITFS licensees. Thus, we tentatively conclude 
that up to 1932 of these educational institutions are small entities. 
We seek comment on this conclusion.
---------------------------------------------------------------------------

    \9\ See 5 U.S.C. Secs. 601 (3)-(5).
    \10\ See 13 CFR 121.210 (SIC 4833, 4841, and 4899).
---------------------------------------------------------------------------

Description of Reporting, Recordkeeping and Other Compliance 
Requirements

    The Commission seeks comment on proposals to amend its rules to 
promote the ability of MDS and ITFS licensees to provide two-way 
digital services, including implementation of simplified procedures 
governing application for, and authorization of, booster stations and 
response station hubs. Because the proposed rule changes would enable 
licensees to apply for and receive authorizations for new types of 
booster stations and for response station hubs, certain commensurate 
new reporting and recordkeeping obligations would follow as part of 
this process, though the nature of the obligations and the MDS and ITFS 
rules directly addressing them <SUP>11</SUP> would remain the same. At 
the same time, however, the proposed rule changes would make the 
overall licensing process for two-way digital services much less 
cumbersome than the current process, which requires individual 
licensing of each response station and booster station. In the NPRM, we 
request comment on whether we should increase ITFS programming 
requirements, and if so, in which way and to what degree. While the 
proposed two-way scheme would result in more complicated interference 
analysis requirements for MDS and ITFS entities seeking to establish or 
modify service, regardless of whether the entities themselves choose to 
engage in fixed two-way transmissions, these interference safeguards 
are necessary to promote the objectives of this proceeding. We seek 
comment on these conclusions and how we can modify any proposed new 
requirements so as to reduce the burden on small entities and still 
meet the objectives of this proceeding.
---------------------------------------------------------------------------

    \11\ See, e.g., 47 CFR 21.911.
---------------------------------------------------------------------------

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

    As described in the NPRM, in response to a March 31, 1997 Public 
Notice soliciting comment on the Petition, several of the ITFS 
commenting parties express concern that the proposed two-way scheme 
presents threats to the independence of ITFS licensees and their future 
ability to use spectrum capacity for instructional purposes. Pace, for 
instance, cautions that because the Petition proposes a massive shift 
towards industry control over ITFS applications, the Commission must 
ensure that individual ITFS licensees ``do not lose their freedom of 
choice'' over the use of their channels, through coercion by 
neighboring licensees or strong wireless cable operators. Other 
commenting ITFS parties, however, do not perceive such a threat. For 
instance, CMPBA believes that the proposed rules adequately protect the 
interests of ITFS entities, primarily because the rules do not obligate 
ITFS licensees to take part in the two-way system, enter into a lease 
agreement, file FCC applications, or accept harmful signal levels. 
Nevertheless, in order to find solutions that would allay the concerns 
of some ITFS licensees, in the NPRM we seek suggestions on ways to 
provide maximum flexibility in usage of ITFS channels while ensuring 
that capacity is reserved for downstream ITFS programming, pose the 
question of whether solutions should be established by rule or by 
contract and what role the Commission or other third parties should 
play in reviewing excess capacity lease agreements, and confirm that 
cellularization by ITFS licensees would be permissive only, and not 
mandatory.
    CTN raises the concern that Petitioners' one-day rolling 
application filing window plan and automatic grant proposal will create 
an undue burden on ITFS licensees who may find themselves required to 
evaluate a continuing stream of applications. We solicit comment on how 
such a concern could be resolved in the context of a one-day rolling 
filing window or whether we should retain a periodic filing window 
system. Furthermore, we tentatively reject the automatic grant 
component of Petitioners' application processing proposal, and instead 
propose a ``comment period'' of 60 or 120 days, after which 
applications would be processed pursuant to current procedures. In 
proposing the comment period alternative, we acknowledge the complexity 
of the engineering information in the response hub or booster station 
applications, and the substantial number of affected parties, 
particularly ITFS licensees, that frequently have very limited 
resources and that often would not be able to file a petition against 
an application before the application is automatically granted. Thus, 
in the NPRM, we particularly solicit comment from small ITFS operators. 
Similarly, we express concern that the proposed interference prediction 
methodology is so complex that it may lead to numerous filings updating 
system configurations, which would present considerable burdens upon 
existing licensees and operators needing to analyze these filings. We 
therefore solicit suggestions for other possible prediction 
methodologies.
    In some instances, a proposed rule will impact different classes of 
small entities in different ways. For instance, in considering whether 
to increase ITFS programming requirements, including ready recapture 
time, we acknowledge in the NPRM the balance which underlies the 
existence and substance of the ready recapture provisions of 47 CFR 
74.931(e): the great value to wireless cable operators of maximization 
of spectrum available for leasing, and the importance of maintaining 
sufficient capacity for programming by ITFS licensees which fulfills 
the primary educational purpose of ITFS. We decline to retreat from the 
current recapture time requirements of Sec. 74.931(e), but we solicit 
comment in the NPRM on whether we should adopt any changes to the 
number of hours required for ready recapture by ITFS licensees.
    Other proposals, tentative conclusions, or questions that we pose 
in the NPRM are designed to minimize the impact on all small entities 
involved. For example, we tentatively reject Caritas' proposal to limit 
the availability of response channels to MDS channels 1, 2, and 2A, 
because it would both artificially limit the amount of spectrum that 
could be used for return paths and unnecessarily prevent ITFS licensees 
from using their own channels for return paths, while providing no 
interference protection benefits that cannot be derived in other ways.
    CTN and SWM both put forth procedural suggestions for this 
proceeding. CTN proposes that rather than proceeding with the instant 
rulemaking, we pursue a negotiated rulemaking procedure and convene a 
federal advisory committee to evaluate Petitioners' proposals and work 
out the most effective method to implement them. CTN asserts that this 
would provide substantial, useful information and facilitate the 
process initiated by Petitioners. We believe that the instant 
rulemaking process will provide us with sufficient information to 
adequately

[[Page 60034]]

evaluate Petitioners' proposals. In addition, the need for swift 
consideration of these proposals, in order to enhance the 
competitiveness of the wireless cable industry and expedite educational 
institutions' access to the Internet via ITFS frequencies, may be 
defeated by implementing a potentially lengthy negotiated rulemaking 
procedure. Thus, we reject CTN's proposal for a negotiated rulemaking 
at this time. Should circumstances warrant, however, we reserve the 
option to revisit our decision on this issue at a later date. 
Conversely, SWM requests the issuance of an NPRM in this proceeding, 
and noting that many of the parties which filed comments in the initial 
round of this proceeding are ITFS entities, requests an early Fall 
comment date in light of the academic schedules which predominate 
amongst these entities. The comment period that we establish here, 
therefore, should enhance the ability of ITFS entities to file 
carefully considered comments and reply comments. We solicit comment in 
the NPRM on other substantive and procedural alternatives to adoption 
of the proposed two-way digital transmission scheme.

Federal Rules that Overlap, Duplicate or Conflict With the Proposed 
Rule

    None.

List of Subjects

47 CFR Part 1

    Environmental impact statements

47 CFR Part 21

    Communications common carriers, Communications equipment, Reporting 
and recordkeeping requirements, Television.

47 CFR Part 74

    Communications equipment, Education, Reporting and recordkeeping 
requirements, Television.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-29346 Filed 11-5-97; 8:45 am]
BILLING CODE 6712-01-P