[Federal Register Volume 65, Number 221 (Wednesday, November 15, 2000)]
[Rules and Regulations]
[Pages 68927-68932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29323]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 24

[PP Docket No. 93-253; FCC 00-299]


Broadband Personal Communications Services (PCS) Competitive 
Bidding and the Commercial Mobile Radio Service Spectrum Cap

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document denies various petitioners' requests to alter 
the Commission's C and F block competitive bidding rules. It does not 
change the rules except to reinstate provisions that had been 
inadvertently eliminated from the rules in a previous order. The 
Commission's determination with respect to these requests promotes the 
goals of the Communications Act.

DATES: Effective November 15, 2000.

FOR FURTHER INFORMATION CONTACT: Audrey Bashkin, Attorney, Auctions and 
Industry Analysis Division, Wireless Telecommunications Bureau, at 
(202) 418-0660.

SUPPLEMENTARY INFORMATION: This is a summary of an Order on 
Reconsideration in the Amendment of the Commission's Rules Regarding 
Broadband PCS Competitive Bidding and the Commercial Mobile Radio 
Service Spectrum Cap. The complete text of the Order on Reconsideration 
is available for inspection and copying during normal business hours in 
the FCC Reference Center (Room CY-A257), 445 12th Street, SW, 
Washington, DC. It may also be purchased from the Commission's copy 
contractor, International Transcription Services, Inc. (ITS, Inc.), 
1231 20th Street, NW, Washington, DC 20036, (202) 857-3800. It is also 
available on the Commission's web site at http://www.fcc.gov/wtb/auctions. 

I. Introduction

    1. In this Order on Reconsideration, we first address three 
petitions for reconsideration of the Commission's Fifth Memorandum 
Opinion and Order in PP Docket No. 93-253 (``Competitive Bidding Fifth 
Memorandum Opinion and Order'') in which the Commission resolved 
petitions for reconsideration or clarification of its rules governing 
competitive bidding for ``entrepreneurs' block'' (C and F block) 
Personal Communications Services licenses in the 2 GHz band 
(``broadband PCS''), See 59 FR 63210 (December 7, 1994). We next 
address nine petitions for reconsideration of the Commission's Report 
and Order in WT Docket No. 96-59 and GN Docket No. 90-314 (``DEF Report 
and Order'') in which the Commission modified its competitive bidding 
and ownership rules for broadband PCS. See 61 FR 33859 (July 1, 1996). 
Finally, we reinstate provisions which, in the Competitive Bidding 
Sixth Report and Order, were inadvertently eliminated from one of the 
Commisson's competitive bidding rules. See 60 FR 37786 (July 21, 1995).

II. Background

    2. Consistent with Congress' mandate to promote the participation 
of small businesses, rural telephone companies, and businesses owned by 
members of minority groups and women (collectively, ``designated 
entities'') in the provision of spectrum-based services, the Commission 
originally limited eligibility for C and F block PCS licenses to 
``entrepreneurs'' and adopted special provisions for those blocks to 
assist small and women- and minority-owned businesses. The Commission 
considers entrepreneurs, with regard to the C and F blocks, to be those 
entities that can meet the auction and licensing eligibility 
requirements of Sec. 24.709 of the Commission's rules. The principal 
requirement is set forth in Sec. 24.709(a)(1), as follows:

    No application is acceptable for filing and no license shall be 
granted for frequency block C or frequency block F, unless the 
applicant, together with its affiliates and persons or entities that 
hold interests in the applicant and their affiliates, have gross 
revenues of less than $125 million in each of the last two years and 
total assets of less than $500 million at the time the applicant's 
short-form application (Form 175) is filed.

Under Sec. 24.709, C and F block licensees are required to maintain 
their eligibility until at least five years from the date of the 
initial license grant. Licensees, however, are permitted to grow beyond 
the gross revenue and total assets caps through equity investment by 
non-attributable investors, debt financing, revenue from operations, 
business development, or expanded service.
    3. The Commission has held four entrepreneurs' block PCS auctions 
to date, Auction No. 5, the first auction of C block spectrum, ended on 
May 6, 1996 and was followed quickly by Auction No. 10, another C block 
auction, which concluded on July 16, 1996. Auction No. 11, the first F 
block auction, ended on January 14, 1997, and also included D and E 
block spectrum. The fourth auction, Auction No. 22, made available 
additional C and F block, as well as E block, spectrum and concluded on 
April 15, 1999.

[[Page 68928]]

III. Reconsideration of the Competitive Bidding Fifth Memorandum 
Opinion and Order

A. Background

    4. In the Competitive Bidding Fifth Memorandum Opinion and Order, 
the Commission, responding to petitions for reconsideration or 
clarification of the Competitive Bidding Fifth Report and Order, 59 FR 
37566 (July 22, 1994), and the Competitive Bidding Order on 
Reconsideration,  59 FR 43062 (August 22, 1994), clarified and modified 
its rules in order to allow better participation in broadband PCS by 
entrepreneurs and designated entities.

B. Control Group Equity Exceptions

    5. Background. To be eligible to participate in entrepreneurs' (C 
or F) block auctions, an applicant (together with its affiliates and 
persons or entities that hold interests in the applicant and their 
affiliates) must have had gross revenues of less than $125 million in 
each of the last two years and must have total assets of less than $500 
million. We recently adopted as our general attribution rule a 
``controlling interest'' standard and decided that this standard would 
govern attribution for purposes of determining entrepreneur and small 
business eligibility for future auctions of C and F block licenses. 
However, in each of the past four C and F block auctions, we applied an 
attribution rule that provided for two ``control group'' equity 
exceptions--the ``25 percent equity exception'' and the ``49.9 percent 
equity exception''--under which auction applicants could exclude from 
their gross revenue and asset totals the gross revenues and total 
assets of passive investors. Both exceptions required the applicant to 
form a ``control group'' within which ``qualifying investors'' owned at 
least 50.1 percent of the applicant's voting interests. Under the 25 
percent equity exception, the applicant's control group was required to 
own at least 25 percent of the applicant's total equity; and, within 
the control group, qualifying investors were required to hold at least 
15 percent of the applicant's total equity. Under the 49.9 percent 
equity exception, the applicant's control group was required to own at 
least 50.1 percent of the applicant's total equity; and, within the 
control group, qualifying investors were required to hold at least 30 
percent of the applicant's total equity. If these and certain other 
requirements were met, the gross revenues and total assets of non-
controlling investors were not attributed to the applicant.
    6. For publicly-traded corporations with widely dispersed voting 
stock ownership, the Commission in the Competitive Bidding Fifth 
Memorandum Opinion and Order created an additional exception. Under the 
``publicly-traded corporations exception,'' applicable to the four C 
and F block auctions conducted to date, no person could own more than 
15 percent of the applicant's equity or be able to control the election 
of more than 15 percent of the applicant's board of directors. 
Moreover, no person, other than the applicant's management or members 
of its board of directors, in their capacities as such, could have de 
facto control of the applicant. If these and certain other requirements 
were met, the gross revenues and total assets of persons holding an 
interest in the applicant were not attributed to the applicant.
    7. Discussion. One commenter objects that under the control group 
exceptions, small, widely held, publicly-traded companies ``cannot 
serve at the `control group' level of the PCS applicant and are thereby 
effectively precluded from raising equity capital through the pursuit 
of joint ventures with non-controlling strategic investors.'' The 
commenter petitions the Commission either to allow publicly-traded 
companies to serve as control groups or to ``extend the public company 
exemption to the control group level.'' While there was nothing in the 
control group rules explicitly preventing a publicly-traded company 
from using one of the control group equity exceptions or even from 
serving as the control group of an applicant, as a practical matter, 
these options were unlikely to be available to corporations that were 
publicly-traded. Nevertheless, we believe that the Commission provided 
such corporations with ample opportunity to obtain financing and to 
form strategic relationships with other entities. Such corporations 
were able, under the publicly-traded corporations exception, to sell 
classes of stock to strategic investors in amounts up to 15 percent of 
the corporation's equity. They were also permitted to obtain unlimited 
amounts of debt financing from, or enter into management agreements 
with, other entities, provided that such arrangements did not 
constitute a transfer of de jure or de facto control of the applicant 
or licensee. Given our recent determination that the controlling 
interest standard would apply to all future C and F block auctions, we 
dismiss as moot the commenter's request as to such auctions. Moreover, 
we believe that to relax the entrepreneurs' block exceptions in the 
manner the commenter's requests for existing C and F block licensees 
would seriously undermine the effectiveness of the financial caps and, 
for this reason, deny the commenter's petition with regard to such 
licensees.

IV. Reconsideration of the DEF Report and Order

A. Background

    8. In the DEF Report and Order, the Commission, responding to the 
Supreme Court's decision in Adarand Constructors, Inc. v. Pena 
(``Adarand''), modified its F block rules to make them race- and 
gender-neutral, as it previously had done for the C block.

B. Auction Timing

    9. Two commenters ask that the Commission delay the start date of 
Auction No. 11. As stated, Auction No. 11, which began on August 26, 
1996, concluded on January 14, 1997. Accordingly, the petitions of 
these commenters' are dismissed as moot.

C. Changes Resulting From Adarand

    10. Background. In the DEF Report and Order, the Commission 
examined the F block auction rules in light of the Supreme Court's 
decision in Adarand that all racial classifications must be analyzed by 
a reviewing court under strict scrutiny. The Commission decided that it 
did not have sufficient evidence to support its F block race- and 
gender-based provisions and concluded that the F block rules should be 
race and gender neutral. Accordingly, the Commission modified the F 
block rules regarding control group equity structures, affiliation, 
installment payment plans, and bidding credits. The changes to the F 
block rules followed analogous modifications to the C block rules by 
the Commission in the Competitive Bidding Sixth Report and Order, which 
was upheld by the D.C. Circuit Court of Appeals in Omnipoint v. FCC. 
Two days after release of the DEF Report and Order,  the Supreme Court 
clarified that under ``intermediate scrutiny,'' the standard of review 
for gender classifications, the government must demonstrate an 
``exceedingly persuasive justification'' in order to defend gender-
based government action, emphasizing that such action is constitutional 
only if it serves an important governmental objective and is 
substantially related to the achievement of that objective.
    11. In the Second Further Notice, 63 FR 770 (January 7, 1998), we 
sought comment on whether there is a compelling governmental interest 
that

[[Page 68929]]

would justify the use of preferences for minority-owned businesses or 
an exceedingly persuasive justification to support gender-based 
preferences for women-owned businesses. In addition, we asked 
commenters to provide evidence in support of their positions and to 
indicate what measures, if any, could be narrowly tailored to withstand 
judicial review. We sought comment on what specifically tailored tools, 
such as bidding credits, might be appropriate or whether preferences 
should be given to minority-owned or women-owned businesses that also 
qualify as small businesses. In our recent Part 1 Fifth Report and 
Order, 65 FR 52323 (August 29, 2000), we noted that we did not receive 
any comments on these issues and concluded that because the record was 
sparse we did not believe that it was appropriate to adopt special 
provisions for minority- and women-owned businesses at that time.
    12. Discussion. One commenter asks the Commission to reconsider its 
decision to eliminate race and gender preferences. It argues that the 
Commission is subject to fewer time pressures for the F block auction 
than it was for the initial C block auction and that the Commission has 
had the time to make, and should make, the factual showing necessary to 
justify reimplementing its race and gender F block provisions. This 
commenter's request is moot with regard to the two F block auctions 
already completed.
    13. With regard to future F block auctions, we do not have a 
sufficient record to justify the reimplementation of race- and gender-
based auction rules. As stated, we received no comments on these issues 
in response to the Second Further Notice. We note that our Office of 
Communications Business Opportunities has initiated several studies to 
examine ownership of telecommunications facilities by minority- and 
women-owned entities. Further, we have recently commenced several new 
studies to explore additional entry barriers and to seek further 
evidence of racial and gender discrimination against potential 
licensees. In addition, we will continue to track the rate of 
participation in our auctions by minority- and women-owned firms and 
evaluate this information with other data gathered to determine whether 
provisions to promote participation by minorities and women can satisfy 
judicial scrutiny. If a sufficient record can be adduced, we will 
consider race- and gender-based provisions for future auctions. We, 
therefore, deny the commenter's petition. We discuss other petitions 
addressing specific rule changes resulting directly or indirectly from 
the Adarand decision.
i. Control Group Equity Exception and Affiliation Exception
    14. Background. Control Group Equity Exception. As explained 
earlier, the Commission's rules applicable to the four past C and F 
block auctions provided for two control group equity exceptions to the 
entrepreneurs' block financial caps. Under these exceptions, the gross 
revenues and total assets of certain persons or entities holding 
interests in an applicant were not considered for purposes of 
determining eligibility to participate in a C or F block auction. As 
originally adopted, the 49.9 percent equity exception was available 
only to women- and minority-owned businesses. In the DEF Report and 
Order, the Commission made the 49.9 percent equity exception available 
to all small businesses and entrepreneurs.
    15. Affiliation Exception. In the Competitive Bidding Sixth Report 
and Order, the Commission modified an exception to the C and F block 
affiliation rules under which the gross revenues and assets of 
affiliates controlled by minority investors that were members of a C or 
F block applicant's control group were not attributed to the applicant. 
The exception as modified allowed every small business C block 
applicant to exclude the gross revenues and assets of any affiliates 
that did not exceed the entrepreneurs' block caps, provided that the 
gross revenues and total assets of all such affiliates of the small 
business applicant, when aggregated, did not exceed those caps. The 
modified exception was limited to C block applicants; language making 
the exception applicable to F block applicants was inadvertently 
eliminated. Subsequently, in the DEF Report and Order, instead of 
extending the exception to F block applicants, the Commission removed 
the exception entirely, expressing skepticism that the exception was 
still needed and acknowledging the argument that the exception might 
allow too many larger entities to qualify as small businesses. The 
Commission stated that it would consider waiver requests to allow 
participation in the first F block auction by parties that had 
participated in the first C block auction and had relied on the 
affiliation exception in structuring themselves.
    16. Discussion. One commenter contends that elimination of the 
affiliation exception for the F block is unfair to F block bidders that 
participated in the original C block auction, because such bidders 
designed business plans that anticipated bidding in both blocks under 
the same bidding credit structure. We find this petition unpersuasive. 
As stated, the Commission offered Auction No. 11 applicants that had 
participated in the first C block auction the opportunity to request a 
waiver in order to be able to participate in Auction No. 11; however, 
the Commission received no such requests. Another commenter argues that 
the Commission should adopt the affiliation exception for the F block 
and eliminate the 49.9 percent equity exception or, alternatively, 
eliminate or retain both the affiliation and the 49.9 percent equity 
exceptions. As we noted, the Commission eliminated the affiliation 
exception for the C block as well as the F block; and we continue to 
believe that the exception may lead to abuses. Accordingly, we deny the 
requests of the two commenters' with regard to existing licensees. With 
regard to past auctions, we dismiss as moot the two commenters' 
petitions. Additionally, in light of our recent determination that the 
controlling interest standard will apply to all future C and F block 
auctions, we dismiss as moot the two commenters' petitions with regard 
to future auctions.
ii. C Block Licenses as Assets
    17. Background. In the DEF Report and Order, the Commission decided 
not to treat C block licenses as assets for purposes of determining an 
applicant's eligibility for the then-upcoming F block auction, fearing 
that including such licenses might preclude C block winners from F 
block eligibility. The Commission stated that, because of the 
Commission's previous indications that the C and F blocks are linked, 
it would be unfair to disqualify C block winners from participation in 
the F block auction on the basis of their success in acquiring capital 
for the C block auction. Specifically, the Commission had earlier noted 
that the two blocks are contiguous and lend themselves to aggregation 
and that together they are subject to a cap on the number of licenses 
that may be won at auction. The Commission expressed concern that 
treating C block licenses as assets for purposes of eligibility for the 
initial F block auction could frustrate business plans and auction 
strategies made in reliance on the Commission's earlier statements. The 
Commission also noted that it was uncertain whether C block licenses 
that had already been won would be issued before the F block auction. 
Finally, the Commission decided that licenses other than C block 
licenses would be included in the total

[[Page 68930]]

asset calculations of applicants for the F block auction.
    18. Discussion. Commenter asserts that it is inconsistent for the 
Commission not to require the inclusion of C block licenses in 
applicants' total asset valuations when the Commission requires A and B 
block broadband PCS licenses to be included in such valuations. 
Commenter argues further that Commission's decision will diminish 
opportunities for small businesses in the F block auction. The 
commenter also suggests that the issuance of C block licenses after 
Auction No. 11 to winners of F block licenses in Auction No. 11 could 
interfere with the ability of such license holders to maintain their 
eligibility as entrepreneurs. One commenter counters that another 
commenter has misconstrued the Commission's rules for maintaining 
entrepreneur eligibility and that, under the rules, entrepreneur 
eligibility is not lost simply because a license acquires additional 
licenses.
    19. Because Auction No. 11 has already occurred, the commenter's 
petition is now moot as to that auction. We believe, however, that the 
Commission's decision was correct. In reaching this decision, the 
Commission determined that to prevent F block auction participation by 
C block winners on the basis of their earlier ability to raise capital 
within the limitations of our rules would be unfair. To further the 
Congressional objective that PCS licenses be disseminated among a wide 
variety of applicants, we encourage the success of C and F block 
licensees and recognize that such success is generally accompanied by 
asset growth. For this reason, we will not require applicants for 
participation in future auctions to treat either C or F block licenses 
as assets for purposes of determining applicants' C or F block 
entrepreneur eligibility. We will, however, continue to require that 
all other Commission licenses be included in the total asset 
calculations on the short-form applications for C and F block auctions. 
We also clarify that the acquisition by C or F block licenses of other 
Commission licenses, entrepreneurs' block or otherwise, will not of 
itself prevent licensees' continued eligibility to hold entrepreneurs' 
block licenses.
iii. Bidding Credits
    20. Background. Under the originally adopted F block bidding credit 
rule, a small business was granted a 10 percent bidding credit; a 
business owned by members of minority groups or women was granted a 15 
percent bidding credit; and a small business owned by members of 
minority groups or women was allowed to aggregate these bidding credits 
for a 25 percent bidding credit. In the DEF Report and Order, the 
Commission eliminated the race- and gender-based aspects of its bidding 
credit provisions and, instead, adopted a two-tiered approach. Under 
the modified rule, small businesses receive a 15 percent bidding credit 
and very small businesses receive a 25 percent bidding credit. In the C 
Block Fourth Report and Order, 63 FR 50791 (September 23, 1998), the 
Commission changed the C block bidding credit rule to adopt, for 
Auction No. 22 and subsequent C block auctions, the same two tiers that 
it had the F block.
    21. Discussion. Commenter objects to the fact that the Commission 
did not adopt the same bidding credit for the F block that it had for 
the initial C block auction, a 25 percent bidding credit for all small 
businesses. Commenter argues that minority-owned bidders had an 
``understanding that, at a minimum, the Commission would preserve for 
them the rules as they existed in the C block auction.'' The Commission 
considered and rejected similar arguments in the DEF Report and Order. 
The Commission disagreed that entities interested in bidding in Auction 
No. 11 had the same expectations as C block applicants in structuring 
their businesses or formulating strategies in reliance on the tiered 
bidding credits originally adopted. The Commission explained, moreover, 
that the timing of the F block modification allowed the Commission to 
take a different approach than it had for the C block. The Commission 
also indicated that a two-tiered approach would ensure that the 
smallest businesses receive the greatest benefit. Commenter has not 
provided any new rationale to justify our deviating from this reasoning 
here, and its petition is therefore denied. We note, as mentioned, that 
under current rules, bidding credits are the same for C and F block 
licenses.
iv. Installment Financing
    22. Background. The originally adopted F block rules provided for 
five different installment payment plans. One of these plans was 
available only to entities owned by members of minority groups or 
women, while another plan was restricted to small businesses owned by 
members of minority groups or women. To satisfy the requirements of 
Adarand, the Commission, in the DEF Report and Order, eliminated these 
two plans. Of the three remaining plans, one was available only to 
small businesses. With the elimination of the two plans restricted to 
minority groups or women, the small business plan became the likely 
choice for minority- and women-owned small businesses. The Commission 
modified this plan in the DEF Report and Order. As modified, the plan 
offers small businesses or small business consortia a two-year 
interest-only period with an interest rate equal to the ten-year U.S. 
Treasury rate and principal amortized over the remaining eight years of 
the license term. This plan has the same interest rate as, but a 
shorter interest-only period than, the two eliminated plans and also 
the plan available to small businesses in the first two C block 
auctions. The Commission concluded that the availability of the small 
business plan would provide minority- and women-owned businesses an 
opportunity to participate in the provision of spectrum-based services. 
The Commission explained that the build-out requirement for F block 
licenses is less stringent than it is for C block licenses and that a 
two-year interest only period would provide F block licensees a 
substantial period in which to construct their systems, while also 
encouraging them to provide service to the public quickly. It explained 
further that restricting the interest-only period to two years would 
deter speculation and insincere bidding. Finally, the Commission 
discussed how the revised small business installment payment plan was 
still extremely attractive in comparison to other financing options 
likely to be available to small businesses.
    23. In the Part 1 Third Report and Order, 63 FR 2315 (January 15, 
1998), we suspended the installment payment program. Accordingly, we 
decided in the C Block Fourth Report and Order not to offer installment 
payments for Auction No. 22. Most recently, in the Part 1 Fifth Report 
and Order, we decided to adhere to our previous decision to suspend the 
installment payment program.
    24. Discussion. We received petitions from several commenters 
opposing the alterations in the DEF Report and Order to the F block 
installment financing plans and, in particular, objecting to the 
reduction of the interest-only payment period under the small business 
plan. Given our current suspension of installment payment financing, 
these petitions are, as a practical matter, moot with regard to future 
F block auctions. Furthermore, we believe that, even with the two-year 
interest-only period, the plan available to small business winners in 
Auction No. 11 provided them with sufficient assistance to build out 
their systems and provide timely service. For this reason, we decline 
to alter the terms of existing, F block installment loans.

[[Page 68931]]

D. Upfront Payment and Down Payment

    25. Background. Under the originally adopted rules, participants in 
an F block auction were required to submit an upfront payment of $0.015 
per MHz per pop (or bidding unit) for the maximum number of licenses on 
which they intended to bid in any one round. Winning bidders were 
required to supplement their upfront payment with a down payment 
sufficient to bring their total deposits up to 10 percent of their 
winning bid(s). Based upon its experience in the first C block auction, 
the Commission changed the rules in the DEF Report and Order to require 
an upfront payment of $0.06 per MHz per pop and a down payment that, 
including the upfront payment amount, would total 20 percent of a 
participant's winning bid(s).
    26. In the Part 1 Third Report and Order, we affirmed the 
Commission's decision in the Competitive Bidding Second Report and 
Order, 59 FR 22980 (May 4, 1994), that the upfront payment amount and 
terms should be determined on an auction-by-auction basis. We also 
concluded that a standard down payment of 20 percent is appropriate for 
all auctionable services; however, we reserved the right, in the event 
of unusual circumstances affecting a particular service, to adopt a 
different down payment amount by rule in that service. Accordingly, in 
the C Block Fourth Report and Order, we modified our part 24 rules for 
the C and F blocks to reflect that upront payments would be established 
on an auction-by-auction basis and that winning C and F block bidders 
would be subject to the 20 percent down payment requirement of part 1 
of the Commission's rules.
    27. Discussion. These commenters all protest the changes in the DEF 
Report and Order to the F block upfront and/or down payment rules. With 
regard to past auctions, these petitions are moot. With regard to 
future auctions, we continue to adhere to the wisdom of tailoring the 
specific amount and terms of the upfront payment to each specific 
auction. We also maintain our conviction, expressed in the Part 1 Third 
Report and Order, that a 20 percent down payment is an appropriate 
amount to provide the Commission with sufficient assurance that a 
winning bidder will be able to pay the full amount of its winning bid 
and that it possesses the financial strength to attract the capital 
necessary to deploy and operate its system. In addition, we continue to 
believe that a 20 percent down payment facilitates our discovery early 
in the licensing process that an applicant might be unable to finance 
its winning bid.

E. Administrative Procedure

i. Contract With America Advancement Act
    28. Background. Shortly before release of the DEF Report and Order, 
Congress enacted the Contract with America Advancement Act of 1996 
(CWAAA), which, inter alia, requires generally that a ``major rule'' 
cannot take effect until 60 days after the later of the rule's 
publication in the Federal Register or submission by the Federal agency 
of a required report to Congress. Under CWAAA, a major rule is one--

that the Administrator of the Office of Information and Regulatory 
Affairs [OIRA] of the Office of Management and Budget finds has 
resulted in or is likely to result in--(A) an annual effect on the 
economy of $100,000,000 or more; (B) a major increase in costs or 
prices for consumers, individual industries, Federal, State, or 
local government agencies, or geographic regions; or (C) significant 
adverse effects on competition, employment, investment, 
productivity, [or] innovation * * *.

The Commission determined, and OIRA concurred, that the rule changes 
made in the DEF Report and Order were not major. Accordingly, the 
Commission made the rules effective 30 days after their July 1, 1996 
Federal Register publication.
    29. Discussion. Commenter contends that the Commission violated 
CWAAA by failing to determine that the rule changes resulting from the 
DEF Report and Order were major and delaying their effectiveness for at 
least 60 days after their Federal Register publication. By terms of the 
statutory language, OIRA's finding that the rule changes were not major 
is dispositive. Commenter's argument is therefore rejected.
ii. Regulatory Flexibility Act
    30. Commenter also claims that the Commission failed to describe 
significant alternatives to the rules designed to minimize any 
significant economic impact on small entities as required by the 
Regulatory Flexibility Act (RFA). We disagree. The portion of the DEF 
Report and Order--the Final Regulatory Flexibility Analysis (FRFA)--
addressing this RFA requirement refers to the substantive part of the 
Order, which discusses in great depth the impact of the rules on small 
businesses, alternatives considered, and why each alternative was 
rejected or adopted. Consolidation of the discussion of the impact on 
small businesses from the item into the FRFA would have been repetitive 
in this instance, where analyses of alternatives related to small 
businesses infuse the decision. Indeed, the commenter identifies no 
specific instances where the Commission omitted consideration of such 
alternatives. Accordingly, the commenter's petitions are denied.

V. Ordering Clauses

    31. Authority for issuance of the Order on Reconsideration is 
contained in sections 4(i), 5(b), 5(c)(1), 309(r), and 309(j) of the 
Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 
155(b), 156(c)(1), 303(r), and 309(j). Accordingly, it is ordered that 
part 24 of the Commission's rules is amended as specified and becomes 
effective November 15, 2000.

List of Subjects in 47 CFR Part 24

    Personal communications services.


Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 24 as follows:

PART 24--PERSONAL COMMUNICATIONS SERVICES

    1. The authority citation for part 24 continues to read as follows:

    Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.

    2. Section 24.709 is amended by revising paragraphs (b)(5)(i)(D) 
and (b)(5)(ii) to read as follows:


Sec. 24.709  Eligibility for licenses for frequency Blocks C and F.

* * * * *
    (b) * * *
    (5) * * *
    (i) * * *
    (D) Following termination of the three-year period specified in 
paragraph (b)(5)(i) of this section, qualifying investors must continue 
to own at least 10 percent of the applicant's (or licensee's) total 
equity unconditionally or in the form of stock options subject to the 
restrictions in paragraph (b)(5)(i)(A) of this section. The 
restrictions specified in paragraph (b)(5)(i)(C)(1) through 
(b)(5)(i)(C)(4) of this section no longer apply to the remaining equity 
after termination of such three-year period.
    (ii) At the election of an applicant (or licensee) whose control 
group's sole member is a preexisting entity, the 25 percent minimum 
equity requirements set forth in paragraph (b)(5)(i) of this section 
shall apply, except that only 10

[[Page 68932]]

percent of the applicant's (or licensee's) total equity must be held in 
qualifying investors, and that the remaining 15 percent of the 
applicant's (or licensee's) total equity may be held by qualifying 
investors, or noncontrolling existing investors in such control group 
member or individuals that are members of the applicant's (or 
licensee's) management. These restrictions on the identity of the 
holder(s) of the remaining 15 percent of the licensee's total equity no 
longer apply after termination of the three-year period specified in 
paragraph (b)(5)(i) of this section.
* * * * *
[FR Doc. 00-29323 Filed 11-14-00; 8:45 am]
BILLING CODE 6712-01-M