[Federal Register Volume 77, Number 52 (Friday, March 16, 2012)]
[Proposed Rules]
[Pages 15665-15681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5689]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 22

[WT Docket No. 12-40; RM-11510; FCC 12-20]


Cellular Service, Including Changes in Licensing of Unserved 
Area; Interim Restrictions and Procedures for Cellular Service 
Applications

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; interim procedures.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes to amend the rules governing the 800 MHz Cellular 
Radiotelephone Service (Cellular Service). In the Notice of Proposed 
Rulemaking (NPRM), the Commission proposes to transition the Cellular 
Service from a site-based licensing model to a geographic-based model 
by offering an ``overlay'' license for every Cellular Market Area (CMA) 
and corresponding channel block (Block A or Block B), in two stages, 
via auction. The Overlay Licensees would be obligated to protect 
existing licensees' Cellular operations from harmful interference. The 
NPRM also includes proposals to update various other Cellular Service 
rules. The Commission seeks comment on all its proposals as well as on 
alternative proposals. The companion Order imposes certain interim 
procedures, including a freeze on the filing of certain Cellular 
applications in certain markets and

[[Page 15666]]

other interim procedures regarding currently pending applications to 
help ensure an orderly and efficient rulemaking proceeding while the 
Commission considers changes to the Cellular Service rules.

DATES: Submit comments on or before May 15, 2012, and reply comments 
are due on or before June 14, 2012. Written comments on the Paperwork 
Reduction Act proposed information collection requirements must be 
submitted by the public, Office of Management and Budget (OMB), and 
other interested parties on or before May 15, 2012.

ADDRESSES: Parties may submit comments to the Secretary of the Federal 
Communications Commission, identified by WT Docket No. 12-40; FCC No. 
12-20, by any of the following methods:
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet: http://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing.
    [ssquf] People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: <a href="/cdn-cgi/l/email-protection#5e181d1d6b6e6a1e383d3d70393128"><span class="__cf_email__" data-cfemail="175154542227235771747439707861">[email protected]</span></a> or phone 202-418-
0530 or TTY: 202-418-0432.

In addition to filing comments with the Secretary, a copy of any 
comments on the Paperwork Reduction Act information collection 
requirements contained herein should be submitted to the Federal 
Communications Commission via email to <a href="/cdn-cgi/l/email-protection#08585a49486e6b6b266f677e"><span class="__cf_email__" data-cfemail="e8b8baa9a88e8b8bc68f879e">[email protected]</span></a> and to Nicholas A. 
Fraser, OMB, via email to <a href="/cdn-cgi/l/email-protection#ace2c5cfc4c3c0cddff3ed82f3eadecddfc9deecc3c1ce82c9c3dc82cbc3da"><span class="__cf_email__" data-cfemail="7d33141e1512111c0e223c53223b0f1c0e180f3d12101f5318120d531a120b">[email protected]</span></a> or via fax 
at 202-395-5167. For detailed instructions for submitting comments and 
additional information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Nina Shafran, Wireless 
Telecommunications Bureau, Mobility Division, at 202-418-2781 or by 
email to <a href="/cdn-cgi/l/email-protection#4f0126212e611c272e293d2e210f292c2c61282039"><span class="__cf_email__" data-cfemail="4b0522252a6518232a2d392a250b2d2828652c243d">[email protected]</span></a>. For additional information concerning 
Paperwork Reduction Act information collection requirements contained 
in this document, send an email to <a href="/cdn-cgi/l/email-protection#f4a4a6b5b4929797da939b82"><span class="__cf_email__" data-cfemail="baeae8fbfadcd9d994ddd5cc">[email protected]</span></a> or contact Judith B. 
Herman at (202) 418-0214.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking and Order (NPRM and Order) in WT Docket No. 12-
40, FCC 12-20, adopted and released on February 15, 2012. The full text 
of the NPRM and Order, including all Appendices, is available for 
inspection and copying during normal business hours in the FCC 
Reference Center, 445 12th Street SW., Washington, DC 20554. The 
complete text may be purchased from the Commission's copy contractor, 
Best Copy and Printing, Inc., 445 12th Street SW., Room CY-B402, 
Washington, DC 20554. The complete text of the NPRM and Order may be 
downloaded at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-20A1.doc. In addition, the complete text of the NPRM and Order as 
well as links to Cellular Service coverage maps and interactive map 
files are available at: http://www.fcc.gov/rulemaking/12-40. 
Alternative formats are available to persons with disabilities by 
sending an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="dbbdb8b8eeebef9bbdb8b8f5bcb4ad">[email protected]</a> or by calling the Consumer & 
Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 
(tty).

Paperwork Reduction Act of 1995 Analysis

    This document contains potential new and modified information 
collection requirements. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public and OMB 
to comment on the potential information collection requirements 
contained in this document, as required by the Paperwork Reduction Act 
of 1995, Public Law 104-13. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4), we seek specific comment on how we might ``further reduce 
the information collection burden for small business concerns with 
fewer than 25 employees.''

Synopsis of the Notice of Proposed Rulemaking

I. Introduction

    1. Since its inception roughly 30 years ago, the Cellular Service 
has been instrumental in transforming the communications landscape by 
making mobile services broadly available to the American public. As 
discussed in Section III below, based on our data, only limited area 
not yet licensed (Unserved Area) remains outside of Alaska and certain 
rural markets in the western United States. At this advanced stage of 
the Cellular Service, the site-based aspect of this licensing model is 
yielding diminished returns. The significant administrative burdens on 
licensees associated with the site-based model no longer appear to be 
outweighed by the public benefits produced. In addition, the Cellular 
Service stands apart from virtually all other commercial wireless 
services by not yet transitioning to a geographic-based model, which 
offers greater flexibility and reduced regulatory requirements. Thus, 
consistent with its regulatory reform agenda, the Commission proposes 
to revise the Cellular licensing regime to a geographic-based approach, 
in two stages, through competitive bidding, as explained in detail in 
Section III, below.
    2. The Commission also proposes to update the Cellular Service 
rules, including, for example, streamlining application requirements 
and deleting certain data collection requirements that may no longer be 
necessary going forward. Consistent with other flexibly licensed 
commercial wireless services, the Commission proposes to establish a 
signal field strength limit. Finally, we seek comment on whether to 
move the part 22 Cellular rules, as well as the part 24 rules, to part 
27. We seek comment on all aspects of our proposals, and on the 
alternative transition proposals discussed in the NPRM, including those 
of CTIA--The Wireless Association (CTIA), as set forth in its initial 
petition for rulemaking filed in February 2008, and its revised 
proposal submitted in September 2010, and those of the National 
Telecommunications Cooperative Association (NTCA), The Rural 
Telecommunications Group (RTG), and others on the record. (All 
commenters are listed in Appendix A of the NPRM and Order.)

II. Background

    3. Brief History of Cellular Service Licensing. The Commission 
adopted initial rules governing allocation of spectrum for commercial 
Cellular service, including the establishment of two channel blocks 
(Blocks A and B), in 1981. The Commission established in phases 734 
Cellular Market Areas (CMAs) for the purpose of issuing licenses to two 
Cellular providers per market (herein, ``Original System Licensees'' 
(OSLs)), one on each Block, without competitive bidding. Every OSL was 
given the exclusive right, for a five-year period from the date of 
grant of the initial construction authorization for that CMA Block, to 
build out anywhere within the CMA boundary. The area timely built out 
during that five-year period became the licensee's initial Cellular 
Geographic Service Area (CGSA), the licensed area entitled to 
protection from harmful interference, while any area not built out by 
the five-year mark was automatically relinquished for re-licensing as 
Unserved Area on a site-by-site basis by

[[Page 15667]]

the Commission. Under site-based licensing, any interested party may 
request authorization to construct at a specific transmitter location 
(or multiple locations) in Unserved Area, and may only construct 
authorized transmitters. For all CMA Blocks except one (Chambers, 
Texas, discussed in detail below), licenses have been issued to OSLs 
and the initial five-year periods have expired.
    4. The Commission established two phases for applicants seeking to 
provide Cellular service in Unserved Area for each CMA Block: Phase I 
and Phase II. As of late 2007, the Phase I filing window had ended in 
all licensed Blocks. Under current rules, Phase II lasts indefinitely. 
Phase II applications specify the area to be licensed and are subject 
to a 30-day public comment period during which petitions to deny and 
mutually exclusive applications may be filed. In the event that 
mutually exclusive applications are filed for a particular Unserved 
Area, they are resolved through competitive bidding in closed auctions. 
Licenses granted in Phase II are subject to a one-year construction 
deadline for the authorized site and the licensee must be providing 
service to subscribers by the end of the one-year period; failure to 
build out results in automatic termination of the authorization for 
that site, and the Unserved Area again is subject to the filing of 
site-based applications.
    5. Summary of Industry Proposals on the Record. In October 2008, 
CTIA filed a Petition requesting that the Commission change Cellular 
licensing from a site-based regime to a geographic area-based regime in 
all markets and to assign to incumbents, without using competitive 
bidding, all remaining Unserved Area. The Wireless Telecommunications 
Bureau (Bureau) subsequently issued a Public Notice seeking comment on 
CTIA's Petition. (See 24 FCC Rcd 27 (WTB 2009).) Ten parties filed 
comments, six (including CTIA) filed reply comments, and two (including 
CTIA) filed ex parte letters. In September 2010, CTIA submitted a 
revised proposal (CTIA Revised Plan) which it asserts ``takes into 
account the objectives and concerns raised by commenters in this 
proceeding.'' RTG filed comments specifically addressing the CTIA 
Revised Plan. In May 2011, CTIA, GCI Communication Corp. (GCI), NTCA, 
and RTG met with Commission staff to express their additional views 
regarding transition approaches for Cellular licensing and, 
accordingly, filed ex parte letters. Subsequently, in February 2012, 
CTIA, AT&T, Inc. (AT&T) and Verizon Wireless met with Commission staff 
to express their additional views regarding transition approaches for 
Cellular licensing and CTIA filed ex parte letters accordingly.
    6. In its Revised Plan, CTIA appears to be proposing that the 
Commission change the Cellular Service to geographic area-based 
licensing and terminate site-based access to Unserved Area on a rolling 
basis, as CMA Blocks become ``Fully Served.'' CTIA defines a Fully 
Served Block as one where either: (1) 90 percent of the land area is 
served; or (2) there is no parcel of Unserved Area measuring at least 
50 contiguous square miles. Under both prongs, CTIA proposes to exclude 
``government lands, but not tribal areas.'' All Unserved Area in Fully 
Served Blocks would be assigned to existing incumbents ``on a 
proportional basis'' without the use of competitive bidding. Disputes 
over existing CGSA boundaries and the distribution of the remaining 
Unserved Area to incumbents would, under CTIA's Revised Plan, need to 
be resolved through cooperation among licensees and in the event that 
such cooperative efforts fail, by referral to arbitration at the 
expense of the referring party. So long as a CMA Block is ``under-
served'' (i.e., not Fully Served), CTIA proposes that it remain under 
site-based licensing rules.
    7. AT&T and Verizon Wireless generally endorse CTIA's Petition; 
they have not submitted comments specifically addressing CTIA's Revised 
Plan. In response to the CTIA Petition, Verizon Wireless offers various 
additional proposals, including a staggered transition process based on 
regional groupings of CMA Blocks; establishment of a 40 dB[micro]V/m 
median field strength limit; the provision of public notice of, and 
opportunity to comment on, claimed licensed area boundaries; and a plan 
for informal dispute resolution of boundary claims (more detailed than 
in CTIA's Petition), in which a de minimis discrepancy standard would 
be applied.
    8. In contrast, commenters representing the interests of smaller 
and rural providers generally favor indefinite retention of the current 
site-based licensing regime. These commenters include Commnet Wireless, 
LLC (Commnet), GCI, NTCA, the Rural Independent Competitive Alliance 
(RICA), RTG, and United States Cellular Corporation (USCC). RTG, for 
example, criticizes CTIA's Revised Plan by asserting that it provides 
no incentive to serve areas obtained through the proposed proportional 
allotment and that its definition of Fully Served ``could leave large 
areas * * * without service indefinitely.'' NTCA claims that its 
members are asked by their communities to ensure that hikers, hunters, 
and others enjoying the most rural territory can complete a call in an 
emergency. Commnet continues to send technicians to Unserved Area to 
determine if there is demand for service and claims that with most of 
its Unserved Area applications, the OSL could have applied for that 
spectrum ``over at least sixteen years'' but did not do so. GCI, which 
operates in Alaska, urges continuation of site-based licensing and is 
concerned it will be unable to improve (or even maintain) its network 
if the Commission adopts CTIA's proposal.
    9. The smaller and more rural providers largely reject CTIA's 
statistics. According to RTG, for example, CTIA's Petition misleadingly 
``undercounts actual use of the [site-based licensing] process'' by 
reporting only grants, not filings, and only new applications, not 
modification applications. RICA, GCI, and NTCA make similar arguments. 
Several of these commenters are also skeptical of CTIA's proposed 
mechanisms for resolving disputes that may arise between adjacent 
licensees concerning license boundaries. USCC argues that a voluntary 
consultation process is unworkable for dispute resolution without legal 
standards.
    10. While preferring retention of the existing paradigm, some rural 
commenters state that they could accept, in the alternative, a limited 
transition to geographic-area licensing. Their suggestions, however, 
are not highly detailed and contain ambiguities. GCI, for example, 
indicates support for issuance of a CMA-based license if the CGSA is 
coterminous with the CMA boundary or if Unserved Area in the CMA Block 
is less than 50 square miles but does not specify how the small areas 
would be licensed. NTCA suggests that, if an incumbent's ``actual 
service area'' is not coterminous with the CMA Block boundary, or if 
there is an Unserved Area parcel that is 50 square miles or larger, the 
Commission could establish a geographic license but based only on the 
territory ``actually served by the licensee.'' RTG states that Cellular 
licensees could ``elect * * * to transition to some form of market-
based licensing,'' but only where the new market-based license ``would 
encompass the areas they actually serve.'' USCC, a mid-sized carrier, 
states that issuance of a CMA-based license may be appropriate in 
limited circumstances, but argues that site-based licensing should be 
retained at least in any market with at least one Unserved Area 
Licensee (defined in the NPRM and Order as a licensee that has 
established a Cellular system solely

[[Page 15668]]

through the Unserved Area application process following expiration of 
the OSL's exclusive five-year initial build-out period), so that OSLs 
and Unserved Area Licensees have equal opportunity to expand their 
systems.
    11. Commenters differ on the issue of how to assign geographic area 
licenses. MetroPCS Communications, Inc. (MetroPCS), another mid-sized 
carrier, advocates a transition to geographic-area licensing via 
auction. AT&T states broadly that, for CMA Blocks with over 50 
contiguous square miles of Unserved Area, the Commission should 
``license that area through an auction or some other process.'' In 
response, USCC argues that an auction is unnecessary in light of the 
existing normal closed auction process for mutually exclusive Unserved 
Area applications. In Ex Parte letters filed by CTIA to document 
various meetings with Commission staff in early 2012, which involved 
representatives of AT&T and Verizon Wireless as well, CTIA expresses 
concerns of CTIA, AT&T and Verizon Wireless with an overlay auction 
approach for markets that are not substantially served. Commnet 
emphasizes that the Commission used competitive bidding in prior 
transitions to geographic area licensing.

III. Notice of Proposed Rulemaking

    12. Based on the record, it appears that site-based licensing may 
unduly limit licensees' ability in many markets to adapt to 
technological and marketplace changes, which burdens licensees and 
consumes FCC staff resources, as application filings are required for 
even minor technical system changes. These problems can be addressed by 
moving to a geographic-based model, which would bring the Cellular 
Service into greater harmony with the more flexible licensing schemes 
used successfully by other similar mobile services, such as the 
Broadband Personal Communications Service (PCS) and the 700 MHz 
Service. At the same time, we propose to preserve direct access to 
Unserved Area through the existing site-based application process for 
an appropriate period in Cellular Service markets that are less 
substantially built out.
    13. In anticipation of releasing the NPRM, the Commission undertook 
the task of creating a digital version of every existing CGSA based on 
maps accompanying Cellular applications. The data, which the Commission 
used to calculate licensed and Unserved Area, is available at the 
Commission's Web site (see http://www.fcc.gov/rulemaking/12-40). It is 
clear from our data that the vast majority of CMA Blocks already are 
substantially built out. (Maps illustrating the data are provided at 
Appendices B and D of the NPRM and Order.) Licensees in these markets, 
which we term ``Substantially Licensed'' as set forth below, have faced 
increasing regulatory challenges, however. Among other things, they do 
not have the ability to modify and expand their systems without 
Commission filings, and must seek prior Commission approval through 
filings if the CGSA would be expanded, even for minor adjustments to 
their systems. We believe that it would serve the public interest to 
reduce administrative burdens for these licensees (as well as for 
Commission staff) by providing Cellular licensees in such markets with 
greater flexibility to modify their operations to respond more quickly 
to market conditions. Moreover, the Commission has long held that 
market-based licensing regimes are simpler to administer for all 
parties.
    14. We recognize that, with direct access to Unserved Area through 
the site-based licensing regime, licensees and prospective new entrants 
are free to respond to market changes by filing an application on an 
as-needed basis (for a filing fee) without use of competitive bidding 
in most cases. We believe that there are public interest benefits of 
preserving such direct access by all interested parties, for some 
defined period, to any Unserved Area in CMA Blocks that are less 
substantially built out (i.e., not Substantially Licensed under our 
proposed test). While site-based application filings would continue to 
be required for some period going forward in these markets, there is a 
significantly smaller volume of system modification filings in areas 
that are less built out.
    15. Additionally, in developing a new model aimed at transitioning 
the Cellular Service to a geographic-based model, we must keep in mind 
long-held Commission policies governing spectrum assignment. The 
Balanced Budget Act of 1997 (BBA) revised the Commission's auction 
authority by substantially amending sections 309(j)(1) and (2) of the 
Communications Act of 1934, as amended (Act). (See 47 U.S.C. 309(j)(1), 
(2).) Under section 309(j)(1), with limited exceptions that are not 
applicable here, the Commission is required to license spectrum through 
competitive bidding whenever it accepts mutually exclusive applications 
for initial licenses or permits. The Commission has determined that 
applications are ``mutually exclusive'' if the grant of one application 
would effectively preclude the grant of one or more of the other 
applications, i.e., when acceptable, competing applications for the 
same license are filed. (When, however, the Commission receives only 
one application that is acceptable for filing for a particular license 
that is otherwise subject to auction, there is no mutual exclusivity, 
and thus, the Commission is not required to conduct an auction for that 
license.) Consistent with the Commission's policy that competitive 
bidding places licenses in the hands of those that value the spectrum 
most highly, we believe that it would be in the public interest to 
adopt the transition described below, which allows the filing of 
mutually exclusive applications that would be resolved through 
competitive bidding.
    16. In light of the above-described goals and considerations, we 
propose to issue CMA-based Overlay Licenses for all Blocks via Stage I 
and Stage II auctions, thus making immediately available to the Overlay 
Licensee, for primary service, all Unserved Area remaining in the 
particular Block as of an established cut-off date. An overlay license 
is issued for the entire geographic area (in this case, the entire CMA 
Block), but requires the overlay licensee to provide interference 
protection to incumbent operations (in this case, Cellular Service 
incumbents' CGSAs existing as of a certain cut-off date). In Stage I, 
we would offer Overlay Licenses only for those CMA Blocks that either: 
(1) As of a certain cut-off date, are Substantially Licensed pursuant 
to certain benchmarks (described below); or (2) have Cellular service 
that has been authorized solely under interim operating authority (IOA) 
(i.e., for which no primary license has been issued). All other Blocks 
would remain subject to the current site-based Unserved Area licensing 
system until we implement Stage II of the transition and offer Overlay 
Licenses for these remaining CMA Blocks. We seek comment on whether 
seven years is the appropriate timeframe before initiation of Stage II. 
As explained below, we propose to exempt from the transition the Gulf 
of Mexico Service Area (GMSA).
    17. We invite comment on all aspects of our proposals, as well on 
the expected costs and benefits (to the extent applicable) of operating 
under our proposal. For example, would the resulting lack of data that 
would otherwise be collected and available to the public through the 
Commission's Universal Licensing System and other databases (i.e., data 
that is currently available regarding major and minor CGSA modification 
applications, grants, construction notifications, etc., indicating the 
location of Cellular

[[Page 15669]]

Service transmitter sites) constitute a detrimental cost? If so, to 
what extent? Would the cost be outweighed by the benefits associated 
with the reduction in regulatory burdens, paperwork, and other aspects 
of our proposal? By reducing the filing burdens on many Cellular 
providers, we would expect resulting lower costs for the providers, and 
in turn, we would expect such lower costs to have a positive effect on 
service to subscribers. We seek comment on these cost considerations, 
including quantification of expected savings (in terms of monetary and 
human resources, for example) resulting from no longer having to submit 
certain applications once fixed boundaries have been established. We 
also seek comment on the extent to which expected savings might be 
passed on to subscribers. We hope these proposals will also promote 
enhanced competitive options for consumers and we seek comment on any 
additional steps the Commission could take, in this proceeding, to 
promote this policy priority.

A. Stage I Transition

1. Substantially Licensed CMA Blocks
    18. We propose to treat a CMA Block as Substantially Licensed if 
either of the following benchmarks is met: (1) At least 95 percent of 
the total land area is licensed; or (2) there is no unlicensed parcel 
within the Block at least 50 contiguous square miles in size. An 
analysis of Cellular licensed area by Block reflects that only about 20 
percent of the 1,468 CMA Blocks are geographically licensed between 
less than 10 percent up to roughly 94 percent. The vast majority of all 
Blocks (approximately 80 percent) fall at or above the 95 percent 
licensed threshold, representing in our view a logical breaking point 
for inclusion in Stage I of the proposed transition. We also recognize, 
however, that a Block that has less than 95 percent of its total land 
area licensed might not have sufficient size parcels of Unserved Area 
to warrant exclusion from transition in Stage I. Our current rules 
prohibit a new entrant from applying to serve an area smaller than 50 
contiguous square miles. We therefore propose that a Block be deemed 
Substantially Licensed if it does not have even one remaining 
unlicensed parcel that is at least 50 contiguous square miles in size, 
regardless of the percentage of licensed area. (The small number of CMA 
Blocks in this category does not affect the approximate 80 percent/20 
percent split between the Stage I and Stage II Blocks under our 
proposal.)
    19. Specifically, 601 of the 734 Block A markets appear to meet the 
proposed test, and 596 of the 734 Block B markets appear to meet the 
proposed test, for a total of 1,197 of 1,468 Blocks. The maps provided 
in Appendix D (see full text of the NPRM and Order) illustrate, for 
each Block, which markets appear to meet the proposed test and which 
markets, while served, do not.
    20. We propose to include total land area without exclusions in our 
calculation of licensed area and Unserved Area. We propose to treat 
government lands differently in this Cellular Service transition, 
compared to our treatment in the 700 MHz Service, for two reasons. 
First, the 700 MHz Service ``government lands'' exclusion was adopted 
in conjunction with the imposition of aggressive construction 
benchmarks, which for the first time included mandatory coverage of 
geography (rather than population). In our proposed Cellular Service 
transition, the calculation is not based on a consideration of 
compliance with future construction benchmarks but is solely for 
purposes of determining whether a CMA Block meets our test for 
inclusion in Stage I. Second, in our analysis of digitized CGSAs, we 
observed that Cellular licensees have frequently applied to provide 
service to federal lands, as the demand for Cellular service has 
increased in areas such as national parks. We believe that permitting 
the exclusion of lands that are already being served as part of a 
Cellular licensee's CGSA would provide inaccurate results as to which 
markets are in fact Substantially Licensed for purposes of inclusion in 
the appropriate transition stage.
    21. Through our proposed transition, an Overlay Licensee would not 
only have the flexibility to extend service into currently Unserved 
Area, but also would be able to do so without filing modification 
applications, with limited exceptions. In addition, in the event that 
all or a portion of an incumbent's CGSA is relinquished by that 
incumbent (e.g., through license cancellation, reduction in CGSA, 
permanent discontinuance of operations, or failure to renew a license), 
the Overlay Licensee of that CMA Block would no longer be required to 
protect the relinquished area and could immediately provide service on 
a primary basis in that area (sometimes known among industry 
stakeholders as ``reversionary rights''). We believe that auctioning, 
instead, only the remaining Unserved Area in a particular Block without 
overlay licensing rights could result in incumbents' relinquished areas 
being held in the Commission's auction inventory and only accessible 
via a future auction. In contrast, our Overlay License proposal will 
facilitate prompt service to such areas through reduced administrative 
burdens.
    22. Under our proposal, just as incumbents that do not become 
Overlay Licensees would be assured continued protection from harmful 
interference within their CGSA footprint as of an established cut-off 
date, they would in turn be obligated to protect the Overlay Licensees 
from harmful interference. Non-Overlay licensees' CGSA boundaries would 
be permanently fixed, insofar as such licensees would not be permitted 
to expand their CGSAs in Blocks included in the auction, except through 
contractual arrangements with other licensees. To foster secondary 
market transactions, we propose to continue to allow licensees to 
partition their CGSAs and/or disaggregate their authorized spectrum, as 
well as enter into leasing arrangements. We seek comment on this 
proposal. Non-overlay licensees will also be free to modify their 
systems in response to market demands without Commission filings, so 
long as the CGSA would not be expanded (other than through contractual 
arrangements) or reduced as a result, and subject to any obligations 
imposed on all licensees. (For example, certain other filings, such as 
administrative updates, license renewals, and filings required under 
the rules implementing the National Environmental Policy Act of 1969, 
as amended (NEPA) would still be required for all licensees.)
    23. We recognize that in Substantially Licensed markets included in 
our Stage I transition, the new Overlay Licenses awarded in the auction 
will be heavily encumbered by the incumbents, whose CGSAs would 
continue to be entitled to protection from harmful interference. A 
prospective Overlay Licensee would therefore need to be familiar with 
incumbent operations and should take care to understand how such 
operations may affect its ability to execute its business plan. Under 
delegated authority, the Bureau will determine, prior to conducting the 
auctions, what procedures (if any) are warranted to resolve 
discrepancies and other anomalies in the licensing data in order to 
establish definitive boundaries of existing authorized CGSAs as of 
certain cut-off dates. The Bureau will also issue the appropriate 
Public Notice(s) regarding such procedures. We recognize that, in some 
Blocks, the remaining Unserved Area as of the auction date may be very 
small, fragmented, and/or not immediately servable.

[[Page 15670]]

2. Interim Operating Authority Block (Chambers, Texas, Block A--CMA 
672A)
    24. Chambers, Texas, Block A (Chambers) is the only Block for which 
a Cellular license has never been issued. AT&T Mobility of Galveston 
LLC (AT&T Galveston) holds an interim operating authorization and 
provides Cellular service to nearly all of the area in this Block under 
Call Sign KNKP971. Notably, neither AT&T nor any other commenter has 
mentioned this unlicensed market thus far in this proceeding. We 
propose that Chambers be licensed on a geographic area (CMA Block) 
basis and that it be included in Stage I described above.
    25. For Chambers, we propose not to apply our existing rules 
concerning the various build-out and application phases that have been 
applicable to other Cellular markets. For example, we propose not to 
subject Chambers to the Phase I or Phase II licensing processes (and 
because Phase I has terminated for all other CMA Blocks, we are 
proposing to delete the provisions that address Phase I applications, 
and references thereto, throughout the part 22 subpart H rules and 
applicable part 1 rules). As no primary license has ever been issued 
for Chambers, the initial five-year build-out period that is described 
in Sec.  22.947 of our rules has never commenced. We propose not to 
apply to Chambers this five-year build-out period (and because it has 
expired for all other CMA Blocks, we are proposing to delete the 
provisions that address the five-year period, and references thereto, 
throughout the part 22 subpart H rules and applicable part 1 rules). 
Consistent with our treatment of newly authorized markets in the 700 
MHz proceeding, we propose that the Overlay License for Chambers will 
terminate automatically if the licensee fails to provide signal 
coverage and offer service over at least 35 percent of the geographic 
area of its license authorization within four years of initial license 
grant and to at least 70 percent of the geographic area of its license 
authorization by the end of the license term. We further propose that, 
after the build-out requirement has been met, the Chambers Overlay 
Licensee should be subject to the same rules and obligations that we 
apply to those that are awarded the Overlay Licenses for all 
Substantially Licensed Blocks. AT&T Galveston does not have primary 
authority to operate and would not be afforded incumbent status with 
respect to any Overlay Licensee resulting from our proposed competitive 
bidding process.
    26. We believe this proposal provides the most efficient and 
effective means to foster the provision of additional advanced wireless 
service by a primary licensee to this Texas market. We also believe 
that our proposed performance obligations are appropriate given the 
increased regulatory flexibility afforded any Chambers Overlay Licensee 
under our transition proposal, including the ability to modify system 
parameters and expand service without application filings in most 
instances. In short, we believe that our proposal serves the public 
interest, and we seek comment on all aspects of the proposal, including 
any foreseeable costs. Commenters that oppose our proposed approach for 
Chambers should offer a detailed alternative proposal that is 
consistent with the goals of this proceeding and the Commission's 
policies as set forth herein, as well as an analysis of the costs and 
benefits of the alternative proposal.

B. Stage II Transition

    27. As stated above, based on our preliminary data, approximately 
20 percent of all CMA Blocks currently do not meet either of the two 
benchmarks of our proposed Substantially Licensed test. We believe that 
the public interest is best served by retaining the existing site-based 
licensing scheme in these Blocks--primarily Alaska and rural areas out 
west--to preserve direct access to such area through the Commission's 
Unserved Area application process during a defined transition period. 
The reduction in administrative burdens identified above for Stage I 
markets is substantially smaller for these Blocks that are less built 
out and have relatively more Unserved Area remaining. In rural areas, 
service tends to become economically feasible gradually, and 
modification and new-system applications are filed to a much lesser 
extent than modification applications in the Blocks that are already 
substantially built out. Our proposal will allow all interested 
parties, including new entrants, the opportunity to identify the 
specific areas they wish to serve as service becomes economically 
feasible in such markets due to changing demographics, technologies, or 
other factors. Under our current site-based rules, the one-year 
construction requirement will ensure prompt build-out of areas in these 
Blocks where licensees seek authorization to provide service.
    28. We recognize the public interest benefits of having all CMA 
Blocks under a single geographic area licensing scheme, and therefore 
we propose to retain the site-based licensing model only for a defined 
period. Specifically, we propose to continue this model for a period of 
seven years from the date on which revised Cellular Service rules take 
effect in this proceeding (Effective Date). We seek comment on our 
Stage II proposal and specifically on our proposed seven-year 
transitional time period. While we wish to effectuate prompt build-out 
in the CMA Blocks that do not currently meet the Substantially Licensed 
test, we recognize that certain markets may present increased 
challenges to widespread deployment in the near term. We seek comment 
on whether seven years is the appropriate timeframe that takes into 
account the goal of ensuring prompt build-out of systems and economic 
forces that might delay deployment in certain markets or any alternate 
proposals commenters may have. We also ask that commenters address the 
costs and benefits of a seven-year transition period, or for any 
alternate proposals set forth.
    29. Possible Exception for Alaska. It is likely to be many years 
before the Alaskan CMA Blocks are substantially built out. We seek 
comment on whether we should simply retain the status quo site-based 
scheme for Alaska indefinitely, rather than including it with other 
Blocks in Stage II. Even if we include Alaska in the proposed 
transition in Stage II, we seek comment on whether it is appropriate to 
revise the one-year build-out requirement for Alaska so long as it 
remains subject to site-based licensing. In addressing these issues, we 
also seek feedback on the costs and benefits of including Alaska in the 
Stage II transition, as well as revision to the one-year build-out 
requirement.
    30. Possible Other Exceptions. We seek comment on whether public 
interest considerations warrant any exception that we have not 
considered, e.g., an especially challenging rural market that might 
require, for example, an extended build-out period, or another kind of 
exception altogether. Commenters proposing an exception should include 
details and supporting rationale consistent with the goals of this 
proceeding and the Commission's policies as set forth herein.

C. Performance Requirements

    31. We are mindful of our statutory obligation and overarching 
policy goal of ensuring that the spectrum is used effectively and 
efficiently to provide valuable services to the American public, 
including those residing in rural areas, and that the spectrum not be 
warehoused when it could be deployed using new technologies and 
services.

[[Page 15671]]

We also recognize that the Cellular Service has, in most CMAs across 
the country, already resulted in significant levels of system 
deployment during the past few decades. Indeed, the level of build-out 
far exceeds even the most stringent geographic-based construction 
benchmarks the Commission has imposed on any wireless service to foster 
public interest goals. In the markets not Substantially Licensed--20 
percent of the CMA Blocks--the current level of build-out varies 
significantly, as discussed above, with most above 70 percent 
geographic coverage, and a few below 10 percent geographic coverage 
(e.g., certain Alaskan CMA Blocks), with the rest somewhere in between.
    32. We seek comment on whether we should adopt any performance 
benchmarks for Overlay Licenses to promote build-out in areas covered 
by these licenses where spectrum is unused and the costs and benefits 
of doing so. If we decide to adopt performance benchmarks, what would 
the measures be? Would it be appropriate to establish build-out 
requirements that vary depending on the amount of Unserved Area 
remaining, or for CMA Blocks that face particular construction 
challenges (e.g., Alaska)? In seeking comment, we note that the 
Commission has never established performance requirements in similar 
services mandating 100 percent build-out of all areas or population 
centers in a geographic-based license.
    33. We also seek comment on whether, in place of or in addition to 
performance build-out requirements, we should require an Overlay 
Licensee to make unused spectrum available in the secondary market to 
entities that have need for it. Specifically, we request comment on 
various possible approaches for facilitating secondary market 
transactions for use of spectrum that the Overlay Licensee is not using 
or may not be inclined to use. As one possible approach, we seek 
comment on whether Overlay Licensees that continue to hold unused 
spectrum after a certain period of time should be required to make that 
information publicly available, in some readily accessible and 
transparent fashion, so that any party interested in using that 
spectrum can more easily seek to take advantage of the opportunity to 
gain access to the spectrum. If we were to require the licensee to 
provide information on unused spectrum, how should this information be 
made publicly available? We also seek comment on the possible costs and 
benefits of pursuing this secondary market transparency approach.
    34. As another possible approach, should Overlay Licensees be 
required to participate in good faith negotiations with a party 
expressing an interest in spectrum leasing, partitioning, or 
disaggregating spectrum in a CMA Block? Or, should we consider a 
modified version of negotiation methodologies employed in other 
wireless services, possibly involving phases of voluntary negotiations, 
followed by mandatory negotiations? What are the relative benefits and 
costs to such an approach in the context of Overlay Licenses?
    35. In considering various approaches, we request that commenters 
address any difficulties they may have experienced when seeking to 
access unused spectrum in secondary markets transactions that could 
inform our decision-making and could improve the workings of secondary 
markets with respect to unused spectrum associated with Overlay 
Licenses. Finally, we seek comment on any other approach that 
commenters may suggest that could facilitate secondary market 
transactions that help ensure that valuable spectrum resources do not 
needlessly lie fallow.

D. Competitive Bidding Procedures

    36. As stated above, consistent with the Commission's approach in 
prior transitions of other services from site-based to geographic area-
based overlay licensing, we believe that it serves the public interest 
to accept competing, mutually exclusive applications in our proposed 
transition of Cellular licensing that will be resolved by competitive 
bidding. We reiterate that we are interested in reducing regulatory 
burdens and affording increased system flexibility (including 
deployment of broadband service) within fixed boundaries for Cellular 
licensees, but in a manner that is consistent with Commission precedent 
and spectrum management policies. No commenter has offered a 
justification for departing from a transition approach under which we 
accept mutually exclusive applications. Competitive bidding should 
place Cellular Overlay Licenses in the hands of those that value them 
most.
    37. In other competing commercial wireless services, the Commission 
implemented geographic-based licensing, rather than a site-based model, 
from the inception of the radio service, particularly in PCS, the 
Advanced Wireless Service (AWS), and the 700 MHz Service. In these 
radio services, the existing incumbents (e.g., microwave, government, 
and broadcasters) were to be relocated. In other commercial wireless 
services where incumbents were originally licensed on a site-by-site 
basis but were permitted to remain in the band, the Commission also 
chose to transition to geographic-based overlay licensing including, 
for example, the 800 MHz specialized mobile radio service, the 220 MHz 
private land mobile radio service, and the 929-931 MHz paging services. 
In each instance, the Commission determined that the geographic-area 
licensing model afforded licensees increased flexibility to construct 
and operate facilities within a larger geographic area and commence 
operations without prior Commission approval, thereby reducing 
regulatory burdens.
    38. In the event we adopt our proposal for a transition entailing 
competitive bidding, we propose to apply the general competitive 
bidding rules set forth in part 1, subpart Q of the Commission's rules, 
substantially consistent with the bidding procedures that have been 
employed in previous auctions. Specifically, we propose to employ the 
Part 1 rules governing competitive bidding design, designated entity 
preferences, unjust enrichment, application and payment procedures, 
reporting requirements, and the prohibition on certain communications 
between auction applicants. Under this proposal, such rules would be 
subject to any modifications that the Commission may adopt in the 
future. In addition, consistent with our long-standing approach, 
auction-specific matters such as the competitive bidding design and 
mechanisms, as well as minimum opening bids and/or reserve prices, 
would be determined by the Bureau pursuant to its delegated authority. 
We invite comment on this proposal. In particular, we request comment 
on whether any of our part 1 competitive bidding rules or other auction 
procedures would be inappropriate or should be modified for an auction 
of Cellular licenses in the context of this proceeding.
    39. Provisions for Designated Entities. In authorizing the 
Commission to use competitive bidding, Congress mandated that the 
Commission ``ensure that small businesses, rural telephone companies, 
and businesses owned by members of minority groups and women are given 
the opportunity to participate in the provision of spectrum-based 
services.'' In addition, section 309(j)(3)(B) of the Act provides that, 
in establishing eligibility criteria and bidding methodologies, the 
Commission shall promote ``economic opportunity and competition . . . 
by avoiding excessive concentration of licenses and by disseminating 
licenses among a wide

[[Page 15672]]

variety of applicants, including small businesses, rural telephone 
companies, and businesses owned by members of minority groups and 
women.'' One of the principal means by which the Commission fulfills 
these mandates is through the award of bidding credits to small 
businesses. The Commission's experience with numerous auctions has 
demonstrated that bidding credits for designated entities afford such 
entities substantial opportunity to compete with larger businesses for 
spectrum licenses and provide spectrum-based services.
    40. The Commission has stated that it would define eligibility 
requirements for small businesses on a service-specific basis, taking 
into account the capital requirements and other characteristics of each 
particular service in establishing the appropriate threshold. Although 
it has standardized many of its auction rules, the Commission has 
determined that it will continue a service-by-service approach to 
defining small businesses.
    41. We propose to employ the following three small business 
definitions for auctions of these licenses. We seek comment on whether 
we should define an entrepreneur as an entity with average gross 
revenues for the preceding three years not exceeding $40 million, a 
small business as an entity with average gross revenues for the 
preceding three years not exceeding $15 million, and a very small 
business as an entity with average gross revenues for the preceding 
three years not exceeding $3 million. As provided in Sec.  1.2110(f)(2) 
of our rules, we seek comment on whether we should offer entrepreneurs 
a bidding credit of 15 percent, small businesses a bidding credit of 25 
percent, and very small businesses a bidding credit of 35 percent. 
Commenters are encouraged to provide feedback on the costs and benefits 
of these proposed definitions and bidding credit designations. We also 
invite input on whether alternative size standards should be 
established in light of the particular circumstances or requirements 
that may apply to the proposed Cellular Overlay Licenses. Commenters 
advocating alternatives should explain the basis for their proposed 
alternatives, including whether anything about the characteristics or 
capital requirements of providing Cellular service or other 
considerations require a different approach, as well as the costs and 
benefits of the alternatives.

E. Gulf of Mexico Service Area

    42. Cellular service in the Gulf of Mexico Service Area (GMSA) (CMA 
Blocks 306A and 306B) is subject to special licensing rules. The GMSA 
is divided by rule into two zones: the Coastal Zone (GMCZ) in the 
Eastern Gulf region and the Exclusive Zone (GMEZ). The existing 
Cellular licensing regime for the GMSA was carefully developed by the 
Commission after taking into account many prior disputes between Gulf-
based and adjacent land-based carriers, multiple prior Commission 
decisions, court litigation and judicial rulings, as well as the unique 
circumstances of providing Cellular service in the Gulf region. We 
propose not to alter the existing regime, except that we propose to 
subject GMSA licensees to our proposed field strength limit, discussed 
below. We also believe that GMSA licensees may benefit from certain 
other rule changes proposed in the NPRM. We seek comment on our 
proposed exemption of the GMSA from a Cellular licensing transition at 
this time, including comment on which (if any) individual rule changes 
should be applied to GMSA licensees.

F. Signal Field Strength Limit Proposal

    43. The Commission believes that a median field strength limit of 
40 dB[mu]V/m is appropriate for the Cellular Service and proposes that 
all Cellular licensees be subject to this limit in all CMA Blocks. With 
an established field strength limit applicable to all Cellular 
licensees, the current rule governing Service Area Boundary (SAB) 
extensions (see 47 CFR 22.912) would be unnecessary, even in those CMA 
Blocks that remain subject to the current site-based licensing rules 
for Unserved Area. In the latter class of CMA Blocks, however, SABs and 
CGSAs (for new systems and expansions of existing systems) would still 
be calculated under the provisions currently set forth in Sec.  22.911. 
We seek comment on our proposal.
    44. An appropriate field strength limit allows a licensee to 
transmit at a signal strength sufficient to provide reliable service 
right up to the license boundary, while preventing the licensee from 
transmitting at a signal strength that is excessive for that purpose. 
Having a 47 dB[mu]V/m field strength limit for PCS, for example, has 
worked effectively as a limit on the amount of signal incursion a 
licensee may have into an adjacent licensed area, and we believe that a 
40 dB[mu]V/m field strength limit will be similarly effective for the 
Cellular Service. We do not anticipate a notable increase in boundary 
disputes if we adopt our proposal. There is no evidence of a causal 
relationship between boundary disputes and a field strength limit if 
the limit applies equally to all licensees in a given service.
    45. We believe that co-channel licensees are in the best position 
to negotiate placement and parameters of facilities near the boundary 
of another licensee's protected area, taking into account the factors 
unique to their systems and the area involved, including, for example, 
technologies, traffic loading, topography, and location of major roads. 
Thus, consistent with the PCS field strength limit rules, we also 
propose to allow Cellular licensees to negotiate contractual agreements 
specifying field strength limits different from the limit established 
by rule. We emphasize, however, that Commission rules do not allow 
licensees to agree to transmit their signals at a power level that is 
higher than the applicable power limit set forth in the rules.
    46. Even with full compliance with the proposed field strength 
limit, licensees operating in proximity to each other will still need 
to coordinate channel usage in order to avoid mutually destructive 
interference. Section 22.907 of our rules requires that interference 
problems (and any possible problems with traffic capture) in the 
Cellular Service be avoided by coordination between or among licensees. 
We propose to retain the requirements for mandatory coordination that 
are currently set forth in Sec.  22.907.
    47. We encourage parties to address all aspects of our proposal 
concerning a field strength limit and continued mandatory licensee 
coordination. Interested parties that offer a counter-proposal, whether 
for a different field strength limit or non-use of any signal field 
strength limit, should be specific and explain how their proposal 
better serves the public interest, including whether it would be more 
cost effective.

G. Other Alternatives to the Commission's Proposed Transition

    48. Single-stage Transition for All Blocks. We seek comment on the 
possibility of eliminating the site-based licensing scheme and 
transitioning expeditiously, via a single auction, all CMA Blocks to a 
geographic-based model. Commenters should address the impact of such a 
proposal on rural service and rural interests in particular, given that 
once an Overlay License is offered at auction, the Unserved Area in 
that particular Block would no longer be available under site-based 
licensing, even if the Overlay License returns to the Commission for 
re-licensing. For example, if there is no successful bidder at auction, 
or if a successful bidder is awarded the Overlay License but then, 
years later, fails to renew, the only methodology for re-licensing is 
to offer

[[Page 15673]]

the Overlay License again at a subsequent Commission auction. We seek 
comment on these considerations under this alternate approach.
    49. A Three-Stage Transition. As another alternative, we could 
subdivide the Blocks that do not now meet the Substantially Licensed 
test into two groups, as there may be some markets that need even more 
time, such as those in Alaska and other very rural areas with similar 
construction challenges, resulting in a third stage in the Cellular 
licensing transition. We seek specific comment on this approach as 
well. For example, what benchmarks should be used to distinguish the 
Stage II Blocks from the Stage III Blocks, and what is the basis for 
choosing such benchmarks? What would be an appropriate dividing line in 
terms of licensed area? What should the trigger dates be for Stage II 
and Stage III, and what would be the rationale? We also seek comment on 
whether all Blocks with unique construction challenges should be 
subject to an extended build-out requirement while they remain under 
the site-based licensing regime.
    50. Other Alternatives. We also welcome submission of alternatives 
that we have not considered herein. Commenters who oppose our two-stage 
proposal and advocate an alternative need to address details of 
implementation and should demonstrate how their alternative serves the 
public interest and is cost effective.

H. Proposed Amendments to Rules and Possible Rule Relocation

1. Proposed Amendments
    51. Transition-related proposed amendments. Proposed new and 
revised rules to reflect the proposed two-stage transition of Cellular 
licensing are set forth in Appendix E of the NPRM and Order. We urge 
all parties to review Appendix E closely and submit detailed comments. 
Our proposals introduce some new terminology, including for incumbent 
operations, and we also propose revisions and some deletions regarding 
the definitions in Sec.  22.99.
    52. Other Deletions and Updates. Although we are not proposing 
immediate fundamental changes to the rules for CMA Blocks that are not 
to be included in the Stage I transition (except for the proposed 
establishment of a signal field strength limit), we have reviewed all 
the subpart H rules as well as certain part 1 rules applicable to 
Cellular licensing in an effort to streamline or update them, and we 
propose certain changes. We have also reviewed these rules to determine 
whether any should be deleted as obsolete or, going forward, no longer 
necessary. For example, we believe that certain items required under 
Sec. Sec.  22.929 and 22.953(a) of our rules will no longer be 
routinely of interest to the Commission's engineering staff in their 
review of Cellular applications in the future, and accordingly, we 
propose to streamline these requirements in a revised Sec.  22.953 (and 
a corresponding deletion of Sec.  22.929). In addition, we discuss 
below a proposal regarding Sec.  22.901(b). The results of our review 
are reflected in the proposed rules set forth in Appendix E of the NPRM 
and Order. We invite all commenters to review each of the proposed 
revisions, additions, and deletions and comment on them with 
specificity. If there are other rules that commenters believe should be 
revised, deleted or added as part of our effort to streamline and 
update the rules that govern Cellular licensees, we welcome suggestions 
regarding such revisions. Commenters should be specific in their 
proposals, providing proposed language for the rule itself as well as 
the rationale for the change.
    53. AMPS Sunset Certifications: Termination of Collection; Deletion 
of Section 22.901(b). On June 15, 2007, the Commission released an 
Order declining to extend the sunset of the Cellular analog service 
requirement set forth in Sec.  22.901(b) of our rules. See 22 FCC Rcd 
11243 (2007). Pursuant to such 2007 AMPS Sunset Order, on November 16, 
2007, the Bureau released a Public Notice (see 22 FCC Rcd 19922 (WTB 
2007)) with instructions for Cellular licensees on how to file a one-
time Cellular Coverage Certification (AMPS Sunset Certification), which 
would certify that discontinuance of analog service would not result in 
any loss of wireless coverage throughout the CGSA. By filing an AMPS 
Sunset Certification, licensees could preserve the rights associated 
with their previously determined CGSAs on file with the Commission as 
of the AMPS Sunset Certification's filing date. The overwhelming 
majority of Cellular licensees have opted to file an AMPS Sunset 
Certification. We believe that all Cellular licensees have had ample 
time--more than four years since the AMPS Instructions Notice--to make 
their choice and file either the one-time AMPS Sunset Certification or 
the appropriate revised CGSA showing. Accordingly, we propose to 
terminate the Commission's collection of such Certifications and to 
delete Sec.  22.901(b). We welcome comment on these proposals.
2. Possible Relocation of Part 22 Cellular and Part 24 PCS Rules to 
Part 27
    54. In light of our proposal to revise the Cellular licensing rules 
to bring them in line with the more flexible rules that govern other 
wireless services, we take this opportunity to invite comment on 
placement of revised rules that may ultimately be adopted in this 
proceeding. Specifically, in the event that we adopt a geographic area 
regime that includes Overlay Licenses, should the new Cellular rules be 
incorporated into part 27, which houses the existing rules for certain 
other flexible wireless services, such as AWS, rather than in subpart H 
of part 22? If the revised Cellular rules are to be incorporated into 
part 27, we believe that the rules for part 24 PCS--which is already a 
flexible service governed by geographic area-based licensing--should 
then also be moved into part 27. Should the Commission initiate a 
separate rulemaking to revise the part 27 rules and reserve the 
possible relocation of Cellular and PCS rules to that separate 
proceeding? We welcome comment on such relocations and the optimal 
timing for them.
3. Proposed Correction of Section 1.958(d)
    55. We take this opportunity to propose correction of a clerical 
error in the distance computation formula in Sec.  1.958(d) of our 
rules. The error was introduced in the process of moving the provision 
containing the formula from part 22 (Sec.  22.157) to subpart F of part 
1. The proposed correction is included in Appendix E of the NPRM and 
Order.

IV. Order

    56. To facilitate the orderly and effective resolution of the 
fundamental changes and issues raised in the NPRM, and consistent with 
our actions in numerous prior proceedings, the Commission adopts a 
companion Order on February 15, 2012 in which it imposes an immediate 
freeze on the acceptance of certain Cellular applications in certain 
markets, as explained below, and imposes other interim procedures for 
certain Cellular applications, as also explained below. The 
Commission's decision to impose a freeze and other interim procedures 
is procedural and therefore not subject to the notice and comment or 
effective date requirements of the Administrative Procedure Act. (See 5 
U.S.C. 553(b)(A), (d). See also, e.g., Bachow Communications, Inc. v. 
FCC, 237 F.3d 683 (D.C. Cir. 2001)). The tailored freeze and other 
interim procedures are

[[Page 15674]]

effective as of February 15, 2012 until further notice.

A. Suspension of Certain Filings

    57. Rather than imposing a freeze on all modification and new-
system applications, the Commission has tailored the freeze in this 
proceeding to: (1) provide for the continued expansion of service to 
consumers during the pendency of this proceeding; and (2) help the 
Commission identify Unserved Area and inform potential bidders of 
encumbrances well in advance of the auction. A tailored freeze will 
facilitate much needed network changes. We conclude that the benefits 
described above outweigh the limited potential costs of this tailored 
freeze.
    58. As of the Adoption Date (February 15, 2012) and until further 
notice, we have suspended acceptance of certain Cellular applications 
claiming Unserved Area in ``Covered'' CMA Blocks. We wish to allow 
licensees to continue limited expansion of existing systems necessary 
to respond to customer needs by addressing technical changes at the 
periphery of their current CGSAs without facing strike applications, 
i.e., applications filed primarily to block such service during a 
transition to geographic area licensing. Moreover, accepting and 
processing all applications in the normal course under our current 
rules would arguably be inconsistent with our goal of changing to a 
less burdensome licensing system.
    59. Covered Blocks include: (i) Those we preliminarily determine to 
be Substantially Licensed under either benchmark of our proposed test 
(listed in Appendix C of the NPRM and Order); and (ii) those we 
preliminarily determine to be more than 90 percent but less than 95 
percent licensed (listed in Appendix F of the NPRM and Order). In 
Covered Blocks, we prohibit the filing of applications for: (a) new-
system Cellular licenses; and (b) major modifications to expand 
existing systems if claiming Unserved Area that is not contiguous to 
the existing CGSA. The prohibition applies even if a portion of the 
area to be claimed as CGSA lies in a non-Covered Block. Thus, for 
example, if a proposed new-system or major modification application 
proposes to claim (as CGSA) Unserved Area that straddles a CMA 
boundary, where the CMA Block on one side of the boundary is Covered 
while the Block on the other side of the boundary is non-Covered, the 
entire application will be treated as if solely for Unserved Area in a 
Covered Block. Any applications prohibited under the Order that are 
received on or after the Adoption Date are to be dismissed by the 
Bureau as unacceptable for filing.
    60. We are permitting major modification applications that propose 
CGSA expansion in, or into, Covered Blocks only if claiming Unserved 
Area that is contiguous to the existing CGSA. (If an application 
proposes to claim (as CGSA) contiguous Unserved Area that is partially 
in a Covered Block and partially in a non-Covered Block, the 
application will be treated as if the entire claimed area is in a 
Covered Block.) Also, as of the Adoption Date and until further notice, 
we are using a ``same-day filing group'' for purposes of determining 
mutual exclusivity of permissible Cellular applications that entail 
Unserved Area in Covered Blocks. We will dismiss any mutually exclusive 
applications claiming Unserved Area in Covered Blocks that are received 
on or after the Adoption Date rather than conduct closed auctions to 
resolve such applications. We will permit major amendments to 
permissible major modification applications only so long as the 
proposed CGSA expansion in the amendment is claiming Unserved Area that 
is contiguous to the existing licensed CGSA. (If the amendment proposes 
to claim (as CGSA) contiguous Unserved Area that is partially in a 
Covered Block and partially in a non-Covered Block, it will be treated 
as if the entire claimed area is in a Covered Block.) Also, for such 
major amendments filed on or after the Adoption Date and until further 
notice, we will use a ``same-day filing group'' for purposes of 
determining mutual exclusivity, and we will dismiss any such mutually 
exclusive major amendments rather than conduct closed auctions to 
resolve them.
    61. These interim filing procedures do not affect applications 
claiming Unserved Area solely in non-Covered CMA Blocks, which we will 
continue to accept and process under current rules and procedures, nor 
do they affect any applications that do not propose a new Cellular 
system or a CGSA expansion (e.g., renewals, transfers, assignments, 
modifications that do not extend a CGSA boundary, administrative 
updates, and required notifications), no matter the Block. Applications 
for renewal must comply with any applicable provisions of the Notice of 
Proposed Rulemaking released by the Commission in the Wireless Radio 
Services (WRS) proceeding in May 2010. (See generally WRS NPRM, 25 FCC 
Rcd 6996 (2010). See also 47 CFR 1.939.) We advise all parties, 
however, that although minor modification applications (regardless of 
market) are not affected by the freeze imposed under this Order, we 
know from experience that staff might find on review that a purported 
minor modification application submitted on or after the Adoption Date 
is in fact a major modification application. If such an application is 
for Unserved Area (in whole or in part) in a Covered CMA Block, the 
application will be subject to the same procedures and restrictions 
described above (including dismissal if an impermissible filing under 
this Order).
    62. In the following Section B, we discuss how we will process 
currently pending new-system and CGSA-expansion applications in Covered 
CMA Blocks.

B. Currently Pending Non-Mutually Exclusive Applications in Covered CMA 
Blocks

    63. New-System and Major Modification Applications. Currently 
pending applications (i.e., filed prior to the Adoption Date) that 
propose either a new Cellular system or a modification that would 
expand an existing system's CGSA boundary in, or into, Covered CMA 
Blocks fall into one of two categories: (1) Those accepted for filing 
and placed on public notice at least 30 days before the Adoption Date; 
and (2) those for which the 30-day public comment period has not yet 
expired as of the Adoption Date. We will treat non-mutually exclusive 
applications in the first category (including pending applications that 
would be impermissible under this Order if filed on or after the 
Adoption Date) under existing rules and will process them in the normal 
course as expeditiously as possible, subject to certain interim 
procedures regarding major amendments. Specifically, for pending 
modification applications proposing expansion of an existing CGSA, we 
will permit major amendments on or after the Adoption Date subject to 
the same interim procedures described above in Section IV.A. For 
pending new-system applications, we will permit major amendments on or 
after the Adoption Date only so long as the proposed new-system CGSA in 
the amendment is claiming Unserved Area that is contiguous to the CGSA 
proposed in the application that was pending as of the Adoption Date. 
(If an application proposes to claim (as CGSA) contiguous Unserved Area 
that is partially in a Covered Block and partially in a non-Covered 
Block, the application will be treated as if the entire claimed area is 
in a Covered Block.) For such amendments, we will use a ``same-day 
filing group'' for purposes of determining mutual exclusivity, and we

[[Page 15675]]

will dismiss any such mutually exclusive major amendments claiming 
Unserved Area in Covered Blocks that are received on or after the 
Adoption Date rather than conduct closed auctions to resolve them. On 
balance, rather than holding them in abeyance until conclusion of this 
proceeding, we concluded that processing pending applications in the 
first category under existing rules, subject to the interim procedures 
described herein, will not sacrifice the goals we seek to accomplish in 
this proceeding.
    64. Pending new-system and major modification applications in the 
second category (i.e., filed prior to the Adoption Date but for which 
the 30-day comment period has not expired) claiming any Unserved Area 
in Covered CMA Blocks will be deemed mutually exclusive only if a 
competing application was filed prior to the adoption date of the 
Order. Applications in the second category that are not mutually 
exclusive will be processed under our current rules, except that we 
will only permit the filing of major amendments subject to the same 
interim procedures described above regarding major amendments to 
applications in the first category.
    65. Minor Modifications. As explained above, applications submitted 
as minor modifications of an existing CGSA are sometimes found by staff 
to be major modification applications. During the pendency of this 
proceeding, a minor modification application submitted prior to the 
Adoption Date that is determined to be proposing a major modification 
claiming (as CGSA) Unserved Area in a Covered Block will be treated the 
same as a pending major modification application in accordance with the 
interim procedures described above.

V. Procedural Matters

A. Ex Parte Rules--Permit-But-Disclose

    66. The proceeding that the NPRM initiates shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. Persons making ex parte presentations must file a copy 
of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine Period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with Sec.  1.1206(b). In proceedings governed by 
Sec.  1.49(f) or for which the Commission has made available a method 
of electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

B. Comment Period and Procedures

    67. Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, interested parties may file comments and reply comments on or 
before the dates indicated on the first page of this document. All 
comments and reply comments should refer to WT Docket No. 12-40. 
Comments may be filed using the Commission's Electronic Comment Filing 
System (ECFS).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8 a.m. to 7 p.m. All hand deliveries must be held together with rubber 
bands or fasteners. Any envelopes and boxes must be disposed of before 
entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington DC 20554.
    68. People with Disabilities: To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="fd9b9e9ec8cdc9bd9b9e9ed39a928b">[email protected]</a> or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
Initial Regulatory Flexibility Analysis of the Notice of Proposed 
Rulemaking and Order
    69. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in the NPRM. Written public comments are requested on this 
IRFA. Comments must be filed by the same dates as listed on the first 
page of the NPRM and must have a separate and distinct heading 
designating them as responses to this IRFA. The Commission will send a 
copy of the NPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA). In addition, the 
NPRM and IRFA (or summaries thereof) will be published in the Federal 
Register.
Need for, and Objectives of, the Proposed Rules
    70. In the NPRM, the Commission proposes a transition for the 800 
MHz Cellular (Cellular) Service from site-based licensing to 
geographic-area licensing. The proposed transition would occur in two 
stages, via Commission auction. We believe that the current site-based 
paradigm is outdated and hinders carriers from being able to respond 
quickly to changing market conditions and consumer demands. We also 
believe it is contrary to the public interest to maintain a burdensome 
system to preserve extremely limited Unserved Area licensing 
opportunities. The Commission's early key goal of creating a seamless 
and integrated nationwide Cellular Service has been achieved throughout 
the vast majority of our nation. The Commission has long held that 
market-based licensing regimes are

[[Page 15676]]

simpler to administer for all parties concerned. The proposed 
transition would reduce administrative burdens for licensees as well as 
Commission staff. The proposed transition is consistent with the 
Commission's ongoing regulatory reform agenda and also supports the 
Commission's Data Innovation Initiative, launched in June 2010, by 
reducing information collection burdens under the Paperwork Reduction 
Act. We anticipate that, with the proposed additional flexibility 
provided to licensees, the regulatory and compliance costs associated 
with service provision would be reduced. These changes would also put 
Cellular licensees more on par with other wireless telecommunications 
licensees and further the Commission's goal of rule harmonization for 
the different wireless services.
    71. As detailed in Section III, we propose a transition in two 
stages. Consistent with precedent, we would accept competing 
applications for Overlay Licenses, and resolve them via auction, for 
each CMA Block. In Stage I, the Commission would offer Overlay Licenses 
for all CMA Blocks that are ``Substantially Licensed'' or authorized 
solely under interim operating authority (IOA). We propose the 
following test to determine if a CMA Block is Substantially Licensed: 
either (1) at least 95 percent of the total land area in the CMA Block 
is licensed; or (2) there is no parcel within the Block at least 50 
contiguous square miles in size that is not licensed. We believe it is 
appropriate to include total land area without exclusions in 
calculating the licensed area. If a CMA Block meets either benchmark as 
of an established date, it would be deemed Substantially Licensed and 
included in the Stage I transition. We propose, however, that the Gulf 
of Mexico Service Area (GMSA) be exempt from the transition because it 
is governed by a specialized licensing regime.
    72. All CMA Blocks that do not meet the Substantially Licensed test 
would remain under site-based licensing until Stage II is triggered. In 
Stage II, the Commission proposes to offer Overlay Licenses for all 
remaining CMA Blocks (except the GMSA), regardless of the percentage of 
total land area licensed, and terminate site-based licensing. In the 
NPRM, we propose to continue the site-based model for seven years 
before Stage II is triggered, and we seek comment on whether this is 
the appropriate period of time. We believe that the public interest is 
best served by preserving the current scheme's direct spectrum access 
through site-based applications in Blocks that are not yet 
Substantially Licensed, primarily rural areas out west, for a defined 
period of time. This will allow all interested parties to have the 
opportunity to identify the specific areas they wish to serve as 
demographics change or service otherwise becomes economically feasible 
in such markets. Moreover, site-based licensing in such Blocks will 
ensure build-out within one year of authorization of such areas.
    73. Overlay Licensees would be obligated to protect incumbent 
licensees' operations from harmful interference. That obligation would 
cease with respect to any incumbent's licensed area relinquished for 
any reason in the future (e.g., through failure to renew the license). 
Such relinquished areas would not be returned to the Commission's 
auction inventory but, rather, could by served immediately by the 
Overlay Licensee on a primary basis without being subject to 
competitive bidding.
    74. The Chambers, Texas Block-A market (Chambers) is the only CMA 
Block for which a license has never been issued; the market is served 
solely under IOA. We propose to include Chambers in the Stage I auction 
and award an Overlay License consistent with the process described for 
the Substantially Licensed Blocks, but subject to specific build-out 
requirements for the Chambers Overlay Licensee, as explained in Section 
III.A.2. We believe this is the most efficient and effective way to 
resolve the continued lack of a licensee and help bring additional 
advanced service to this Texas market.
    75. We also propose that all Cellular licensees, regardless of 
Block, should be subject to a field strength limit at their respective 
license boundaries, similar to licensees in other flexible services 
such as PCS, certain AWS, etc. The NPRM proposes a median field 
strength limit of 40 dB[mu]V/m for the Cellular Service. We also 
propose certain other revisions in individual Cellular rules to reflect 
the proposed transition, and to delete provisions that we deem obsolete 
or unnecessary going forward, including certain application 
requirements and other filings, and to streamline certain other 
provisions. The proposed rules are set forth in Appendix E and we 
encourage all interested parties to review them carefully. We seek 
comment on how the proposals will impact the amount of information 
available to regulated entities and the public.
Legal Basis
    76. The proposed action is taken under sections 1, 2, 4(i), 301, 
303, 307, 309, 319, 324, and 332 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152, 154(i), 301, 303, 307, 309, 319, 324, and 
332.
Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply
    77. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (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.
    78. Small Businesses, Small Organizations, and Small Governmental 
Jurisdictions. Our action may, over time, affect small entities that 
are not easily categorized at present. We therefore describe here, at 
the outset, three comprehensive, statutory small entity size standards. 
First, nationwide, there are a total of approximately 27.5 million 
small businesses, according to the SBA. In addition, a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of 2007, there were approximately 1,621,315 small 
organizations. Finally, the term ``small governmental jurisdiction'' is 
defined generally as ``governments of cities, towns, townships, 
villages, school districts, or special districts, with a population of 
less than fifty thousand.'' Census Bureau data for 2011 indicate that 
there were 89,476 local governmental jurisdictions in the United 
States. We estimate that, of this total, as many as 88,506 entities may 
qualify as ``small governmental jurisdictions.'' Thus, we estimate that 
most governmental jurisdictions are small.
    79. Wireless Telecommunications Carriers (except Satellite). The 
appropriate size standard under SBA rules is for the category Wireless 
Telecommunications Carriers. The size standard for that category is 
that a business is small if it has 1,500 or fewer employees. Census 
Bureau data for 2007, which now supersede data from the 2002 Census, 
show that there were 3,188 firms in this category that operated for the 
entire year. Of this

[[Page 15677]]

total, 3,144 had employment of 999 or fewer, and 44 firms had 
employment of 1,000 employees or more. Thus, under this category and 
the associated small business size standard, the Commission estimates 
that the majority of wireless telecommunications carriers (except 
satellite) are small entities that may be affected by our proposed 
action. The Commission's own data--available on its Spectrum 
Dashboard--indicate that, as of February 9, 2012, there are 347 
Cellular licensees that will be affected by this NPRM. The Commission 
does not know how many of these licensees are small, as the Commission 
does not collect that information for these types of entities.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    80. In the NPRM, the Commission seeks to reduce filing burdens and 
recordkeeping for all Cellular licensees by changing from site-based to 
geographic area licensing. We propose that, in the Blocks for which an 
Overlay License is offered, the CGSA boundaries of incumbents that do 
not become Overlay Licensees would be permanently fixed insofar as such 
incumbents would not be permitted to expand their CGSAs, except through 
contractual arrangements with other licensees. They would, however, be 
free to modify their systems in response to market demands without 
Commission filings in most cases, so long as the CGSA would not be 
changed as a result, and subject to any obligations we impose on all 
Cellular licensees.
    81. Under our proposal, in most cases Overlay Licensees would be 
free as well to modify their systems without Commission filings, 
thereby minimizing their regulatory burdens. In addition, while Overlay 
Licensees would be obligated to protect incumbent licensees' operations 
from harmful interference, that obligation would cease with respect to 
any incumbent's licensed area (CGSA) or portion thereof that is 
relinquished for any reason in the future (e.g., through failure to 
renew the license). Such relinquished areas would not be returned to 
the Commission's auction inventory but, rather, could be served by the 
Overlay Licensee on a primary basis immediately, without being subject 
to competitive bidding.
    82. Once an Overlay License is granted via auction for Chambers, we 
propose not to subject the Licensee to the existing rules concerning 
the five-year build-out phase or the Phase I or Phase II license 
application processes that have been applicable to other CMA Blocks. 
Instead, we propose that the Chambers Overlay Licensee be required to 
demonstrate that it has built out a Cellular system that is providing 
signal coverage and offering service over at least 35 percent of the 
geographic area of its license authorization within four years of 
initial license grant and at least 70 percent of the geographic area of 
its license authorization by the end of the license term, with failure 
to meet these build-out deadlines resulting in automatic forfeiture of 
the license. We further propose that, after the build-out requirements 
have been met, the Chambers Overlay Licensee should be subject to the 
same rules and obligations that we apply to the other Overlay Licenses 
issued in Stage I of the transition. For example, we seek comment in 
the NPRM on whether Overlay Licensees should be subject to performance 
requirements.
    83. The Commission also proposes that all Cellular licensees be 
subject to a field strength limit at their respective license 
boundaries and that a median field strength limit of 40 dB[micro]V/m is 
appropriate for the Cellular Band. Coordination among co-channel 
licensees regarding channel usage will remain essential in actually 
preventing harmful interference. We therefore propose to retain the 
current Cellular Service rule mandating coordination in certain 
circumstances (Sec.  22.907), but we also propose to allow Cellular 
licensees to negotiate contractual agreements specifying different 
field strength limits. This will provide licensees with additional 
flexibility in their operations.
    84. In the NPRM, we also propose various other changes in parts 1 
and 22 of the Commission's rules that apply to Cellular Service 
licensees. For example, we propose to streamline the application 
requirements for site-based Unserved Area applications, notably Sec.  
22.953 (deleting certain technical data requirements that, going 
forward, we believe will no longer be routinely necessary). We also 
propose to delete provisions that we believe are obsolete going 
forward, such as those requiring certifications associated with 
cessation of analog service, often referred to as the ``analog 
sunset.'' Here too, our proposals are consistent with the Commission's 
regulatory reform agenda and its Data Innovation Initiative. The 
proposed rules are set forth in Appendix E and we encourage all 
interested parties to review them carefully and comment on them with 
specificity.
Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered
    85. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for small entities; (3) the use 
of performance rather than design standards; and (4) an exemption from 
coverage of the rule, or any part thereof for small entities.
    86. The NPRM discusses several alternatives to the proposed two-
stage transition. These include, for example, alternatives that would 
entail transition via auction in more than two stages as well as 
possible exemption for certain extremely rural markets such as Alaskan 
markets and others with special build-out challenges. The NPRM also 
discusses proposals put forth by industry stakeholders thus far in this 
proceeding, including an approach that would not entail competitive 
bidding. The NPRM specifically invites interested parties to comment on 
these various alternatives and to suggest other alternative proposals. 
At this time, the Commission has not excluded any alternative proposal 
from its consideration, but it would do so in this proceeding if the 
record indicates that a particular proposal would have a significant 
and unjustifiable adverse economic impact on small entities.
    87. The Commission believes that the proposed transition to a 
geographic-area licensing system for the Cellular Service in two stages 
via auction will benefit all Cellular incumbents and entrants, 
regardless of size. The proposed scheme would put Cellular licensees on 
a regulatory par with other wireless licensees that hold geographic 
area licenses, such as PCS and certain AWS licensees, thus easing the 
regulatory burden of compliance by eliminating discrepancies in 
competing services. The Commission has historically valued 
harmonization in the rules for wireless licensees by eliminating 
burdensome requirements, as appropriate. Furthermore, we anticipate 
that the modernized licensing scheme will encourage Cellular licensees 
to invest in and deploy ever more advanced technologies as they evolve. 
By reducing the paperwork burden on Cellular providers, we would also 
expect their resulting lower costs to have some positive effect on the 
rates paid by subscriber groups, including small businesses that rely 
on Cellular service.

[[Page 15678]]

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    None.

C. Initial Paperwork Reduction Analysis

    88. This document contains potential new and modified information 
collection requirements. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public and OMB 
to comment on the potential information collection requirements 
contained in this document, as required by the Paperwork Reduction Act 
of 1995, Public Law 104-13. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4), we seek specific comment on how we might ``further reduce 
the information collection burden for small business concerns with 
fewer than 25 employees.''

VI. Ordering Clauses

    89. Pursuant to sections 1, 2, 4(i), 301, 302, 303, 308, 309(j), 
and 332 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
152, 154(i), 301, 302, 303, 308, 309(j), and 332, this Notice of 
Proposed Rulemaking and Order are hereby adopted.
    90. Pursuant to sections 4(i), 301, 303, 308, and 309 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 301, 303, 
308, and 309, that effective as of the date of the adoption of this 
Notice of Proposed Rule Making and Order, THE FEDERAL COMMUNICATIONS 
COMMISSION WILL NOT ACCEPT FOR FILING ANY APPLICATIONS for licenses in 
the Cellular Band that are inconsistent with the terms of the 
application freeze discussed herein. This suspension is effective until 
further notice and applies to any such applications received on or 
after the date of adoption of this Notice of Proposed Rulemaking and 
Order.
    91. NOTICE IS HEREBY GIVEN of the proposed regulatory changes 
described in this Notice of Proposed Rulemaking and that comment is 
sought on these proposals.
    92. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, SHALL SEND a copy of this Notice of 
Proposed Rulemaking and Order, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 1

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

47 CFR Part 22

    Communications common carriers, Radio, Reporting and recordkeeping 
requirements, Rural areas.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR parts 1 and 22 as 
follows:

PART 1--PRACTICE AND PROCEDURE

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

    Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154(j), 
155, 157, 225, 227, 303(r), and 309.


Sec.  1.919  [Amended]

    2. Amend Sec.  1.919 by removing and reserving paragraph (c).
    3. Amend Sec.  1.929 by revising paragraph (b)(1), removing and 
reserving paragraph (b)(3), and adding paragraph (b)(4) to read as 
follows:


Sec.  1.929  Classification of filings as major or minor.

* * * * *
    (b) * * *
    (1) Request for an authorization or an amendment to a pending 
application that would expand the Cellular Geographic Service Area 
(CGSA) of an existing cellular system or, in the case of an amendment, 
as previously proposed in an application, in a CMA Block that has not 
been included in an auction for Cellular Overlay Authorizations under 
Sec.  22.985.
* * * * *
    (4) Request for a Cellular Overlay Authorization. See Sec.  22.985.
* * * * *
    4. Amend Sec.  1.958 by revising paragraph (d) to read as follows:


Sec.  1.958  Distance computation.

* * * * *
    (d) Calculate the number of kilometers per degree of longitude 
difference for the mean geodetic latitude calculated in paragraph (b) 
of this section as follows:

KPD<INF>lon</INF> = 111.41513 cos ML - 0.09455 cos 3ML + 0.00012 cos 
5ML
* * * * *

PART 22--PUBLIC MOBILE SERVICES

    5. The authority citation for part 22 continues to read as follows:

    Authority: 47 U.S.C. 154, 222, 303, 309 and 332.

    6. Amend Sec.  22.99 by:
    a. Removing the definitions ``Build-out transmitters,'' 
``Extension,'' ``Five year build-out period,'' and ``Partitioned 
cellular market'';
    b. Revising the definitions ``Cellular Geographic Service Area,'' 
and ``Cellular markets''; and
    c. Revising the term ``Unserved areas'' to read ``Unserved Area'' 
and revising the first sentence of its definition;
    d. Adding definitions ``Cellular area-based authorization,'' 
``Cellular Licensed Area,'' ``Cellular Overlay Authorization (COA),'' 
``Cellular Overlay Licensee,'' ``Cellular site-based authorization,'' 
``CMA Block,'' and ``Substantially Licensed CMA Block''.
    The revisions and additions read as follows:


Sec.  22.99  Definitions.

* * * * *
    Cellular area-based authorization. An authorization in the Cellular 
Radiotelephone Service where the licensed area is a specified fixed 
geographic area other than a CGSA (e.g., a CMA, as in the case of a 
Cellular Overlay Authorization) irrespective of the locations and 
technical parameters of base stations (cell sites), in a CMA Block 
included in an auction under Sec.  22.985.
    Cellular Geographic Service Area (CGSA). The licensed geographic 
area, determined by the specified locations and technical parameters of 
base stations (cell sites) pursuant to the procedures set forth in 
Sec.  22.911, within which a cellular system is entitled to protection 
and adverse effects are recognized, for the purpose of determining 
whether a petitioner has standing, in the Cellular Radiotelephone 
Service.
    Cellular Licensed Area. The geographic area within which the 
cellular licensee is permitted to transmit, or consent to allow other 
cellular licensees to transmit, electromagnetic energy and signals on 
the assigned channel block, in order to provide cellular service.
    Cellular Market Area (CMA). A standard geographic area used by the 
FCC for administrative convenience in the licensing of cellular 
systems; a more recent term for ``cellular market'' (and includes 
Metropolitan Statistical Areas (MSAs) and Rural Service Areas (RSAs)). 
See Sec.  22.909.

[[Page 15679]]

    Cellular markets (obsolescent). See definition for ``Cellular 
Market Area (CMA)''.
* * * * *
    Cellular Overlay Authorization (COA). A cellular area-based 
authorization in a CMA Block included in an auction under Sec.  22.985, 
where the cellular licensed area is the geographic area within the CMA 
boundary (Channel Block A or B), subject to the requirement to protect 
incumbent licensees' operations from harmful interference under 
applicable rules.
    Cellular Overlay Licensee. The holder of a Cellular Overlay 
Authorization.
* * * * *
    Cellular site-based authorization. An authorization in the Cellular 
Radiotelephone Service where the Cellular Licensed Area is determined 
by the specified locations and technical parameters of base stations 
(cell sites), pursuant to the procedures set forth in Sec.  22.911.
* * * * *
    CMA Block. In the Cellular Radiotelephone Service, a CMA considered 
in regard to a specified channel block, i.e., either Channel Block A or 
Channel Block B (see Sec.  22.905).
* * * * *
    Substantially Licensed CMA Block. A CMA Block (A or B) where at 
least 95 percent of the total land area is Cellular Geographic Service 
Area or which contains no contiguous parcel of Unserved Area larger 
than 130 square kilometers (50 square miles).
* * * * *
    Unserved Area. With regard to a channel block allocated for 
assignment in the Cellular Radiotelephone Service: Geographic area in 
the District of Columbia, or any State, Territory or Possession of the 
United States of America that is not within any Cellular Geographic 
Service Area of any cellular system authorized to transmit on that 
channel block. * * *
    7. Amend Sec.  22.131 by revising paragraphs (c)(3)(iii) and 
(d)(2)(iv) to read as follows:


Sec.  22.131  Procedures for mutually exclusive applications.

* * * * *
    (c) * * *
    (3) * * *
    (iii) If all of the mutually exclusive applications filed on the 
earliest filing date are applications for initial authorization, a 30-
day notice and cut-off filing group is used.
* * * * *
    (d) * * *
    (2) * * *
    (iv) Any application to expand the CGSA of a cellular system (as 
defined in Sec.  22.911) in a CMA Block that has not been included in 
an auction under Sec.  22.985.
* * * * *
    8. Amend Sec.  22.165 by revising paragraph (e) to read as follows:


Sec.  22.165  Additional transmitters for existing systems.

* * * * *
    (e) Cellular Radiotelephone Service. (1) In a CMA Block that has 
not been included in an auction under Sec.  22.985, the service area 
boundaries of the additional transmitters, as calculated by the method 
set forth in Sec.  22.911(a), must remain within the CGSA; the licensee 
must seek prior approval (using FCC Form 601) regarding any 
transmitters to be added under this section that would cause a change 
in the CGSA boundary. See Sec.  22.953.
    (2) With regard to an incumbent's CGSA in a CMA Block that has been 
included in an auction under Sec.  22.985, the service area boundaries 
of the additional transmitters, as calculated by the method set forth 
in Sec.  22.911(a), must remain within the incumbent's CGSA.
    (3) A Cellular Overlay Licensee is permitted to expand into any 
Unserved Area within its licensed CMA Block so long as it protects 
existing cellular licensees from harmful interference.
* * * * *


Sec.  22.228  [Removed]

    9. Remove Sec.  22.228.
    10. Revise Sec.  22.901 to read as follows:


Sec.  22.901  Cellular service requirements and limitations.

    Each cellular system must provide either mobile service, fixed 
service, or a combination of mobile and fixed service, subject to the 
requirements, limitations and exceptions in this section. Mobile 
service provided may be of any type, including two-way radiotelephone, 
dispatch, one-way or two-way paging, and personal communications 
services (as defined in part 24 of this chapter). Fixed service is 
considered to be primary service, as is mobile service. When both 
mobile and fixed services are provided, they are considered to be co-
primary services. In providing cellular service, each cellular system 
may incorporate any technology that meets all applicable technical 
requirements in this part.
    11. Revise Sec.  22.909 to read as follows:


Sec.  22.909  Cellular market areas (CMAs).

    Cellular market areas (CMAs) are standard geographic areas used by 
the FCC for administrative convenience in the licensing of cellular 
systems. CMAs comprise Metropolitan Statistical Areas (MSAs) and Rural 
Service Areas (RSAs). All CMAs and the counties they comprise are 
listed in: ``Common Carrier Public Mobile Services Information, 
Cellular MSA/RSA Markets and Counties,'' Public Notice, Report No. CL-
92-40, 6 FCC Rcd 742 (1992).
    (a) MSAs. Metropolitan Statistical Areas are 306 areas, including 
New England County Metropolitan Areas and the Gulf of Mexico Service 
Area (water area of the Gulf of Mexico, border is the coastline), 
defined by the Office of Management and Budget, as modified by the FCC.
    (b) RSAs. Rural Service Areas are 428 areas, other than MSAs, 
established by the FCC.


Sec.  22.912  [Removed]

    12. Remove Sec.  22.912.


Sec.  22.929  [Removed]

    13. Remove Sec.  22.929.
    14. Revise Sec.  22.946 to read as follows:


Sec.  22.946  Construction period for cellular systems under site-based 
authorizations.

    The construction period applicable to specific new or modified 
cellular facilities for which a site-based authorization is granted is 
one year, beginning on the date the authorization is granted. To 
satisfy this requirement, a cellular system must be providing service 
to mobile stations operated by subscribers and roamers. The licensee 
must notify the FCC (FCC Form 601) after the requirements of this 
section are met. See Sec.  1.946 of this chapter. GMEZ cellular systems 
are not subject to construction period requirements. See Sec.  22.950.
    15. Revise Sec.  22.947 to read as follows:


Sec.  22.947  Build-out period for CMA Block 672A (Chambers, TX).

    This rule section applies only to cellular systems operating on 
Channel Block A in CMA 672 (Chambers, Texas).
    (a) A licensee that holds the Cellular Overlay Authorization for 
CMA Block 672A (Chambers, Texas) initially awarded via auction (i.e., 
the CMA Block for which cellular service was authorized solely under 
interim operating authority prior to the Stage I auction described in 
Sec.  22.985) must be providing signal coverage and offering service 
over at least 35 percent of the geographic area of the CMA Block within 
four years of the grant of the authorization, and over at least 70 
percent of the geographic area of its license authorization by the end 
of the license term. In applying this geographic benchmark, the 
licensee is to count total land area.

[[Page 15680]]

    (b) The licensee must notify the FCC (FCC Form 601) after the 
requirements of this section are met and must include with its 
notification(s) GIS map files and other supporting documents showing 
compliance with the construction requirement. See Sec.  1.946 of this 
chapter. See also Sec.  22.953.
    (c) Failure to meet the requirements in this section by the 
deadline will result in automatic termination of the authorization and 
such licensee will be ineligible to regain it.
    16. Revise Sec.  22.948 to read as follows:


Sec.  22.948  Geographic partitioning and spectrum disaggregation.

    Cellular licensees may apply to partition their cellular licensed 
area or to disaggregate their licensed spectrum at any time following 
the grant of their authorization(s). Parties seeking approval for 
partitioning and disaggregation shall request from the FCC an 
authorization for partial assignment of a license pursuant to Sec.  
1.948 of this chapter. See also paragraph (f) of this section.
    (a) Partitioning. Applicants must file FCC Form 603 pursuant to 
Sec.  1.948 of this chapter. The filing must include the attachments 
required under Sec.  22.953, including GIS map files and a reduced-size 
PDF map, for both the assignor and the assignee.
    (1) Within a CMA Block that has not yet been included in an auction 
under Sec.  22.985, partitioning of a CGSA must be on a site-by-site 
basis; i.e., the partitioned area must comprise only the area resulting 
from one or more cell sites pursuant to Sec.  22.911. At least one 
entire cell site must be partitioned. If all cell sites are assigned, 
it is not partitioning, but rather a full assignment of authorization.
    (2) Partitioning of the licensed area of a cellular area-based 
authorization (including, e.g., the licensed area of a Cellular Overlay 
Authorization) to a licensee in a CMA Block that has not yet been 
included in an auction under Sec.  22.985 must be on a site-by-site 
basis; i.e., the partitioned area must comprise CGSA resulting from one 
or more cell sites pursuant to Sec.  22.911.
    (3) Partitioning of the licensed area of a cellular area-based 
authorization within the same CMA Block that has been included in an 
auction under Sec.  22.985, or to a licensee in another CMA Block that 
has also been included in such an auction (including, e.g., the 
partitioning of a Cellular Overlay Authorization area by one Cellular 
Overlay Licensee to another Cellular Overlay Licensee), may involve any 
proportion of division. If all of the licensed area is assigned, it is 
not partitioning, but rather a full assignment of authorization.
    (b) Disaggregation. Spectrum may be disaggregated in any amount.
    (c) Combined partitioning and disaggregation. The FCC will consider 
requests for partial assignment of licenses that propose combinations 
of partitioning and disaggregation.
    (d) Field strength limit. For purposes of partitioning and 
disaggregation, cellular systems must be designed so as not to exceed a 
median field strength level of 40 dB[mu]V/m at or beyond the boundary 
of the Cellular Licensed Area, unless all affected adjacent service 
area licensees agree to a different signal level. See Sec.  22.983.
    (e) License term. The license term for a partitioned license area 
and for disaggregated spectrum will be the remainder of the original 
license term.
    (f) Spectrum Leasing. Cellular spectrum leasing is subject to the 
provisions of paragraphs (a)(1) through (a)(3), (b), and (c) of this 
section, except that applicants must file FCC Form 608 (not FCC Form 
603), as well as all applicable provisions of subpart X of part 1 of 
this chapter.
    17. Revise Sec.  22.949 to read as follows:


Sec.  22.949  Unserved Area licensing process for site-based systems.

    This section sets forth the process for licensing Unserved Area in 
CMA Blocks not yet included in an auction pursuant to Sec.  22.985. The 
licensing process in this Sec.  22.949 allows eligible parties to apply 
for any Unserved Area that remains in such CMA Blocks.
    (a) The Unserved Area licensing process described in this section 
is on-going and applications may be filed at any time, until the CMA 
Block is included in an auction pursuant to Sec.  22.985.
    (b) There is no limit to the number of Unserved Area applications 
that may be granted on each CMA Channel Block that remains subject to 
the procedures of this section. Consequently, such Unserved Area 
applications are mutually exclusive only if the proposed CGSAs would 
overlap. Mutually exclusive applications are processed using the 
general procedures in Sec.  22.131. See also Sec.  22.961.
    (c) Unserved Area applications under this section may propose a 
CGSA covering more than one CMA. Each such Unserved Area application 
must request authorization for only one CGSA.
    (d) Settlements among some, but not all, applicants with mutually 
exclusive applications for Unserved Area (partial settlements) under 
this section are prohibited. Settlements among all applicants with 
mutually exclusive applications under this section (full settlements) 
are allowed and must be filed no later than the date that the FCC Form 
175 (short-form) is filed.
    18. Amend Sec.  22.950 by revising paragraphs (c) and (d) to read 
as follows:


Sec.  22.950  Provision of service in the Gulf of Mexico Service Area 
(GMSA).

* * * * *
    (c) Gulf of Mexico Exclusive Zone (GMEZ). GMEZ licensees have an 
exclusive right to provide cellular service in the GMEZ, and may add, 
modify, or remove facilities anywhere within the GMEZ without prior FCC 
approval. There is no Unserved Area licensing procedure for the GMEZ.
    (d) Gulf of Mexico Coastal Zone (GMCZ). The GMCZ is subject to the 
Unserved Area licensing procedure set forth in Sec.  22.949.
    19. Revise Sec.  22.953 to read as follows:


Sec.  22.953  Content and form of applications for cellular 
authorizations.

    Applications for authority to operate a new cellular system or to 
modify an existing cellular system must comply with the specifications 
in this section.
    (a) New Systems. In addition to information required by subparts B 
and D of this part and by FCC Form 601, applications for a site-based 
authorization to operate a cellular system must comply with all 
applicable requirements set forth in part 1 of this chapter, including 
the requirements specified in Sec. Sec.  1.913, 1.923, and 1.924, and 
must include the information listed below, in numbered exhibits. 
Geographical coordinates must be correct to <plus-minus>1 second using 
the NAD 83 datum.
    (1) Exhibit I--Geographic Information System (GIS) map files. The 
FCC will specify the file format required for the Geographic 
Information System (GIS) map files that are to be submitted 
electronically via the Universal Licensing System (ULS). In addition to 
GIS map files submitted electronically, the FCC reserves the right to 
request a full-size paper map from the applicant. The scale of the 
full-size paper map must be 1:500,000, regardless of whether any 
different scale is used for the reduced-size PDF map required in 
Exhibit II. In addition to the information required for the GIS map 
files, the paper map, if requested, must include all the information 
required for the reduced-size PDF map (see paragraph (a)(2) of this 
section).
    (2) Exhibit II--Reduced-size PDF map. This map must be 8\1/2\ x 11 
inches (if possible, a proportional reduction of a 1:500,000 scale 
map). The map must

[[Page 15681]]

have a legend, a distance scale and correctly labeled latitude and 
longitude lines. The map must be clear and legible. The map must 
accurately show the cell sites (transmitting antenna locations), the 
service area boundaries of additional and modified cell sites, the 
entire CGSA, extensions of the composite service area beyond the CGSA 
(see Sec.  22.911), and the relevant portions of the CMA boundary.
    (3) Exhibit III--Antenna Information. In addition, upon request by 
an applicant, licensee, or the FCC, a cellular applicant or licensee of 
whom the request is made shall furnish the antenna type, model, the 
name of the antenna manufacturer, antenna gain in the maximum lobe, the 
beam width of the maximum lobe of the antenna, a polar plot of the 
horizontal gain pattern of the antenna, antenna height to tip above 
ground level, the height of the center of radiation of the antenna 
above the average terrain, the height of the antenna center of 
radiation above the average elevation of the terrain along each of the 
8 cardinal radials, the maximum effective radiated power, and the 
electric field polarization of the wave emitted by the antenna when 
installed as proposed to the requesting party within ten (10) days of 
receiving written notification.
    (4) through (10) [Reserved].
    (11) Additional information. The FCC may request information not 
specified in paragraphs (a)(1) through (3) of this section as necessary 
to process an application.
    (b) Existing systems: major and minor modifications. Licensees 
making major modifications pursuant to Sec.  1.929(a) and (b) of this 
chapter, and licensees making minor modifications pursuant to Sec.  
1.929(k) of this chapter, must file FCC Form 601 and comply with the 
requirements of paragraph (a) of this section.
    (c) [Reserved].


Sec.  22.960  [Removed]

    20. Remove Sec.  22.960.
    21. Add Sec.  22.961 to read as follows:


Sec.  22.961  Cellular licenses subject to competitive bidding.

    The following mutually exclusive initial applications for cellular 
licensed area authorizations are subject to competitive bidding, and 
unless otherwise provided by this subpart, the general competitive 
bidding procedures set forth in part 1, subpart Q of this chapter will 
apply:
    (a) Mutually exclusive initial applications for cellular site-based 
authorizations; and
    (b) Mutually exclusive initial applications for Cellular Overlay 
Authorizations.


Sec. Sec.  22.962 through 22.967  [Removed and Reserved]

    22. Remove and Reserve Sec. Sec.  22.962 through 22.967.


Sec.  22.969  [Removed]

    24. Remove Sec.  22.969.
    25. Add Sec.  22.983 to read as follows:


Sec.  22.983  Field strength limit.

    The predicted or measured median field strength at any location on 
or beyond the boundary of any Cellular Licensed Area must not exceed 40 
dB[mu]V/m, unless the adjacent cellular service licensee(s) on the same 
Channel Block agree(s) to a different field strength. This value 
applies to both the initially authorized areas and to partitioned 
areas.
    26. Add Sec.  22.985 to read as follows:


Sec.  22.985  Geographic area licensing via auctions.

    The licensing procedures in this section do not apply to any CMA 
Block in the GMSA (see Sec.  22.950).
    (a) Determination of licensing status of CMA Blocks. The FCC will 
determine whether each CMA Block is Substantially Licensed. A CMA Block 
will be deemed Substantially Licensed if, as of a cut-off date 
established by the FCC, either:
    (1) At least 95 percent of the total land area in the CMA Block is 
already licensed as CGSA; or
    (2) The CMA Block contains no contiguous parcel of Unserved Area 
that is larger than 130 square kilometers (50 square miles).
    (b) Stage I Auction. Any auction to resolve mutually exclusive 
applications filed with respect to CMA Blocks that are included in 
Stage I for the assignment of Cellular Overlay Authorizations shall be 
conducted pursuant to the procedures set forth in part 1, subpart Q of 
this chapter. Any eligible entity may bid in the Stage I auction. A CMA 
Block is eligible to be included in the Stage I auction if either:
    (1) The CMA Block is determined by the FCC to be Substantially 
Licensed; or,
    (2) The CMA Block has cellular service that has been authorized 
solely under interim operating authority (i.e., for which no license 
has ever been issued).
    (c) Stage II Auction. Any auction to resolve mutually exclusive 
applications filed with respect to CMA Blocks that are included in 
Stage II for the assignment of Cellular Overlay Authorizations in such 
Blocks shall be conducted pursuant to the procedures set forth in part 
1, subpart Q of this chapter. Any eligible entity may bid in the Stage 
II auction.
    27. Add Sec.  22.986 to read as follows:


Sec.  22.986.  Designated Entities.

    (a) Eligibility for small business provisions in the Cellular 
Radiotelephone Service. (1) A very small business is an entity that, 
together with its controlling interests and affiliates, has average 
annual gross revenues not exceeding $3 million for the preceding three 
years.
    (2) A small business is an entity that, together with its 
controlling interests and affiliates, has average annual gross revenues 
not exceeding $15 million for the preceding three years.
    (3) An entrepreneur is an entity that, together with its 
controlling interests and affiliates, has average annual gross revenues 
not exceeding $40 million for the preceding three years.
    (b) Bidding credits in the Cellular Radiotelephone Service. A 
winning bidder that qualifies as a very small business, as defined in 
this section, or a consortium of very small businesses may use the 
bidding credit specified in Sec.  1.2110(f)(2)(i) of this chapter. A 
winning bidder that qualifies as a small business, as defined in this 
section, or a consortium of small businesses may use the bidding credit 
specified in Sec.  1.2110(f)(2)(ii) of this chapter. A winning bidder 
that qualifies as an entrepreneur, as defined in this section, or a 
consortium of entrepreneurs may use the bidding credit specified in 
Sec.  1.2110(f)(2)(iii) of this chapter.

[FR Doc. 2012-5689 Filed 3-15-12; 8:45 am]
BILLING CODE 6712-01-P


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