11616 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Parts 22 and 90

[WT Docket No. 96–18; PP Docket No. 93–

253; FCC 97–59]

Facilitate Future Development of

Paging Systems and Implementation of

Section 309(j) of the Communications

Act; Competitive Bidding

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: In this Second Report and

Order the Commission adopts rules

governing geographic area licensing of

Common Carrier Paging (CCP) and

exclusive 929 MHz Private Carrier

Paging (PCP), and competitive bidding

procedures for auctioning mutually

exclusive applications for these

licenses. This action is necessary to

promote efficient licensing and

competition in paging services. The

Commission’s objectives in this

proceeding are to ensure that the paging

service rules are consistent with the

rules for competing services, so that

competitive success is dictated by the

marketplace, rather than by regulatory

distinctions, and to ensure that the

licensing process promotes the goals of

competition and efficient use of

spectrum.

EFFECTIVE DATE: May 12, 1997.

ADDRESSES: Federal Communications

Commission, 1919 M Street, NW.,

Washington, DC 20554

FOR FURTHER INFORMATION CONTACT:

Mika Savir, Commercial Wireless

Division, Wireless Telecommunications

Bureau, at (202) 418–0620, or Frank

Stilwell, Auctions Division, Wireless

Telecommunications Bureau, at (202)

418–0660.

SUPPLEMENTARY INFORMATION: This

Second Report and Order in WT Docket

96–18 and PP Docket No. 93–252,

adopted on February 19, 1997, and

released on February 24, 1997, is

available for inspection and copying

during normal business hours in the

FCC Reference Center, Room 239, 1919

M Street NW., Washington, DC 20554.

The complete text may also be

purchased from the Commission’s copy

contractor, International Transcription

Service, Inc., 2100 M Street, NW., Suite

140, Washington, DC 20037 (202) 857–

3800.

Paperwork Reduction Act: The

collection of information requirements

have been approved by the Office of

Management and Budget and assigned

OMB control number 3060–0697. The

FCC Form 175 is assigned OMB control

number 3060–0600. The FCC Form 600

is assigned OMB control number 3060–

0623.

Summary of Action

I. Background

1. In the NPRM, Revision of part 22

and part 90 of the Commission’s rules

to Facilitate Future Development of

Paging Systems, WT Docket No. 96–18,

Notice of Proposed Rulemaking, 61 FR

6199 (February 16, 1996) (NPRM), the

Commission proposed a transition to

geographic area licensing for CCP and

PCP channels pursuant to the statutory

objective of regulatory symmetry for all

Commercial Mobile Radio Services

(CMRS) set forth in the Omnibus Budget

Reconciliation Act of 1993, Pub. L. 103–

66, Title VI section 6002(b)(2) (A), (B),

107 Stat. 312 (largely codified at 47

U.S.C. 332 et seq.) (1993 Budget Act).

The 1993 Budget Act mandated that

substantially similar mobile services

receive comparable regulatory

treatment. In the NPRM, the

Commission also proposed competitive

bidding procedures for resolving

mutually exclusive applications for

these licenses pursuant to its statutory

authority under the 1993 Budget Act,

section 6002 (codified at 47 U.S.C.

309(j)).

2. In the NPRM, the Commission

proposed a transition from site-by-site

licensing to geographic area licensing

for all exclusive, non-nationwide paging

services. The Commission also proposed

to adopt competitive bidding rules for

the geographic area licenses. Due to the

fundamental changes proposed in the

NPRM, the Commission suspended

acceptance of new applications for

paging licenses as of February 8, 1996.

The Commission observed that

continuing to accept new applications

after releasing the NPRM with the

proposed rule changes would impair the

objectives of the rulemaking proceeding.

The Commission partially lifted the

paging freeze for incumbent licensees by

allowing incumbents to file applications

for additional sites within 65 kilometers

(40 miles) of operating sites in the First

Report and Order, Revision of part 22

and part 90 of the Commission’s rules

to Facilitate Future Development of

Paging Systems, WT Docket No. 96–18,

First Report and Order, 61 FR 21380

(May 10, 1996); reconsideration in

Order on Reconsideration of First

Report and Order, 61 FR 34375 (July 2,

1996). Additionally, the First Report

and Order exempted Basic Exchange

Telecommunications Radio Service

(BETRS), Rural Radiotelephone Service,

and Special Emergency Radio Service

(SERS) from the interim freeze.

3. In this Second Report and Order,

the Commission adopts final rules

governing geographic area licensing for

channels in the 35–36 MHz, 43–44

MHz, 152–159 MHz, 454–460 MHz,

929–930 MHz, and 931–932 MHz bands

allocated for paging; competitive

bidding rules for granting geographic

area non-nationwide licenses; and a

standard methodology for providing

protection to incumbent licensees from

co-channel interference for the 929–930

MHz and 931–932 MHz paging bands.

All pending mutually exclusive paging

applications will be dismissed,

including those filed under the interim

rules. As of the adoption date of this

Second Report and Order, February 19,

1997, no further applications for site-bysite licenses, other than for shared

channels will be accepted (with the

exception of applications filed pursuant

to 47 CFR 22.369, 90.177, 1.1301 et seq.,

and applications filed for coordination

with Mexico and Canada).

II. Second Report and Order

A. Geographic Area Licensing for NonNationwide Paging Channels

1. Geographic Area Licensing for

Exclusive 929 MHz and 931 MHz Bands

4. The Commission observes that

geographic area licensing provides

flexibility for licensees and ease of

administration, facilitates further buildout of wide-area systems, and enables

paging operators to act quickly to meet

the needs of their customers. The

Commission finds, therefore, that

converting the 931 MHz channels and

the exclusive 929 MHz channels to

geographic area licensing will further

the goal of giving carriers offering

substantially similar services more

flexibility to compete, and will enhance

regulatory symmetry between paging

and narrowband personal

communications services (PCS). The

Commission states that exclusive 929

MHz and 931 MHz licensees will be

extended the same flexibility as

narrowband PCS licensees in terms of

the location, design, construction, and

modification of their facilities

throughout their geographic areas.

5. The Commission is implementing

geographic area licensing in lieu of the

current site-by-site licensing, with Major

Trading Areas (MTAs) as the geographic

area for the 931 MHz and exclusive 929

MHz channels. The Commission is

licensing these channels using 51 MTA

geographic areas. In addition to the 47

Rand McNally MTAs, the Commission

is adding three MTAs for the U.S.

territories of (1) Guam and the Northern
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11617

Mariana Islands, (2) Puerto Rico and the

U.S. Virgin Islands, and (3) American

Samoa. The Commission is also

licensing Alaska as a single area

separate from the Seattle MTA.

6. Geographic area licensees will have

the flexibility to construct transmitters

at any place within their license area,

subject to the co-channel interference

rules and will not be required to file

applications for additional sites or

modifications with the Commission.

Geographic area licensees may add or

modify sites consistent with this Second

Report and Order. Applications must be

filed with the Commission for

coordination with Mexico or Canada

and where required by §§ 22.369,

90.177, or 1.1301 et seq. Geographic

area licensees will be able to act quickly

to add sites or make modifications of

existing sites to meet the needs of their

customers. Due to the prevalence of

wide-area paging systems on these

channels and the flexibility geographic

area licensing will afford paging

licensees, the Commission believes that

geographic area licensing for exclusive

929 MHz and 931 MHz channels, with

MTAs as the geographic area, is

consistent with the public interest,

convenience and necessity, and the

purposes of the Communications Act of

1934, as amended (Communications

Act), and fulfills the objectives of

section 309(j)(4)(c).

7. Spectrum recovered by the

Commission within a geographic area

will revert automatically to the

geographic area licensee. The

Commission will consider transfers and

assignments between a geographic area

licensee and an incumbent to be

presumptively in the public interest.

The Commission is also eliminating

finders’ preferences immediately for

paging services, and will no longer

accept finders’ preferences requests

following adoption of the Second Report

and Order.

8. Mutually exclusive applications for

geographic area licenses will be

processed pursuant to the competitive

bidding rules adopted in this Second

Report and Order. All incumbent

licensees will continue to operate under

the existing authorizations with full

protection from co-channel interference,

and will not be required to file

applications for additional internal

sites.

2. Geographic Area Licensing for

Common Carrier Paging Services in the

35–36 MHz, 43–44 MHz, 152–159 MHz,

and 454–460 MHz Bands

a. Common Carrier Paging Services

9. The Commission believes that the

advantages of geographic licensing—

flexibility, enhanced regulatory

symmetry with other CMRS, and

eliminating the inefficiencies in the

licensing process—are applicable to

these channels, particularly for regional

and wide-area paging services. One of

the Commission’s goals in this

proceeding is to revise the paging rules

so that substantially similar mobile

services receive comparable regulatory

treatment, to the extent feasible, in a

manner consistent with the public

interest, convenience, necessity, and the

purposes of the Communications Act.

The Commission notes that paging

providers on these CCP channels

generally have smaller paging systems

than the 931 MHz band paging services,

and therefore smaller market areas

would be more appropriate than MTAs

for these bands. The Commission finds

that Economic Areas (EAs) would be an

appropriate size for geographic licensing

on these bands. The Bureau of

Economic Analysis of the Department of

Commerce has divided the United

States into 172 EAs. See Final

Redefinition of the BEA Economic

Areas, Department of Commerce, Docket

No. 950–3020–64–5064–01, 60 FR

13114 (March 10, 1995). The

Commission adopts EAs as the

geographic area for paging licenses.

Geographic area licensees will have the

flexibility to construct transmitters at

any place within their EA, subject to the

co-channel interference rules; however,

geographic area licensees must file

applications with the Commission if

such filing is necessary for coordination

with Canada or Mexico, or is required

by § 22.369, 90.177, or 1.1301 et seq.

The EA geographic area licenses will be

assigned pursuant to the competitive

bidding rules.

b. Other Services in the 152–159 MHz

and 454–460 MHz Bands

10. The Commission concludes that

Rural Radiotelephone Service licensees,

including BETRS licensees, can

participate in the geographic area

licensing framework adopted for paging.

Additionally, these licensees may obtain

site licenses and operate facilities on a

secondary basis. If any geographic area

licensee subsequently notifies the Rural

Radiotelephone or BETRS licensee that

a secondary site must be shut down

because it may cause interference to the

paging licensee’s existing or planned

facilities, the Rural Radiotelephone or

BETRS licensee must discontinue use of

the particular channel at that site no

later than six months after such notice.

Additionally, mobile two-way telephone

service on the paging channels will also

be subject to geographic area licensing

and competitive bidding.

3. Shared Channels

11. The shared channels consist of

five 929 MHz channels and thirteen

Business Radio Service channels. The

Commission concludes that the existing

shared paging channels should continue

to be licensed on a shared basis. The

Commission is concerned about the

consumer fraud and license application

speculation issues and is seeking

comment in a Further Notice of

Proposed Rulemaking on changes in the

license application and frequency

coordination procedures. The

Commission is eliminating the interim

40-mile rule for additional sites.

Pending resolution of the fraud and

speculation issues, the Commission is

limiting applications for shared

channels to (1) licensees expanding

their commercial mobile radio systems;

(2) applicants, including new

applicants, for private, internal-use

systems; and (3) Special Emergency

Radio Services (SERS) providers on the

shared channels.

4. Exempting Certain Incumbents From

Competitive Bidding

12. The Commission believes that the

market, not regulation, should

determine participation in competitive

bidding for geographic area licenses.

Therefore, the Commission is adopting

open eligibility for paging licenses. The

Commission believes that this will be

pro-competitive and potentially will

result in further wide-area coverage of

paging services.

B. Geographic Area Licensing for

Nationwide Channels

13. Three 931 MHz channels,

931.8875 MHz, 931.9125 MHz, and

931.9375 MHz, were allocated for

nationwide paging, and have been

assigned to licensees on a nationwide

basis. The Commission is granting

nationwide geographic area licenses,

without competitive bidding, to these

three licensees. Additionally, 23

licensees have met requirements for

nationwide exclusivity on 929 MHz

channels under § 90.495 of the

Commission’s rules. The Commission is

granting nationwide geographic area

licenses, without competitive bidding,

to those 929 MHz licensees who had

constructed sufficient transmitters to

obtain nationwide exclusivity under the
11618 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

prior rules, and to those licensees who

had sufficient authorizations as of

February 8, 1996 and have since

constructed sufficient transmitters to

earn nationwide exclusivity. The

Commission notes that these nationwide

licensees have built out their paging

systems to serve consumers, and the

public interest would not be served in

eliminating the nationwide

authorizations that were previously

granted by the Commission. Therefore,

the Commission concludes that

licensees on these channels will not be

subject to competitive bidding for

nationwide geographic area licenses.

14. The Commission declines to

extend automatic nationwide

geographic area licensing to MTel’s

931.4375 MHz channel. The

Commission notes that MTel has been

extensively licensed on 931.4375 MHz;

however, this channel has not been

reallocated as a nationwide channel

thus MTel has not built-out this channel

in reliance on a grant of a nationwide

license or nationwide exclusivity. The

Commission notes that many paging

carriers, including MTel, have extensive

systems on channels that are not

specifically designated as nationwide

channels. Paging is a competitive

industry, and to the extent that

nationwide licensees not only compete

with each other, but also with the

paging carriers who provide local and

regional service, the Commission does

not believe it would be pro-competitive

to automatically grant nationwide

geographic area licenses to any

additional licensees.

C. Protection for Incumbents

15. The Commission believes that the

public interest would be served by

allowing incumbent (non-geographic)

paging licensees to continue to operate

under their existing authorizations with

full protection from co-channel

interference, and similarly protecting

the geographic area licensees from cochannel interference from the

incumbent licensees. Therefore,

consistent with the rules for 900 MHz

Specialized Mobile Radio (SMR), the

Commission will not allow incumbent

(non-geographic) licensees to expand

beyond their composite interference

contour unless the incumbents and the

geographic licensee have reached

agreement on such modifications.

D. Coverage Requirements

16. The Commission notes that

coverage requirements satisfy the

mandate for performance requirements

under section 309(j)(4)(B) of the

Communications Act. The Commission

is imposing the following coverage

requirements: for each MTA or EA, the

geographic licensee must provide

coverage to one-third of the population

within three years of the geographic area

license grant and to two-thirds of the

population within five years of the

geographic area license grant. In the

alternative, the MTA or EA licensee may

provide substantial service to the

geographic license area within five years

of license grant. Substantial service is

defined as service that is sound,

favorable, and substantially above a

level of mediocre service which would

barely warrant renewal. The failure to

meet these coverage requirements will

result in automatic cancellation of the

geographic license. The Commission

will reinstate any licenses held prior to

auction for sites that were authorized,

constructed, and operating at the time of

the cancellation of the geographic area

license.

E. Co-Channel Interference Protection

1. Co-Channel Interference Protection—

Incumbent Licensees

17. The Commission is persuaded that

the advantages of adopting the formulas

proposed in the NPRM are outweighed

by the disadvantages noted by the

commenters. As the commenters

observed, changing from Tables E–1 and

E–2 to the proposed formulas would, in

most cases, reduce the service area and

composite interference contour that

incumbent licensees have relied on in

developing their systems to date.

Additionally, the proposed formulas

may underestimate the actual reliable

coverage of the paging systems. Using

the fixed distances in Tables E–1 and E–

2 in § 22.537 for the 929 MHz and 931

MHz channels would maintain the

status quo for 931 MHz channels and

conform 929 MHz channels to the

current procedure for 931 MHz.

Therefore, the Commission is adopting

the fixed distances in Tables E–1 and E–

2 in § 22.537 for the exclusive 929 MHz

and 931 MHz channels. Geographic area

licensees must provide co-channel

protection to all incumbent licensees,

including incumbents in other

geographic areas. The Commission will

allow geographic and incumbent

licensees to use short-spaced locations

pursuant to mutual written consent. The

Commission will continue to use the

current formulas for the CCP channels

below 931 MHz.

2. Co-Channel Interference Protection—

Adjacent Geographic Licensees

18. Geographic licensees generally are

not required to file applications with the

Commission, therefore it is possible that

a geographic licensee with a transmitter

at or close to the border of the MTA or

EA could unknowingly cause

interference to a neighboring geographic

licensee. It is in the interest of the

geographic licensees to find mutually

beneficial ways to accommodate their

needs in providing service within their

respective MTAs and EAs. Instead of

specifying a minimum distance a

geographic licensee’s transmission site

must be from the geographic border,

which may result in unserved areas, the

Commission is allowing geographic

licensees to negotiate mutually

acceptable agreements with all adjacent

geographic area licensees if the

interfering contour of one geographic

area licensee will extend into the

adjacent geographic area or areas.

Adjacent geographic area licensees have

a duty to negotiate with each other in

good faith regarding co-channel

interference protection. The

Commission believes that informal

negotiations between parties in

determining mutually agreeable

arrangements between adjacent MTAs

and EAs will achieve the most

expeditious and effective resolution of

co-channel interference. The lack of

adequate service to the public due to

failure to negotiate reasonable solutions

to co-channel interference problems

with adjacent geographic area licensees

could reflect negatively on licensees

seeking renewal.

3. Maximum Power and Height-Power

Limit

19. The Commission believes that the

931 MHz and 929 MHz bands should

operate under the same power and

height-power rules. Conforming these

rules will allow paging operators to

design their systems in the most

economical manner. Most of the

commenters addressing this issue

contend that the Commission should

eliminate the disparity between the 931

and 929 MHz channels, and conform the

maximum effective radiated power

(ERP) limit and the height-power limit

in these bands. The Commission is

eliminating the height-power limit for

929 MHz systems, to conform them to

the 931 MHz systems. The Commission

is also increasing the permitted

maximum ERP for all 929 MHz systems

to 3500 Watts, to conform these systems

with the nationwide 929 MHz systems

and the 931 MHz systems. With respect

to the CCP bands below 931 MHz, the

Commission is maintaining the current

power and height-power limits for these

channels.
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11619

F. Licensing in Mexican and Canadian

Border Areas

20. The Commission notes that

commenters agree with the proposal

that border areas should be treated like

any other area for licensing purposes

and carriers can determine whether

spectrum is usable in border areas under

applicable treaties and protocols.

Therefore, the Commission will not

distinguish between border and nonborder areas in geographic licensing.

Geographic licensees will be responsible

for advising the Commission of any

transmitter site changes or additions if

site-by-site coordination is required by

Canada or Mexico.

G. Eligibility to Participate in

Competitive Bidding

21. The Commission believes that it is

important to allow all parties to

participate in the competitive bidding

process for geographic area licenses, and

accordingly, apart from foreign

ownership limitations, eligibility will

not be restricted. The Commission

believes that non-incumbents should be

allowed to bid for available spectrum, or

to enter into joint ventures with

incumbents for purposes of bidding in

a geographic area. The competitive

bidding process itself should deter

speculation by those not genuinely

interested in providing service to the

public. In addition, the Commission

believes that the open eligibility for the

geographic area licenses will be procompetitive and potentially will result

in a diverse group of entities providing

paging services to the public.

H. Channel Aggregation Limit

22. The Commission has imposed a

spectrum aggregation cap of 45 MHz as

the total amount of combined PCS,

cellular, and SMR spectrum classified as

CMRS in which an entity may have an

attributable interest in any geographic

area at any point in time. Narrowband

radio services, including paging, are not

included in the spectrum cap because it

is highly unlikely that one entity could

ever accumulate as much as 5 MHz in

any given geographic market. The

Commission now concludes that a

channel aggregation limit is unnecessary

for paging services. The paging market

is highly competitive and diversified,

making it unlikely that any one licensee

could accumulate sufficient spectrum to

dominate the paging market, much less

the CMRS market as a whole. The

Commission does not find any evidence

that excessive channel aggregation has

occurred in the paging industry; to the

contrary, paging channel use is highly

dispersed among numerous competing

licensees. Additionally, the Commission

anticipates that many applicants for

geographic area paging licenses will be

incumbents seeking to obtain

geographic area licenses where their

existing facilities reside. Thus, the

Commission does not believe that

geographic area licensing is likely to

increase market concentration in the

paging industry. Finally, the

Commission believes that a cap could

arbitrarily limit a carrier’s capacity to

provide services that may require

multiple channels. Therefore, the

Commission is not imposing a spectrum

or channel aggregation cap on paging

licenses at this time.

I. Competitive Bidding

1. Competitive Bidding Design

a. Bidding Methodology

23. Based on the record in this

proceeding and its successful

experience conducting simultaneous

multiple round auctions for other

services, the Commission believes this

type of auction is most appropriate for

paging licenses. The Commission

believes that, for certain bidders, these

licenses will be significantly

interdependent because of the

desirability of aggregation across

spectrum blocks and geographic areas

and because some licenses are likely to

be substitutes. Given such

interdependence, simultaneous multiple

round bidding generates more

information about license values during

the course of the auction and provides

bidders with more flexibility to pursue

back-up strategies than if the licenses

were auctioned separately or through

sealed bidding. The Commission also

expects the value of paging licenses to

be sufficiently high to warrant

simultaneous multiple round bidding.

The Commission retains the discretion,

however, to use a different methodology

if that proves to be more efficient

administratively. Prior to the auction,

information will be provided about the

bidding design to be used.

b. License Grouping

24. Although it may be desirable to

hold a single simultaneous multiple

round auction for all paging licenses,

such an auction is not currently feasible

from an operational standpoint because

there will be more than 15,000 paging

licenses available for auction. The

Commission finds that there is

significant interdependence among

licenses in the 929 MHz and 931 MHz

services, and similar interdependency

among the licenses of the lower band

paging services. The Commission also

believes that grouping interdependent

licenses and putting them up for bid at

the same time promotes awarding

licenses to bidders who value them

most highly. The Commission therefore

will award the paging licenses in a

series of simultaneous multiple round

auctions, grouping them based on

interdependency and operational

feasibility. The Commission reserves the

discretion to decide on specific license

groupings as administrative

circumstances dictate.

c. Bidding Procedures

25. Bid increments and tie bids. The

Commission will announce, by Public

Notice prior to the auction, general

guidelines for minimum bid increments.

Minimum bid increments for individual

paging licenses or groups of licenses

may vary over the course of the auction

and will be announced before or during

the auction. In the case of a tie bid, the

high bidder will be determined by the

order in which the bids are received by

the Commission.

26. Stopping rules. With more than

ten times the largest number of licenses

the Commission has ever auctioned

simultaneously, there is an increased

risk of an excessively prolonged auction

if a significant proportion of the licenses

are auctioned simultaneously using a

simultaneous stopping rule. To reduce

this risk and to promote expeditious

service to the public, while at the same

time preserving most of the efficiency

benefits of a simultaneous stopping rule,

the Commission adopts a hybrid

simultaneous/license-by-license

stopping rule. The hybrid rule has three

phases. During Phase I, which lasts one

month, or 100 rounds, whichever comes

later, the Commission will employ its

standard simultaneous stopping rule

whereby bidding will remain open on

all licenses until bidding stops on every

license. The auction will close after one

round passes in which no new valid

bids or proactive activity rule waivers

are submitted. This provides bidders

some protection against the risk that

bidding on a license will be closed

before they have sufficient information

to start bidding on it as a back up

strategy. In Phase II, the Wireless

Telecommunications Bureau will assess

the extent to which bidders are pursuing

back up strategies and implement a

license-by-license stopping rule if the

Bureau determines that the use of back

up strategies is minimal. Under the

license-by-license stopping rule,

bidding on a license will close

whenever 10 consecutive rounds pass

with no new valid bids for that license.

The remaining licenses will close

according to the standard simultaneous

stopping rule—when a round passes
11620 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

with no new valid bids on any license.

Phase III begins after two months and

100 rounds have passed. If the auction

has not closed by then, the Commission

intends to implement the license-bylicense stopping rule that is

discretionary in the second phase. This

approach balances concerns about the

time to complete the paging auction and

the benefits of preserving back up

strategies which give bidders the

flexibility to acquire licenses that are

consistent with their business plans.

The Commission reserves the discretion

not to employ this hybrid stopping rule

in future paging auctions based on its

experience in this auction and

depending on the circumstances in

future auctions with respect to factors

such as the number of licenses and

degree that licenses are encumbered.

27. The Commission further retains

the discretion, in Phase III, to declare

after 200 rounds that the auction will

end after some specified number of

additional rounds. If this method is

employed, bids will be accepted only on

licenses where the high bid has

increased in the last three rounds. This

will provide the Commission with a

mechanism to end the auction in the

unlikely event that a small number of

bidders are continuing to bid on a few

low value licenses solely to delay the

closing of the auction. The Commission

will declare the imminent end of the

auction only in the case of extremely

dilatory bidding.

28. Revealing bidders’ identities. In

the Competitive Bidding Second

Memorandum Opinion and Order, 59

FR 44272 (August 26, 1994), because of

the advantages of providing more

information to bidders, and the

difficulties involved in ensuring that

bidder identities remain confidential,

the Commission determined that it

generally would release the identities of

bidders before each auction. However,

the Commission reserved the option to

withhold bidder identities on an

auction-by-auction basis if further

experience showed that it would be

feasible and desirable to do so.

29. In the case of the upcoming paging

auctions, the Commission believes that

shielding certain information from the

bidders will help to speed the bidding

since there will be less of an

opportunity for strategic gaming

practices to occur. The Commission will

announce by Public Notice prior to the

auction the precise information that will

be revealed to bidders during the

auction. This information may be

limited to the high bids (no identities of

bidders) and may also include the total

number of bids on each license. The loss

of efficiency from denying bidders the

identities of likely winners of adjacent

licenses should be minimal because, in

contrast to broadband personal

communications services, paging does

not provide for roaming and there is

little uncertainty about technologies

(i.e., GSM versus CDMA technology).

30. Activity Rule. The Commission

will employ the Milgrom-Wilson

activity rules for the paging auctions.

These rules discourage delay by bidders

and expedite simultaneous multiple

round auctions in which a simultaneous

stopping rule is used. Under the

Milgrom-Wilson rules, the auction is

divided into three stages and the

minimum required activity level,

measured as a fraction of the bidder’s

eligibility in the current round, will

increase during the course of the

auction.

31. In each round of Stage One, a

bidder that wishes to maintain its

current eligibility is required to be

active on licenses encompassing at least

60 percent of the activity units for

which it is currently eligible. The

number of activity units for a given

license is calculated by multiplying the

amount of spectrum (in MHz) by the

population of the market. A bidder’s

eligibility is determined by multiplying

the activity units by a specified

monetary figure. Failure to maintain the

requisite activity level will result in a

reduction in the amount of activity units

upon which a bidder will be eligible to

bid in the next round of bidding (unless

an activity rule waiver is used). During

Stage One, if bidding activity is below

the required minimum level, eligibility

in the next round will be calculated by

multiplying the current round activity

by five-thirds (5/3). Eligibility for each

applicant at the start of the auction is

determined by the amount of the

upfront payment received and the

licenses identified in its auction

application.

32. In each round of Stage Two, a

bidder that wishes to maintain its

current eligibility is required to be

active on at least 80 percent of the

activity units for which it is eligible in

the current round. During Stage Two, if

activity is below the required minimum

level, eligibility in the next round will

be calculated by multiplying the current

round activity by five-fourths (5/4).

33. In each round of Stage Three, a

bidder that wishes to maintain its

current eligibility must be active on

licenses encompassing at least 98

percent of the activity units for which

it is eligible in the current round. In

Stage Three, if activity in the current

round is below 98 percent of current

eligibility, eligibility in the next round

will be calculated by multiplying the

current round activity by fifty fortyninths (50/49).

34. The Commission reserves the

discretion to set and, by announcement

before or during the auction, vary the

requisite minimum activity levels (and

associated eligibility calculations) for

each auction stage. Retaining this

flexibility will improve the

Commission’s ability to control the pace

of the auction and help ensure that the

auction is completed within a

reasonable period of time.

35. For paging auctions, the

Commission will use the following

general transition guidelines. The

auction will start in Stage One and

typically will move to Stage Two when

the auction activity level is below ten

percent for three consecutive rounds in

Stage One. In general, the auction will

move from Stage Two to Stage Three

when the auction activity level is below

ten percent for three consecutive rounds

in Stage Two. In no case can the auction

revert to an earlier stage. The

Commission retains the discretion to

determine and announce during the

course of an auction when, and if, to

move from one auction stage to the next.

These determinations will be based on

a variety of measures of bidder activity

including, but not limited to, the

auction activity level defined above, the

percentage of licenses (measured in

terms of activity units) on which there

are new bids, the number of new bids,

and the percentage increase in revenue.

36. To avoid the consequences of

clerical errors and to compensate for

unusual circumstances that might delay

a bidder’s bid preparation or submission

in a particular round, bidders will be

provided with five activity rule waivers

that may be used in any round during

the course of the auction. If a bidder’s

activity level is below the required

activity level, a waiver automatically

will be applied. A waiver will preserve

current eligibility in the next round, but

cannot be used to correct an error in the

amount bid. An activity rule waiver

applies to an entire round of bidding

and not to a particular service area.

37. Bidders will be afforded an

opportunity to override the automatic

waiver mechanism when they place a

bid, if they wish to reduce their bidding

eligibility and do not want to use a

waiver to retain their eligibility at its

current level. If a bidder overrides the

automatic waiver mechanism, its

eligibility permanently will be reduced

(according to the formulas specified

above), and it will not be permitted to

regain its bidding eligibility from a

previous round. An automatic waiver

invoked in a round in which there are

no valid bids will not keep the auction
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11621

open. Bidders will have the option to

proactively enter an activity rule waiver

during the bid submission period. If a

bidder submits a proactive waiver in a

round in which no other bidding

activity occurs, the auction will remain

open.

38. The Commission retains the

discretion to issue additional waivers

during the course of an auction for

circumstances beyond a bidder’s

control. The Commission also retains

the flexibility to adjust, by Public Notice

prior to an auction, the number of

waivers permitted, or to institute a rule

that allows one waiver during a

specified number of bidding rounds or

during specified stages of the auction.

39. Duration of bidding rounds. The

Commission retains the discretion to

vary the duration of the bidding rounds

or the interval at which bids are

accepted in order to move the auction

to closure more quickly. The duration of

and intervals between bidding rounds

will be announced either by Public

Notice prior to the auction or by

announcement during the auction.

2. Procedural and Payment Issues

a. Pre-auction Application Procedures

40. The Commission will use the preauction application procedures

established in the Competitive Bidding

Second Report and Order, 59 FR 22980

(May 4, 1994), for the paging services.

A Public Notice announcing the auction

will specify the licenses to be auctioned

and the time and place of the auction in

the event that mutually exclusive

applications are filed. The Public Notice

will also specify, inter alia, the shortform filing deadline.

41. The Commission adopts the same

general bidding procedures used for the

PCS, 900 MHz SMR, and Multipoint

Distribution Service (MDS) auctions.

Under these procedures, bidders will be

able to submit bids remotely, either

electronically or by telephone. The

Commission has established a schedule

of fees that participants in the

competitive bidding process will be

assessed for certain on-line computer

services, bidding software, and Bidder

Information Packages. Bidders will be

permitted to bid electronically only if

they have filed a short-form application

electronically. Bidders who file their

short-form applications manually may

bid only telephonically.

b. Short-form Applications

42. Section 309(j)(5) of the

Communications Act provides that no

person may participate in an auction

unless such bidder ‘‘submits such

information and assurances as the

Commission may require to demonstrate

that such bidder’s application is

acceptable for filing.’’ Moreover, ‘‘[n]o

license shall be granted to an applicant

selected pursuant to this subsection

unless the Commission determines that

the applicant is qualified pursuant to

(section 309(a)) and sections 308(b) and

310’’ of the Communications Act. 47

U.S.C. 309(j)(5). The Commission will,

therefore, dismiss applications not

meeting the requirements of its rules

prior to the auction.

43. The Commission disagrees with

commenters who state that it should not

permit bidders to apply for all market

areas by checking the ‘‘all’’ markets box

on their FCC Form 175. The

Commission believes bidders should

have the flexibility to pursue back-up

strategies if they are unable to obtain

their first choice of licenses. Moreover,

any potential problems associated with

so-called blanket bidding will be cured

through the Commission’s eligibility

rules and the submission of a

corresponding upfront payment.

Finally, because the Commission has

permitted incumbents to expand their

systems pending the commencement of

the auction, it believes that current

application rules will have no impact on

planned expansions by incumbents. The

Commission sees no reason to change its

current application procedures at this

time.

44. If only one application that is

acceptable for filing is received for a

particular market, and thus there is no

mutual exclusivity, the Commission

will issue a Public Notice cancelling the

auction for that license and establish a

date for the filing of a long-form

application, the acceptance of which

will trigger the procedures permitting

petitions to deny.

c. Amendments and Modifications

45. Applicants for paging auctions

will be provided with an opportunity to

correct minor defects in their short-form

applications prior to the auction. After

review of the short-form applications, a

Public Notice will be issued listing all

defective applications. Applicants with

minor defects in their applications will

be given an opportunity to cure them

and resubmit a corrected version.

d. Upfront Payments

46. The Commission believes that a

specific upfront payment amount

should be established for each license

upon which bids are to be made. It is

important, as commenters point out, to

deter speculation and ensure, to the

greatest extent practicable, that only

sincere bidders participate in the

auction. The Commission delegates to

the Wireless Telecommunications

Bureau the authority and discretion to

determine an appropriate upfront

payment for each license being

auctioned, taking into account such

factors as the population and the

approximate amount of unencumbered

spectrum in each geographic license

area. The Commission expects that the

Bureau will follow the guidelines laid

out in the Competitive Bidding Second

Report and Order, and establish upfront

payments equal to approximately five

percent of the expected amounts of

winning bids for the various licenses. In

no event will the upfront payment for

any license be less than $2,500, the

minimum suggested in the Competitive

Bidding Second Report and Order, and

the Bureau will retain the flexibility to

modify this minimum if experience

demonstrates that a higher amount

would better deter speculative filings.

47. Prior to a paging license auction,

the Bureau will issue a Public Notice

listing the upfront payment amounts

corresponding to the licenses to be

auctioned. The number of activity units

determines the amount of the upfront

payment for a license. A prospective

bidder must submit an upfront payment

equal to the largest combination of

activity units on which the bidder

anticipates being active in any single

round. Although a bidder may file

applications for every license being

auctioned, the total upfront payment

submitted by each applicant will

determine the combinations on which

the applicant will actually be permitted

to be active in any single round of

bidding. Upfront payments will be due

by a date specified by Public Notice, but

generally no later than 14 days before

the scheduled auction.

e. Down Payments

48. The Commission concludes that

winning bidders (including winners that

are small businesses, as discussed

below) must supplement their upfront

payments with a down payment

sufficient to bring their total deposits up

to 20 percent of their winning bid(s). If

the upfront payment amount on deposit

is greater than 20 percent of the winning

bid amount after deducting any bid

withdrawal and default payments due,

the additional monies will be refunded.

If a bidder has withdrawn a bid or

defaulted, but the amount of the

withdrawal or default payment cannot

yet be determined, the bidder will be

required to make a deposit of up to 20

percent of the amount bid. When it

becomes possible to calculate and assess

the payment, any excess deposit will be

refunded. Monies on account will be

applied to bid withdrawal and default
11622 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

payments due before being applied

toward the bidder’s down payment on

licenses the bidder has won and seeks

to acquire.

49. Winning bidders, except small

businesses, must submit the required

down payment by cashier’s check or by

wire transfer to the Commission’s lockbox bank within 10 business days

following release of a Public Notice

announcing the close of bidding. All

auction winners, except those that

qualify for installment payments, will

be required to make full payment of the

balance of their winning bids within 10

business days following Public Notice

that licenses are ready for grant.

f. Bid Withdrawal, Default, and

Disqualification

50. The Commission will apply its

general bid withdrawal, default, and

disqualification rules in paging license

auctions. If a license is re-offered by

auction, the ‘‘winning bid’’ refers to the

high bid in the auction in which the

license is re-offered. If a license is reoffered in the same auction, the

‘‘winning bid’’ refers to the high bid

amount made subsequent to the

withdrawal in that auction. If a license

which is the subject of withdrawal or

default is offered to the highest losing

bidders in the initial auction, as

opposed to being re-auctioned, the

‘‘winning bid’’ refers to the bid of the

highest bidder who accepts the offer. In

the unlikely event that there is more

than one bid withdrawal on the same

license, the Commission will hold each

withdrawing bidder responsible for the

difference between its withdrawn bid

and the amount of the winning bid the

next time the licenses are offered for

auction. If a license winner defaults or

is otherwise disqualified after an

auction is closed, the Commission will

exercise its discretion to hold a new

auction or offer the license to the second

highest bidder.

51. If a default or disqualification

involves gross misconduct,

misrepresentation or bad faith by an

applicant, the Commission may declare

the applicant and its principals

ineligible to bid in future auctions, and

may take any other action that it deems

necessary, including institution of

proceedings to revoke any existing

licenses held by the applicant.

52. The Wireless Telecommunications

Bureau has recently instituted an

additional procedure that warns bidders

of the possibility of a mistaken bid, and

this procedure will be utilized in the

paging license auctions. The

Commission also recently addressed the

issue of how its bid withdrawal

payment provisions apply to bids that

are mistakenly placed and withdrawn.

See Atlanta Trunking Associates, Inc.

and MAP Wireless L.L.C. Request to

Waive Bid Withdrawal Payment

Provisions, 61 FR 25807 (May 23, 1996),

recon. pending.

g. Long-form Applications

53. In the Competitive Bidding

Second Report and Order, the

Commission established rules requiring

winning bidders to submit a long-form

application. These procedures, which

are set forth in § 1.2107 of the

Commission’s rules, 47 CFR 1.2107, will

be followed if the winning bidder makes

the down payment in a timely manner.

h. Petitions to Deny and Limitations on

Settlements

54. The petition to deny procedures in

§§ 22.130 and 90.163 of the

Commission’s rules, 47 CFR 22.130 and

90.163, will apply to the paging

services. A party filing a petition to

deny against a paging license

application will be required to

demonstrate standing and meet all other

applicable filing requirements. Sections

90.162 and 22.129 of the Commission’s

rules, 47 CFR 90.162 and 22.129,

prevent the filing of speculative

applications and pleadings for purposes

of extracting money from applicants.

Thus, the Commission will limit the

consideration that an individual or

entity is permitted to receive for

agreeing to withdraw an application or

petition to deny to the legitimate and

prudent expenses of the withdrawing

applicant or petitioner. To the extent

§§ 22.129 and 90.162 conflict with

§ 1.2105 of the Commission’s rules, 47

CFR 1.2105, these provisions should not

apply to paging licenses awarded

through competitive bidding. Therefore,

the Commission will amend these

provisions to prohibit agreements to

withdraw mutually exclusive

applications, or pleadings filed by one

applicant against another applicant for a

license in the same geographic area,

after the deadline for filing short-form

applications.

3. Regulatory Safeguards

a. Anti-Collusion Rules

55. The Commission will require

paging licensees to comply with the

reporting requirements and rules

prohibiting collusion embodied in

§§ 1.2105 and 1.2107 of the

Commission’s rules, 47 CFR 1.2105 and

1.2107. Thus, after the FCC Form 175

filing deadline, applicants may not

discuss the substance of their bids or

bidding strategies with other applicants,

other than those identified on their

short-form applications, that are bidding

in the same license areas, even if they

are not bidding for the same spectrum

blocks.

56. Where specific instances of

collusion in the competitive bidding

process are alleged during the petition

to deny process, the Commission may

conduct an investigation or refer such

complaints to the United States

Department of Justice for investigation.

Bidders who are found to have violated

the antitrust laws, in addition to any

penalties they incur under the antitrust

laws, or who are found to have violated

the Commission’s rules in connection

with their participation in the auction

process, may be subject to a variety of

sanctions, including forfeiture of their

down payment or their full bid amount,

revocation of their license(s), and

possible prohibition from participating

in future auctions.

b. Transfer Disclosure Requirements

57. Section 1.2111(a), 47 CFR

1.2111(a), will apply to all paging

licenses obtained through the

competitive bidding process. The

Commission sees nothing disruptive in

requiring the disclosure of this

information, and believes these

disclosure requirements are necessary to

the enforcement of its unjust

enrichment provisions. The

Commission also agrees with the

Federal Trade Commission that

speculation in connection with the

acquisition of paging licenses is a major

concern. By enabling the Commission to

monitor license transfers, the disclosure

requirements of §§ 1.2111(a), which

implements section 309(j)(4)(E) of the

Communications Act, (47 U.S.C.

309(j)(4)(E)), will assist in eliminating

the problem of speculation while

providing safeguards to those who

might otherwise fall victim to deceptive

practices used to induce them to invest

in paging licenses.

4. Treatment of Designated Entities

a. Small Businesses

58. Congress specifically cited the

needs of small businesses in enacting

§ 309(j) of the Communications Act, 47

U.S.C. 309(j), directing the Commission

to promote economic opportunities for

small businesses. While a number of

small businesses are successfully

participating in the paging industry, the

Commission concludes that it is

appropriate to establish special

provisions in its paging rules for

competitive bidding by small

businesses.
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11623

b. Minority- and Women-Owned

Businesses

59. In the paging service, as in other

auctionable services, the Commission is

committed to meeting the statutory

objectives of promoting economic

opportunity and competition, of

avoiding excessive concentration of

licenses, and of ensuring access to new

and innovative technologies by

disseminating licenses among a wide

variety of applicants, including

businesses owned by members of

minority groups and women.

Commenters failed to provide record

evidence sufficient to support special

provisions for minorities under the

strict scrutiny standard of judicial

review, which applies to federal racebased programs. The Commission is also

concerned that the record would not

support gender-based provisions under

intermediate scrutiny, which is the

standard of judicial review that applies

to such provisions. Balancing its

obligation to provide opportunities for

women- and minority-owned businesses

to participate in spectrum-based

services against its statutory duties to

facilitate the rapid delivery of new

services to the American consumer and

promote efficient use of the spectrum,

the Commission concludes that it

should not delay the paging service

auctions for the amount of time it would

take to adduce sufficient evidence to

support race- and gender-based

provisions. Moreover, the Commission

believes that most minority- and

women-owned businesses will be able

to take advantage of the specific

provisions adopted for small businesses.

c. Bidding Credits

60. While bidding credits do not

guarantee the success of small

businesses, the Commission believes

that they at least provide such bidders

with an opportunity to successfully

compete against larger, well-financed

bidders. The Commission also

concludes that it is appropriate to adopt

tiered bidding credits for paging auction

participants based on the size of the

small business. Such an approach will

further the Commission’s mandate

under section 309(j) of the

Communications Act to disseminate

licenses to a variety of applicants.

61. The Commission therefore will

define a small business as either (1) an

entity that, together with its affiliates

and controlling principals, has average

gross revenues for the three preceding

years of not more than $3 million, or (2)

an entity that, together with affiliates

and controlling principals, has average

gross revenues for the three preceding

years of not more than $15 million. The

Commission will give small businesses

that, together with affiliates and

controlling principals, have average

gross revenues for the three preceding

years of not more than $3 million, a 15

percent bidding credit. The Commission

will give small businesses that, together

with affiliates and controlling

principals, have average gross revenues

for the three preceding years of not more

than $15 million, a bidding credit of 10

percent. These bidding credits take into

account the difficulties smaller

businesses have in accessing capital.

Bidding credits at these levels also

achieve a reasonable compromise

between the arguments of commenters

advocating greater credits and those of

commenters advocating no credits.

62. For purposes of the definitions

adopted here, the Commission will

consider the gross revenues of the

applicant, all controlling principals in

the applicant, and affiliates of the

applicant. The Commission chooses not

to impose specific equity requirements

on controlling principals but will

require that, in order for an applicant to

qualify as a small business, qualifying

small business principals must maintain

both de jure and de facto control of the

applicant. For this purpose, the

Commission will borrow from certain

Small Business Administration (SBA)

rules that are used to determine when

a firm should be deemed an affiliate of

a small business. Typically, de jure

control is evidenced by ownership of

50.1 percent of an entity’s voting stock.

De facto control is determined on a

case-by-case basis. An entity must

demonstrate at least the following

indicia of control to establish that it

retains de facto control of the applicant:

(1) The entity constitutes or appoints

more than 50 percent of the board of

directors or partnership management

committee; (2) the entity has authority

to appoint, promote, demote and fire

senior executives that control the dayto-day activities of the licensee; and (3)

the entity plays an integral role in all

major management decisions. The

Commission cautions that while it is not

imposing specific equity requirements

on small business principals, the

absence of significant equity could raise

questions about whether the applicant

qualifies as a bona fide small business.

63. Eligible small businesses will be

permitted to form consortia and not

aggregate their gross revenues.

Additionally, a small corporation that

has dispersed voting stock ownership

and no controlling affiliates will not be

required to aggregate with its own

revenues the revenues of each

shareholder for purposes of small

business status. Thus, the Commission

clarifies that such an applicant may

qualify—even in the absence of

identifiable control being held by

particular investors.

d. Installment Payments and Down

Payments

64. The Commission adopts

installment payments for small business

winners in the paging license auctions.

The Commission recognizes that small

businesses, including those owned by

women and minorities, face capital

access difficulties not encountered by

other firms. Thus, they require special

measures to ensure their participation in

the paging service. Licensees who

qualify as small businesses in paging

license auctions will be entitled to pay

their winning bid amount in quarterly

installments over the term of the

license, with interest charges to be fixed

at the time of licensing at a rate equal

to the rate for ten-year U.S. Treasury

obligations plus 2.5 percent. The rate for

ten-year U.S. Treasury obligations will

be determined by taking the coupon rate

of interest on the ten-year U.S. Treasury

notes most recently auctioned by the

Treasury Department before licenses are

conditionally granted. These licensees

will be able to make interest-only

payments for the first two years of the

license term. Timely payment of all

installments will be a condition of the

license grant, and failure to make such

timely payments will be grounds for

revocation of the license.

65. The Commission declines to adopt

a second installment payment plan with

a longer interest-only period for small

businesses with average gross revenues

of not more than $3 million. The

Commission believes that the two-year

interest-only period in the single plan it

adopts will provide small businesses

with the appropriate level of financing

to overcome difficulties in attracting

capital. Given that it is making

additional financial assistance available

to very small businesses in the form of

a 15 percent bidding credit, the

Commission does not think a longer

interest-only period is justified.

66. The Commission also concludes

that it should provide for late payment

fees in connection with its installment

payment plan for paging licensees.

Therefore, when licensees are more than

fifteen days late in their scheduled

installment payments, a late payment

fee equal to 5 percent of the amount of

the past due payment will be charged.

For example, if a $50,000 payment is

due on June 1, then on June 16 $2,500

is due in addition to the payment.

Without such a fee licensees may not

have adequate financial incentives to
11624 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

make installment payments on time and

may attempt to maximize their cash

flow at the government’s expense by

paying late. The 5 percent payment

adopted is an approximation of late

payment fees applied in typical

commercial lending transactions.

Payments will be applied in the

following order: late charges, interest

charges, principal payments.

67. The Commission believes that

small businesses should be required to

pay a down payment of 20 percent.

Such a requirement is consistent with

ensuring that winning bidders have the

financial capability of building out their

systems and will provide the

Commission with stronger assurance

against default than a 10 percent down

payment. Increasing the amount of the

bidder’s funds at risk in the event of

default discourages insincere bidding

and therefore increases the likelihood

that licenses are awarded to parties who

are best able to serve the public. A 20

percent down payment should also

cover the required payments in the

unlikely event of default. Thus, small

business licensees will be required to

bring their deposit up to ten percent of

the winning bid within ten business

days of the close of the auction. Prior to

licensing, they will be required to pay

an additional ten percent. Specific

procedures for payment will be

provided in a Public Notice issued by

the Wireless Telecommunications

Bureau. The Commission declines to

adopt reduced upfront payment rules

for small businesses participating in

paging license auctions. The

Commission believes a uniform upfront

payment provision for all bidders in the

auction is necessary in order to deter

speculation and to ensure that only

sincere bidders participate in the

auction.

e. Partitioning

68. Based on the strong support

expressed by commenters for granting

broad partitioning rights to paging

licensees, the Commission will permit

all MTA and EA paging licensees to

partition to any party eligible to be a

paging licensee. The Commission takes

this action with respect to partitioning

because of its conclusion that allowing

holders of paging licenses to partition

their geographic service areas will

facilitate the provision of services in

small markets and rural areas.

Partitioning will also furnish providers

of paging service with operational

flexibility that will serve to promote the

most efficient use of the spectrum and

encourage participation by a wide

variety of service providers. The

Commission will permit partitioning of

paging licenses awarded through

competitive bidding based on any

license area defined by the parties.

69. Due to the paucity of comments

on the subject, and uncertainty as to

whether it is technically feasible, the

Commission will not, at this time,

authorize spectrum disaggregation for

the paging services. Instead, the

Commission seeks information

regarding the technical feasibility and

appropriateness of spectrum

disaggregation for the paging services in

a Further Notice of Proposed

Rulemaking.

70. Providers of paging service will be

permitted to acquire partitioned licenses

in either of two ways: (1) By forming

bidding consortia to participate in

auctions, and then partitioning the

licenses won among consortium

members; or (2) by acquiring partitioned

licenses from other licensees through

private negotiation and agreement either

before or after the auction. Each member

of a consortium will be required to file

a long-form application, following the

auction, for its respective mutually

agreed-upon geographic area. With

regard to partitioning by small

businesses, the Commission seeks

comment in the Further Notice of

Proposed Rulemaking regarding the

treatment of bidding credits and

installment payments. In the event the

Commission receives applications

requesting FCC consent to partitioning

transfers from small businesses to nonsmall businesses or to small businesses

that qualify for less favorable bidding

credits, action on such applications will

be deferred until the adoption of rules

governing the treatment of bidding

credits and installment payments.

f. Unjust Enrichment Provisions for Full

Transfers

71. The Commission adopts unjust

enrichment rules for paging. These rules

provide that, during the initial license

term, licensees utilizing bidding credits

and seeking to assign or transfer control

of a license to an entity that does not

meet the eligibility criteria for bidding

credits will be required to reimburse the

government for the value of the benefit

conferred by the government, that is, the

amount of the bidding credit, plus

interest at the rate imposed for

installment financing at the time the

license was awarded, before the

assignment or transfer will be approved

by the Commission. Licensees utilizing

a bidding credit and seeking to assign or

transfer control of a license to a small

business that meets the eligibility

standards for a lower bidding credit will

be required to reimburse the U.S.

government for the difference between

the amount of the bidding credit

obtained by the original licensee and the

bidding credit for which the assignee,

transferee or new licensee is eligible,

plus interest at the rate imposed for

installment financing at the time the

license was awarded as a condition of

Commission approval of such

assignment or transfer. If a licensee that

utilizes bidding credits seeks to make

any change in ownership structure that

would render the licensee ineligible for

bidding credits, or eligible only for a

lower bidding credit, the licensee must

first seek Commission approval and

reimburse the government for the

amount of the bidding credit, or the

difference between its original bidding

credit and the bidding credit for which

it is eligible after the ownership change,

plus interest at the rate imposed for

installment financing at the time the

license was awarded. The amount of

this payment will be reduced over time

as follows: (1) A transfer in the first two

years of the license term will result in

a forfeiture of 100 percent of the value

of the bidding credit (or the difference

between the bidding credit obtained by

the original licensee and the bidding

credit for which the new licensee is

eligible); (2) in year three of the license

term the payment will be 75 percent; (3)

in year four the payment will be 50

percent, and (4) in year five the payment

will be 25 percent, after which there

will be no required payment. These

payments will have to be paid to the

U.S. Treasury as a condition of approval

of the assignment, transfer, or

ownership change.

72. In addition, if a licensee that

qualifies for installment payments seeks

to assign or transfer control of its license

during its term to an entity that does not

meet the small business definition, the

Commission will require payment of the

remaining principal and any interest

accrued through the date of assignment

as a condition of the license assignment

or transfer. Also, if an investor

subsequently purchases an interest in

the business and, as a result, the gross

revenues of the business exceed the

applicable financial caps, these unjust

enrichment provisions will apply. The

Commission will apply these payment

requirements for the entire license term

to ensure that small businesses look first

to other small businesses when deciding

to transfer their licenses. However, the

Commission will not impose a holding

period or other transfer restrictions on

these licensees.

g. Spectrum Set-aside

73. The Commission will not adopt an

entrepreneurs’ block for paging licenses.

The large number of licenses of different
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11625

sizes that will be available in the paging

auctions should allow for extensive

participation of small businesses

without an entrepreneurs’ block.

Moreover, the special provisions for

small businesses that the Commission

adopts, including installment payments

and tiered bidding credits, will give

small businesses a significant

opportunity to acquire paging licenses

through the auctions.

III. Conclusion

74. The Commission concludes that

the paging rules and geographic area

licensing adopted in this Second Report

and Order will facilitate future

development of paging systems and

foster competition between paging and

other CMRS in general.

IV. Procedural Matters and Ordering

Clauses

A. Regulatory Flexibility Analysis

75. As required by section 603 of the

Regulatory Flexibility Act, 5 U.S.C. 603

(RFA), an Initial Regulatory Flexibility

Analysis (IRFA) was incorporated in the

Notice of Proposed Rulemaking (NPRM)

in WT Docket No. 96–18. The

Commission sought written public

comment on the proposals in the NPRM,

including the IRFA. The Commission’s

Final Regulatory Flexibility Analysis in

this Second Report and Order conforms

to the RFA, as amended by the Contract

With America Advancement Act of

1996, Pub. L. 104–121, 110 Stat. 847

(1996). (CWAA, Subtitle II of the Small

Business Regulatory Enforcement

Fairness Act of 1996 (SBREFA) codified

at 5 U.S.C. 601 et seq.)

Need for and Purpose of This Action

76. In the Second Report and Order,

in WT Docket No. 96–18, the

Commission adopts rules to establish

geographic area licensing and

competitive bidding for Common

Carrier Paging (CCP) and exclusive 929

MHz Private Carrier Paging (PCP)

services. These rules are adopted to

establish a flexible regulatory scheme

for paging services, which will promote

efficient licensing and competition in

the Commercial Mobile Radio Services

(CMRS) marketplace. The competitive

bidding rules adopted in the Second

Report and Order are pursuant to

section 309(j) of the Communications

Act of 1934, as amended

(Communications Act), which grants

authority to the Commission to use

auctions to select among mutually

exclusive applications for initial

licenses for subscriber-based services.

Summary of Issues Raised in Response

to the Initial Regulatory Flexibility

Analysis

77. Several commenters submitted

comments in response to the IRFA.

These commenters contend that the

Commission did not assess how the

proposals for market area licensing and

competitive bidding will impact small

businesses; that market area licensing

will alleviate some administrative

burdens but the savings will mainly be

seen by the largest paging operators; and

that market area licensing will impose

administrative burdens and additional

costs on small businesses. In addition to

the comments specifically submitted in

response to the IRFA, several

commenters raised issues in their

comments to the NPRM regarding the

effects of the proposals in the NPRM on

small businesses. These commenters do

not support geographic area licensing

for the exclusive 929 MHz and 931 MHz

paging channels. These commenters

contend that geographic area licensing

would be disruptive to existing

licensees, as well as to the public,

without providing any overriding

benefit. The Commission addresses

these issues in the Second Report and

Order, and concludes that geographic

area licensing using Major Trading

Areas (MTAs) as the geographic area for

these bands, is in the public interest.

The Commission also observes that

small businesses will be able to use

bidding credits and installment

payments in order to compete with

larger entities in the auction process.

78. Additionally, several commenters

are opposed to geographic area licensing

for the 35–36 MHz, 43–44 MHz, 152–

159 MHz, and 454–460 MHz bands and

claim that geographic area licensing

would prevent the continued growth of

small paging businesses. Several

commenters are also opposed to

geographic area licensing for other

services, such as Basic Exchange

Telecommunications Radio Service

(BETRS). Commenters argue that it is

not in the public interest to use

competitive bidding to select between

applications for BETRS and paging, as

this may leave some rural areas without

any local exchange service. Commenters

contend that requiring local exchange

carriers to bid for BETRS spectrum

would defy the requirements in the

Communications Act for universal

service and would jeopardize the

Commission’s goal to increase

subscriber penetration. The Commission

addresses these issues in the Second

Report and Order, and concludes that

geographic area licensing, using

Economic Areas (EAs) as the geographic

area for these bands, is in the public

interest. The Commission notes that

EAs, which are smaller than MTAs, will

provide more opportunities for small

paging businesses. The Commission also

observes that small businesses will be

able to use bidding credits and

installment payments in order to

compete with larger entities in the

auction process. The Commission

concludes that rural areas will not be

deprived of service because existing

BETRS systems will remain in place and

the new partitioning rules adopted in

the Second Report and Order will allow

BETRS operators to enter into

partitioning agreements with the

geographic area paging licensees.

Additionally, the Commission notes that

BETRS operators will be able to obtain

additional sites on a secondary basis.

79. Commenters are also opposed to

geographic licensing for the shared

channels and request that the

Commission maintain the present

system of site-by-site licensing for these

channels. The commenters observe that

these channels are predominantly used

by small businesses. The Commission

finds that the concerns raised by these

commenters regarding the shared

channels are well-founded and therefore

declines to impose geographic area

licensing for the shared channels.

Description and Number of Small

Entities Involved

80. The rules adopted in this Second

Report and Order will apply to current

paging operators and new entrants into

the paging market. Under these rules,

exclusive 929 MHz paging licenses and

licenses for all CCP channels will be

granted on a market area basis, instead

of site-by-site, and mutually exclusive

applications will be resolved through

competitive bidding procedures. In

order to ensure the more meaningful

participation of small business entities

in the auction for mutually exclusive

geographic area paging licenses the

Commission has adopted a two-tier

definition of small businesses. A small

business will be defined for these

purposes as either (1) an entity that,

together with its affiliates and

controlling principals, has average gross

revenues for the three preceding years of

not more than $3 million, or (2) an

entity that, together with affiliates and

controlling principals, has average gross

revenues for the three preceding years of

not more than $15 million. The Small

Business Administration (SBA) has not

yet approved this definition for paging

services. The Commission will utilize

the SBA’s definition applicable to

radiotelephone companies, i.e., an

entity employing less than 1,500
11626 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

persons. See 13 CFR 121.201, Standard

Industrial Classification Code 4812.

81. The Commission anticipates that a

total of 16,630 non-nationwide

geographic area licenses will be

auctioned. The geographic area licenses

subject to auction will consist of 2,550

MTA licenses and 14,080 EA licenses.

In addition to the 47 Rand McNally

MTAs, the Commission is adding three

MTAs for the U.S. territories of (1)

Guam and the Northern Mariana

Islands, (2) Puerto Rico and the U.S.

Virgin Islands, and (3) American Samoa.

The Commission is also licensing

Alaska as a single MTA separate from

the Seattle MTA. There will be a total

of 51 MTA licenses auctioned for each

non-nationwide 931 MHz and exclusive

929 MHz channel. Auctions of paging

licenses have not yet been held, and

there is no basis to determine the

number of licenses that will be awarded

to small entities. Given the fact that

nearly all radiotelephone companies

have fewer than 1,000 employees, and

that no reliable estimate of the number

of prospective paging licensees can be

made, the Commission assumes, for

purposes of the evaluations and

conclusions in this Final Regulatory

Flexibility Analysis, that all the

auctioned 16,630 geographic area paging

licenses will be awarded to small

entities, as that term is defined by the

SBA. See U.S. Bureau of the Census,

U.S. Department of Commerce, 1992

Census of Transportation,

Communications, and Utilities, UC 92–

S–1, Subject Series, Establishment and

Firm Size, Table 5, Employment Size of

Firms: 1992, SIC Code 4812 (issued May

1995).

Summary of Projected Reporting,

Recordkeeping and Other Compliance

Requirements

82. Geographic area paging licensees

may be required to report information

concerning the location of their

transmission sites under some

circumstances, although generally they

will not be required to file applications

on a site-by-site basis. Additionally,

geographic area license applicants will

be subject to reporting and

recordkeeping requirements to comply

with the competitive bidding rules.

Specifically, applicants will apply for

paging license auctions by filing a shortform application (FCC Form 175).

Winning bidders will file a long-form

application (FCC Form 600) at the

conclusion of the auction. Additionally,

entities seeking treatment as small

businesses will need to submit

information pertaining to the gross

revenues of the small business applicant

and its affiliates and controlling

principals. Such entities will also need

to maintain supporting documentation

at their principal place of business.

83. Section 309(j)(4)(E) of the

Communications Act directs the

Commission to ‘‘require such transfer

disclosures and anti-trafficking

restrictions and payment schedules as

may be necessary to prevent unjust

enrichment as a result of the methods

employed to issue licenses and

permits.’’ 47 U.S.C. 309(j)(4)(E). The

Commission adopted safeguards

designed to ensure that the

requirements of this section are

satisfied, including a transfer disclosure

requirement for paging licenses

obtained through the competitive

bidding process. An applicant seeking

approval for a transfer of control or

assignment of a license within three

years of receiving a new license through

a competitive bidding procedure must,

together with its application for transfer

of control or assignment, file with the

Commission a statement indicating that

its license was obtained through

competitive bidding. Such applicant

must also file with the Commission the

associated contracts for sale, option

agreements, management agreements, or

other documents disclosing the total

consideration that the applicant would

receive in return for the transfer or

assignment of its license.

84. With respect to small businesses,

the Commission has adopted unjust

enrichment provisions to deter

speculation and participation in the

licensing process by those who do not

intend to offer service to the public, or

who intend to use the competitive

bidding process to obtain a license at a

lower cost than they would otherwise

have to pay and to later sell it at a profit,

and to ensure that large businesses do

not become the unintended

beneficiaries of measures meant to help

small firms. Small business licensees

seeking to transfer their licenses to

entities which do not qualify as small

businesses (or which qualify for a lower

bidding credit), as a condition of

approval of the transfer, must remit to

the government a payment equal to a

portion of the value of the benefit

conferred by the government.

85. Finally, applicants and licensees

claiming eligibility for competitive

bidding as a small business are subject

to audits by the Commission. Selection

for audit may be random, on

information, or on the basis of other

factors. Consent to such audit is part of

the certification included in the shortform application (FCC Form 175).

Steps Taken to Minimize Burdens on

Small Entities

86. Section 309(j)(3)(B) of the

Communications Act, 47 U.S.C.

309(j)(3)(B), provides that in

establishing eligibility criteria and

bidding methodologies the Commission

shall, inter alia, promote economic

opportunity and competition and ensure

that new and innovative technologies

are readily accessible by avoiding

excessive concentration of licenses and

by disseminating licenses among a wide

variety of applicants, including small

businesses, rural telephone companies,

and businesses owned by members of

minority groups and women. Section

309(j)(4)(A) of the Communications Act,

47 U.S.C. 309(j)(4)(A), provides that in

order to promote such objectives, the

Commission shall consider alternative

payment schedules and methods of

calculation, including lump sums or

guaranteed installment payments, with

or without royalty payments, or other

schedules or methods. In awarding

geographic area paging licenses the

Commission is committed to meeting

the statutory objectives of promoting

economic opportunity and competition,

of avoiding excessive concentration of

licenses, and of ensuring access to new

and innovative technologies by

disseminating licenses among a wide

variety of applicants, including small

businesses, rural telephone companies,

and businesses owned by members of

minority groups and women. The

Commission finds that it is appropriate

to establish special provisions in the

paging rules for competitive bidding by

small businesses. The Commission

believes that small businesses applying

for paging licenses should be entitled to

bidding credits and should be permitted

to pay their bids in installments.

87. In order to ensure the more

meaningful participation of small

business entities in paging auctions, the

Commission has adopted a two-tiered

definition of small businesses. This

approach will give qualifying small

businesses bidding flexibility. A small

business will be defined as either (1) an

entity that, together with its affiliates

and controlling principals, has average

gross revenues for the three preceding

years of not more than $3 million, or (2)

an entity that, together with affiliates

and controlling principals, has average

gross revenues for the three preceding

years of not more than $15 million. The

Commission will require that in order

for an applicant to qualify as a small

business, qualifying small business

principals must maintain control of the

applicant. The Commission has

established bidding credits consistent
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11627

with the two-tiered definition of a small

business. Small businesses that, together

with affiliates and controlling

principals, have average gross revenues

for the three preceding years of not more

than $3 million will receive a 15 percent

bidding credit. Small businesses that,

together with affiliates and controlling

principals, have average gross revenues

for the three preceding years of not more

than $15 million will receive a bidding

credit of 10 percent.

88. Additionally, licensees who

qualify as small businesses in the

geographic area paging license auction

will be entitled to pay their winning bid

amount in quarterly installments over

the term of the license, with interest

charges to be fixed at the time of

licensing at a rate equal to the rate for

ten-year U.S. Treasury obligations plus

2.5 percent. Licensees who qualify for

this installment payment plan will be

permitted to make interest-only

payments for the first two years of the

license term. Timely payment of all

installments will be a condition of the

license grant, and failure to make such

timely payments will be grounds for

revocation of the license.

89. The Commission is also extending

geographic partitioning of MTA and EA

license areas to all entities eligible to be

paging licensees. The Commission

believes that this provision will allow

paging licensees to tailor their business

strategies and allow them to use the

spectrum more efficiently, will allow

more entities to participate in the

provision of paging services, and will

facilitate market entry by small entities

that have the ability to provide service

only to a limited population.

Additionally, the Commission is

maintaining the current site-by-site

licensing procedure for the shared

channels.

Significant Alternatives Considered and

Rejected

90. The Commission considered and

rejected a proposal for geographic area

licensing using MTAs for all licenses.

Commenters opposed this proposal,

contending that MTAs were too large for

the smaller paging systems. The

Commission believes that the

advantages of geographic area

licensing—flexibility, enhanced

regulatory symmetry with other CMRS,

and eliminating the inefficiencies in the

licensing process—are applicable to the

UHF and VHF channels, particularly for

regional paging services offered on these

bands. Based on the record in this

proceeding, the Commission concludes

that EAs would be more appropriate

than MTAs for the paging channels

below 931 MHz. The Commission agrees

with the commenters that the

geographical definition used should

correspond as much as possible to the

geographic area that the paging

licensees seek to serve, and concludes

that EAs, which are smaller than MTAs,

would facilitate the ability of paging

operators of smaller systems to

participate in geographic area licensing.

91. Additionally, the Commission

considered and rejected converting all

or some of the shared channels to

exclusive use and implementing

geographic area licensing. The

Commission also considered and

rejected limiting the number of

licensees on the shared channels. In the

NPRM, the Commission asked for

comment on whether to (1) convert the

shared channels to exclusive use and

implement geographic licensing; (2)

limit the number of licenses per shared

channel and use competitive bidding to

choose among applications once the

limit is reached; or (3) retain the status

quo. Most commenters opposed

geographic area licensing for the shared

channels, because paging systems on

these channels are smaller paging

systems, not wide-area systems. The

Commission observed that smaller

paging systems have been able to utilize

these channels effectively on a shared

basis. Most of the commenters requested

that the Commission maintain the

present system of site-by-site licensing.

The Commission noted that attempting

to superimpose a geographic licensing

scheme on channels that have

historically been shared could cause

significant disruption to existing

operations. Additionally, the

Commission declined to adopt a cap on

licensing shared channels, or to convert

certain shared channels to exclusive

licensing. The difficulty with a licensing

cap, as noted by several commenters, is

that it is the amount of time a paging

channel is used and the transmission

equipment and protocol used, not the

number of licensees, that determines the

capacity limits of a channel. The

Commission was also concerned that

picking certain shared channels to be

designated as exclusive would only

cause greater pressure on the remaining

shared channels and therefore could

limit opportunities for entry by smaller

systems. The Commission concluded

that the shared channels should not be

converted to exclusive use, and the

number of licensees should not be

limited in order to provide continued

opportunities for paging operators,

particularly small businesses.

92. With respect to competitive

bidding rules, the Commission

considered using a market-by-market

stopping rule, which many commenters

favored in order to facilitate bringing an

earlier end to the auction and permitting

the earlier close of uncontested markets.

The Commission adopted instead a

hybrid simultaneous/license-by-license

stopping rule, which combines the

advantages of a simultaneous stopping

rule and a license-by-license stopping

rule. This approach will prevent the

auction from being unreasonably long

while also preserving bidders’ flexibility

to pursue back up strategies and acquire

licenses that are consistent with their

business plans.

93. The Commission also considered

allowing small businesses that are

winning bidders to pay a lower down

payment than non-small businesses.

The Commission concluded, however,

that all winning bidders should pay a

down payment of 20 percent of their

winning bids. The Commission believes

that a substantial down payment is

necessary to ensure that winning

bidders have the financial capability of

building out their systems, and will

provide stronger assurance against

defaults than a reduced down payment.

Increasing the amount of the bidder’s

funds at risk in the event of default

discourages insincere bidding and

therefore increases the likelihood that

licenses are awarded to parties who are

best able to serve the public. The

Commission also believes that a 20

percent down payment should cover the

required payments in the unlikely event

of default.

94. The Commission requested

comment on whether, in addition to

small business provisions, separate

provisions should be adopted for

minority-and women-owned entities.

Few comments were received on this

issue, and commenters failed to provide

record evidence of discrimination

sufficient to support race-based

provisions under the strict scrutiny

standard of judicial review. The

Commission is also concerned that the

record would not support gender-based

provisions under intermediate scrutiny.

Balancing its obligation to provide

opportunities for women- and minorityowned businesses to participate in

spectrum-based services against its

statutory duties to facilitate the rapid

delivery of new services to the

American consumer and promote

efficient use of the spectrum, the

Commission concluded that it should

not delay paging service auctions for the

amount of time it would take to adduce

sufficient evidence to support race- and

gender-based provisions. The

Commission believes that most

minority-and women-owned businesses

will be able to take advantage of the
11628 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

specific provisions that it has adopted

for small businesses.

95. The Commission proposed, with

respect to installment payments, that

small businesses with not more than $3

million in average gross revenues for the

preceding three years be permitted to

make interest-only payments for the first

five years of the license term, while

small businesses with not more than

$15 million in average gross revenues

for the preceding three years be

permitted to make interest-only

payments during the first two years. The

Commission concluded, however, that

all licensees qualifying for installment

payments should be allowed to make

interest-only payments only for the first

two years of the license term. The

Commission declined to adopt a longer

interest-only period for small businesses

with average gross revenues of not more

than $3 million. The Commission

believes that the two-year interest-only

period provides small businesses with

the appropriate level of financing to

overcome difficulties in attracting

capital. Given that additional financial

assistance is being made available to

very small businesses in the form of a

15 percent bidding credit, the

Commission does not think a longer

interest-only period is needed.

96. The Commission sought comment

on the need, if any, for a reduced

upfront payment for entities qualifying

as a small business. The Commission

did not, however, adopt reduced

upfront payment rules for small

businesses participating in the paging

license auction because it believes that

a uniform upfront payment provision

for all bidders in the auction is

necessary in order to deter speculation

and to ensure that only sincere bidders

participate in the auction.

97. Finally, the Commission

considered but elected not to adopt a

spectrum set-aside for entrepreneurs. In

the NPRM, the Commission tentatively

concluded that it was not necessary to

adopt an entrepreneurs’ block for paging

license auctions, and most commenters

opposed the creation of an

entrepreneurs’ block or other form of

spectrum set-aside for paging license

auctions. The Commission believes that

the large number of licenses of different

sizes that will be available in the paging

auctions should allow for extensive

participation of small businesses

without an entrepreneurs’ block.

Moreover, the Commission believes that

the special provisions for small

businesses that it has adopted,

including installment payments and

tiered bidding credits, will give small

businesses a significant opportunity to

acquire paging licenses through

auctions.

Report to Congress

98. The Commission shall send a copy

of this Final Regulatory Flexibility

Analysis, along with this Second Report

and Order, in a report to Congress

pursuant to the Small Business

Regulatory Enforcement Fairness Act of

1996, 5 U.S.C. 801(a)(1)(A).

B. Paperwork Reduction Act

99. This collection of information

requirements have been approved by the

Office of Management and Budget and

assigned OMB control number 3060–

0697. The FCC Form 175 is assigned

OMB control number 3060–0600. The

FCC Form 600 is assigned OMB control

number 3060–0623.

C. Authority

100. The above action is authorized

under the Communications Act,

sections 4(i), 303(r), 309(c), 309(j), and

332, 47 U.S.C. 154(i), 303(r), 309(c),

309(j), and 332, as amended.

D. Ordering Clauses

101. Accordingly, it is ordered that,

pursuant to the authority of sections

4(i), 303(g), 303(r), and 332(a) of the

Communications Act of 1934, as

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

303(r), and 332(a), part 22 of the

Commission’s rules, 47 CFR part 22, is

amended as set forth below.

102. It is further ordered that,

pursuant to the authority of sections

4(i), 303(g), 303(r), and 332(a) of the

Communications Act of 1934, as

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

303(r), and 332(a), part 90 of the

Commission’s rules, 47 CFR part 90, is

amended as set forth in below.

103. It is further ordered that the rules

adopted in this Second Report and

Order and Further Notice of Proposed

Rulemaking will be effective May 12,

1997.

104. It is further ordered that,

pursuant to 47 U.S.C. 155(c), the Chief,

Wireless Telecommunications Bureau,

is granted delegated authority to

implement and modify auction

procedures in the part 22 and part 90

paging services, including the general

design and timing of an auction, the

number and grouping of authorizations

to be offered in any particular auction,

the manner of submitting bids, the

amount of minimum opening bids and

bid increments, activity and stopping

rules, and application and payment

requirements, including the amount of

upfront payments, and to announce

such procedures by Public Notice.

105. It is further ordered that,

pursuant to 47 U.S.C. 155(c), the Chief,

Wireless Telecommunications Bureau,

is granted delegated authority to dismiss

all mutually exclusive paging

applications filed as of the adoption

date of this Second Report and Order

and grant or dismiss all non-mutually

exclusive paging applications filed as of

the adoption date of this Second Report

and Order.

List of Subjects

47 CFR Part 22

Communication common carriers,

Reporting and recordkeeping

requirements.

47 CFR Part 90

Common carriers, Reporting and

recordkeeping requirements.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rules Changes

1. Part 22 of Chapter I of Title 47 of

the Code of Federal Regulations is

amended as follows:

Part 22—PUBLIC MOBILE SERVICES

The authority citation for Part 22

continues to read as follows:

Authority: Secs. 4, 303, 309, and 332, 48

Stat. 1066, 1082, as amended, 47 U.S.C 154,

303, 309, and 332, unless otherwise noted.

Section 22.99 is revised by adding the

following definitions (in alphabetical

order), and revising the definition for

the term ‘‘unserved areas’’, to read as

follows:

§ 22.99 Definitions.

* * * * *

Paging geographic area authorization.

An authorization conveying the

exclusive right to establish and expand

one or more stations throughout a

paging geographic area or, in the case of

a partitioned geographic area,

throughout a specified portion of a

paging geographic area, on a specified

channel allocated for assignment in the

Paging and Radiotelephone Service.

These are subject to the conditions that

no interference may be caused to

existing co-channel stations operated by

other licensees within the paging

geographic area and that no interference

may be caused to existing or proposed

co-channel stations of other licensees in

adjoining paging geographic areas.

Paging geographic areas. Standard

geographic areas used by the FCC for

administrative convenience in the

licensing of stations to operate on

channels allocated for assignment in the
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11629

Paging and Radiotelephone Service. See

§ 22.503(b).

* * * * *

Unserved areas. 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 the CGSA of

any cellular system authorized to

transmit on that channel block. With

regard to a channel allocated for

assignment in the Paging and

Radiotelephone Service: Geographic

area within the District of Columbia, or

any State, Territory or possession of the

United States of America that is not

within the service contour of any base

transmitter in any station authorized to

transmit on that channel.

* * * * *

The heading of Subpart B is revised

to read as follows:

Subpart B—Licensing Requirements

and Procedures

4. A new center heading preceding

§ 22.101 is added to read as follows:

Applications and Notifications

5. Section 22.115 is amended by

revising the introductory text of

paragraph (a) to read as follows:

§ 22.115 Content of applications.

* * * * *

(a) Site-specific requirements. The

following requirements apply to all

Public Mobile Service applications that

involve specific transmitting antenna

sites.

* * * * *

6. Section 22.123 is amended by

revising paragraphs (e)(1) and (e)(2), to

read as follows:

§ 22.123 Classification of filings as major

or minor.

* * * * *

(e) * * *

(1) Request that a paging geographic

area authorization be issued to the filer

on a requested channel;

(2) Request an authorization that

would establish for the filer a new fixed

transmission path or service area (a new

station) on a requested channel, unless

the new service area would be totally

within a paging geographic area for

which the filer holds the paging

geographic area authorization for the

requested channel;

* * * * *

7. Section 22.129 is amended by

adding paragraph (e) to read as follows:

§ 22.129 Agreements to dismiss

applications, amendments, and pleadings.

* * * * *

(e) Notwithstanding the provisions of

this section, any payments made or

received in exchange for withdrawing a

short-form application for an FCC

authorization awarded through

competitive bidding shall be subject to

the restrictions set forth in § 1.2105(c) of

this chapter.

8. Section 22.131 is amended by

revising paragraphs (c)(4)(ii)(A) and

(c)(4)(ii)(B), and by adding a new

paragraph (d)(2)(v), to read as follows:

§ 22.131 Procedures for mutually

exclusive applications.

* * * * *

(c) * * *

(4) * * *

(ii) * * *

(A) If all of the mutually exclusive

applications in a 30-day notice and cutoff filing group are applications for

initial authorization, the FCC

administers competitive bidding

procedures in accordance with § 22.201

through § 22.227 and subpart Q of part

1 of this chapter, as applicable. After

such procedures, the application of the

successful bidder may be granted and

the other applications may be dismissed

without prejudice.

(B) If any of the mutually exclusive

applications in a 30-day notice and cutoff filing group is an application for

modification, the Commission may

attempt to resolve the mutual

exclusivity by facilitating a settlement

between the applicants. If a settlement

is not reached within a reasonable time,

the FCC may designate all applications

in the filing group for comparative

consideration in a hearing. In this event,

the result of the hearing disposes all of

the applications in the filing group.

* * * * *

(d) * * *

(2) * * *

(v) Any ‘‘short-form’’ application

(filed on FCC Form 175) requesting a

new paging geographic area

authorization.

* * * * *

9. Section 22.165 is amended by

revising paragraph (d)(1) to read as

follows:

§ 22.165 Additional transmitters for

existing systems.

* * * * *

(d) * * *

(1) The interfering contours of the

additional transmitter(s) must be totally

encompassed by the composite

interfering contour of the existing

station (or stations under common

control of the applicant) on the same

channel, except that this limitation does

not apply to nationwide network paging

stations or in-building radiation

systems.

* * * * *

10. A new center heading consisting

of §§ 22.201 through 22.227 is added to

read as follows:

Competitive Bidding Procedures

Sec.

22.201 Scope of competitive bidding rules.

22.203 Competitive bidding design for

paging licensing.

22.205 Competitive bidding mechanisms.

22.207 Withdrawal, default, and

disqualification payments.

22.209 Bidding applications (FCC Form 175

and 175–S short-form).

22.211 Submission of upfront payments and

down payments.

22.213 Long-form applications (FCC Form

600).

22.215 Authorization grant, denial, default,

and disqualification.

22.217 Bidding credits for small businesses.

22.219 Installment payments for licenses

won by small businesses.

22.221 Eligibility for partitioned licenses.

22.223 Definitions concerning competitive

bidding process.

22.225 Certifications, discolsures, records

maintenance and audits.

22.227 Petitions to deny and limitation on

settlements.

Competitive Bidding Procedures

§ 22.201 Scope of competitive bidding

rules.

Sections 22.201 through 22.227,

inclusive (and, unless otherwise

specified in this part, the procedures set

forth in part 1, subpart Q, of this

chapter), apply only to competitive

bidding (‘‘auction’’) procedures for

authorizations as follows:

(a) Paging geographic area

authorizations issued pursuant to this

part or to part 90 of this chapter.

(b) [Reserved].

§ 22.203 Competitive bidding design for

paging licensing.

A simultaneous multiple round

auction will be used to choose from

among mutually exclusive initial

applications for paging geographic area

authorizations, unless the FCC specifies

otherwise by Public Notice prior to the

competitive bidding procedure.

§ 22.205 Competitive bidding mechanisms.

(a) Sequencing. The FCC will

establish and may vary the sequence in

which paging geographic area

authorizations are auctioned.

(b) Grouping. The FCC will determine

which licenses will be auctioned

simultaneously or in combination based

on interdependency and administrative

circumstances.
11630 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

(c) Minimum Bid Increments. The

FCC may, by public announcement

before or during an auction, require

minimum bid increments in dollar or

percentage terms.

(d) Stopping Rules. The FCC may

establish stopping rules before or during

an auction in order to terminate the

auction within a reasonable time.

(e) Activity Rules. The FCC may

establish activity rules which require a

minimum amount of bidding activity. In

the event that the FCC establishes an

activity rule in connection with a

simultaneous multiple round auction,

each bidder may request waivers of such

rule during the auction. The FCC may,

by public announcement either before

or during an auction, specify or vary the

number of waivers available to each

bidder.

§ 22.207 Withdrawal, default, and

disqualification payments.

The FCC will impose payments on

bidders who withdraw high bids during

the course of an auction, who default on

payments due after an auction

terminates, or who are disqualified.

When the FCC conducts a simultaneous

multiple round auction, payments will

be calculated as set forth in §§ 1.2104(g)

and 1.2109 of this chapter. When the

amount of such a payment cannot be

determined, a deposit of up to 20

percent of the amount bid on the license

will be required.

§ 22.209 Bidding applications (FCC Form

175 and 175–S Short-form).

Each applicant to participate in

competitive bidding for paging

geographic area authorizations must

submit an application (FCC Forms 175

and 175–S) pursuant to the provisions

of § 1.2105 of this chapter.

§ 22.211 Submission of upfront payments

and down payments.

(a) The FCC will require applicants to

submit an upfront payment prior to the

start of a paging auction. The amount of

the upfront payment for each geographic

area license auctioned and the

procedures for submitting it will be set

forth by the Wireless

Telecommunications Bureau in a Public

Notice in accordance with § 1.2106 of

this chapter.

(b) Each winning bidder in a paging

auction must submit a down payment to

the FCC in an amount sufficient to bring

its total deposits up to 20 percent of its

winning bid. All winning bidders

except small businesses will be required

to make such payment within ten

business days following the release of a

Public Notice announcing the close of

bidding. Small businesses must bring

their deposits up to 10 percent of their

winning bids within ten business days

following the release of a Public Notice

announcing the close of bidding, and

must pay an additional 10 percent prior

to licensing, by a date and time to be

specified by Public Notice.

§ 22.213 Long-form applications (FCC

Form 600).

Each successful bidder for a paging

geographic area authorization must

submit a ‘‘long-form’’ application (FCC

Form 600) within ten business days

after being notified by Public Notice that

it is the winning bidder. Applications

for paging geographic area

authorizations on FCC Form 600 must

be submitted in accordance with

§ 1.2107 of this chapter, all applicable

procedures set forth in the rules in this

part, and any applicable Public Notices

that the FCC may issue in connection

with an auction. After an auction, the

FCC will not accept long-form

applications for paging geographic area

authorizations from anyone other than

the auction winners and parties seeking

partitioned licenses pursuant to

agreements with auction winners under

§ 22.221.

§ 22.215 Authorization grant, denial,

default, and disqualification.

(a) Each winning bidder, except those

eligible for installment payments, will

be required to pay the full balance of its

winning bid within ten business days

following Public Notice that the FCC is

prepared to award the authorization.

(b) A bidder that withdraws its bid

subsequent to the close of bidding,

defaults on a payment due, or is

disqualified, is subject to the payments

specified in § 22.207, § 1.2104(g), or

§ 1.2109 of this chapter, as applicable.

§ 22.217 Bidding credits for small

businesses.

(a) A winning bidder that qualifies as

a small business or a consortium of

small businesses as defined in

§ 22.223(b)(1)(i) may use a bidding

credit of 15 percent to lower the cost of

its winning bid. A winning bidder that

qualifies as a small business or a

consortium of small businesses as

defined in § 22.223(b)(1)(ii) may use a

bidding credit of ten percent to lower

the cost of its winning bid.

(b) Unjust Enrichment:

(1) If a small business that utilizes a

bidding credit under this section seeks

to transfer control or assign an

authorization to an entity that is not a

small business under § 22.223(b)(1), or

seeks to make any other change in

ownership that would result in the

licensee losing eligibility as a small

business, the small business must seek

FCC approval and reimburse the U.S.

government for the amount of the

bidding credit (plus interest at the rate

imposed for installment financing at the

time the license was awarded), as a

condition of approval of such

assignment, transfer, or other ownership

change.

(2) If a small business that utilizes a

bidding credit under this section seeks

to transfer control or assign an

authorization to a small business

meeting the eligibility standards for a

lower bidding credit, or seeks to make

any other change in ownership that

would result in the licensee qualifying

for a lower bidding credit under this

section, the licensee must seek FCC

approval and reimburse the U.S.

government for the difference between

the amount of the bidding credit

obtained by the licensee and the bidding

credit for which the assignee, transferee,

or licensee is eligible under this section

(plus interest at the rate imposed for

installment financing at the time the

license was awarded), as a condition of

the approval of such assignment,

transfer, or other ownership change.

(3) The amount of payments made

pursuant to paragraphs (b)(1) and (b)(2)

of this section will be reduced over time

as follows: A transfer in the first two

years of the license term will result in

a forfeiture of 100 percent of the value

of the bidding credit (or the difference

between the bidding credit obtained by

the original licensee and the bidding

credit for which the post-transfer

licensee is eligible); in year 3 of the

license term the payment will be 75

percent; in year 4 the payment will be

50 percent; and in year 5 the payment

will be 25 percent, after which there

will be no assessment.

§ 22.219 Installment payments for licenses

won by small businesses.

(a) Each licensee that qualifies as a

small business under § 22.223(b)(1) may

pay the remaining 80 percent of the net

auction price for the license in

installment payments over the term of

the authorization. Interest charges shall

be fixed at the time of licensing at a rate

equal to the rate for ten-year U.S.

Treasury obligations plus 2.5 percent.

An eligible licensee may make interestonly payments for two years. Payments

of interest and principal shall be

amortized over the remaining eight

years of the license term.

(b) Late Installment Payment.

(1) Any licensee that submits a

scheduled installment payment more

than 15 days late will be charged a late

payment fee equal to 5 percent of the

amount of the past due payment.
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11631

(2) Payments will be applied in the

following order: late charges, interest

charges, principal payments.

(c) Unjust Enrichment:

(1) If a licensee that utilizes

installment financing under this section

seeks to assign or transfer control of its

license to an entity not meeting the

eligibility standards for installment

financing, the licensee must seek FCC

approval and make full payment of the

remaining unpaid principal and unpaid

interest accrued through the date of

assignment or transfer as a condition of

FCC approval.

(2) If a licensee that utilizes

installment financing under this section

seeks to make any change in ownership

structure that would result in the

licensee losing eligibility for installment

payments, the licensee shall first seek

FCC approval before making such a

change in ownership structure and must

make full payment of the remaining

unpaid principal and unpaid interest

accrued through the date of such change

in ownership structure as a condition of

FCC approval.

§ 22.221 Eligibility for partitioned licenses.

If partitioned licenses are being

applied for in conjunction with a

license(s) to be awarded through

competitive bidding procedures—

(a) The applicable procedures for

filing short-form applications and for

submitting upfront payments and down

payments contained in this chapter

shall be followed by the applicant, who

must disclose as part of its short-form

application all parties to agreement(s)

with or among other entities to partition

the license pursuant to this section, if

won at auction (see 47 CFR

1.2105(a)(2)(viii));

(b) Each party to an agreement to

partition the license must file a longform application (FCC Form 600) for its

respective, mutually agreed-upon

geographic area together with the

application for the remainder of the

MTA or EA filed by the auction winner.

(c) If the partitioned license is being

applied for as a partial assignment of the

MTA or EA license following grant of

the initial license, request for

authorization for partial assignment of a

license shall be made pursuant to

§ 22.137.

§ 22.223 Definitions concerning

competitive bidding process.

(a) Scope. The definitions in this

section apply to §§ 22.201 through

22.227, unless otherwise specified in

those sections.

(b) Small business; consortium of

small businesses. (1) A small business is

an entity that either:

(i) Together with its affiliates and

controlling principals has average gross

revenues that are not more than $3

million for the preceding three years; or

(ii) Together with its affiliates and

controlling principals has average gross

revenues that are not more than $15

million for the preceding three years.

(2) For purposes of determining

whether an entity meets either the $3

million or $15 million average annual

gross revenues size standard set forth in

paragraph (b)(1) of this section, the gross

revenues of the entity, its affiliates, and

controlling principals shall be

considered on a cumulative basis and

aggregated.

(3) A consortium of small businesses

is a conglomerate organization formed

as a joint venture between or among

mutually independent business firms,

each of which individually satisfies the

definition of a small business in

paragraph (b)(1) of this section. Each

individual member must establish its

eligibility as a small business, as

defined in this section. Where an

applicant (or licensee) is a consortium

of small businesses, the gross revenues

of each small business shall not be

aggregated.

(c) Gross Revenues. Gross revenues

shall mean all income received by an

entity, whether earned or passive, before

any deductions are made for costs of

doing business (e.g., cost of goods sold).

Gross revenues are evidenced by

audited financial statements for the

relevant number of calendar or fiscal

years preceding the filing of the

applicant’s short-form application. If an

entity was not in existence for all or part

of the relevant period, gross revenues

shall be evidenced by the audited

financial statements of the entity’s

predecessor-in-interest or, if there is no

identifiable predecessor-in-interest,

unaudited financial statements certified

by the applicant as accurate. When an

applicant does not otherwise use

audited financial statements, its gross

revenues may be certified by its chief

financial officer or its equivalent.

(d) Affiliate.—(1) Basis for Affiliation.

An individual or entity is an affiliate of

an applicant if such individual or entity:

(i) Directly or indirectly controls or

has the power to control the applicant,

or

(ii) Is directly or indirectly controlled

by the applicant, or

(iii) Is directly or indirectly controlled

by a third party or parties who also

control or have the power to control the

applicant, or

(iv) Has an ‘‘identity of interest’’ with

the applicant.

(2) Nature of control in determining

affiliation. (i) Every business concern is

considered to have one or more parties

who directly or indirectly control or

have the power to control it. Control

may be affirmative or negative and it is

immaterial whether it is exercised so

long as the power to control exists.

Example for paragraph (d)(2)(i). An

applicant owning 50 percent of the voting

stock of another concern would have

negative power to control such concern since

such party can block any action of the other

stockholders. Also, the bylaws of a

corporation may permit a stockholder with

less than 50 percent of the voting stock to

block any actions taken by the other

stockholders in the other entity. Affiliation

exists when the applicant has the power to

control a concern while at the same time

another person, or persons, are in control of

the concern at the will of the party or parties

with the power of control.

(ii) Control can arise through stock

ownership; occupancy of director,

officer or key employee positions;

contractual or other business relations;

or combinations of these and other

factors. A key employee is an employee

who, because of his/her position in the

concern, has a critical influence in or

substantive control over the operations

or management of the concern.

(iii) Control can arise through

management positions if the voting

stock is so widely distributed that no

effective control can be established.

Example for paragraph (d)(2)(iii). In a

corporation where the officers and directors

own various size blocks of stock totaling 40

percent of the corporation’s voting stock, but

no officer or director has a block sufficient

to give him/her control or the power to

control and the remaining 60 percent is

widely distributed with no individual

stockholder having a stock interest greater

than 10 percent, management has the power

to control. If persons with such management

control of the other entity are controlling

principals of the applicant, the other entity

will be deemed an affiliate of the applicant.

(3) Identity of interest between and

among persons. Affiliation can arise

between or among two or more persons

with an identity of interest, such as

members of the same family or persons

with common investments. In

determining if the applicant controls or

is controlled by a concern, persons with

an identity of interest will be treated as

though they were one person.

(i) Spousal affiliation. Both spouses

are deemed to own or control or have

the power to control interests owned or

controlled by either of them, unless they

are subject to a legal separation

recognized by a court of competent

jurisdiction in the United States.

(ii) Kinship affiliation. Immediate

family members will be presumed to

own or control or have the power to

control interests owned or controlled by
11632 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

other immediate family members. In

this context ‘‘immediate family

member’’ means father, mother,

husband, wife, son, daughter, brother,

sister, father- or mother-in-law, son- or

daughter-in-law, brother- or sister-inlaw, step-father, or -mother, stepbrother, or -sister, step-son, or

-daughter, half-brother or -sister. This

presumption may be rebutted by

showing that:

(A) The family members are

estranged,

(B) The family ties are remote, or

(C) The family members are not

closely involved with each other in

business matters.

Example for paragraph (d)(3)(ii). A owns a

controlling interest in Corporation X. A’s

sister-in-law, B, has a controlling interest in

a paging geographic area authorization

application. Because A and B have a

presumptive kinship affiliation, A’s interest

in Corporation X is attributable to B, and thus

to the applicant, unless B rebuts the

presumption with the necessary showing.

(4) Affiliation through stock

ownership. (i) An applicant is presumed

to control or have the power to control

a concern if he/she owns or controls or

has the power to control 50 percent or

more of its voting stock.

(ii) An applicant is presumed to

control or have the power to control a

concern even though he/she owns,

controls, or has the power to control less

than 50 percent of the concern’s voting

stock, if the block of stock he/she owns,

controls, or has the power to control is

large as compared with any other

outstanding block of stock.

(iii) If two or more persons each owns,

controls or has the power to control less

than 50 percent of the voting stock of a

concern, such minority holdings are

equal or approximately equal in size,

and the aggregate of these minority

holdings is large as compared with any

other stock holding, the presumption

arises that each one of these persons

individually controls or has the power

to control the concern; however, such

presumption may be rebutted by a

showing that such control or power to

control, in fact, does not exist.

(5) Affiliation arising under stock

options, convertible debentures, and

agreements to merge. Stock options,

convertible debentures, and agreements

to merge (including agreements in

principle) are generally considered to

have a present effect on the power to

control the concern. Therefore, in

making a size determination, such

options, debentures, and agreements

will generally be treated as though the

rights held thereunder had been

exercised. However, neither an affiliate

nor an applicant can use such options

and debentures to appear to terminate

its control over another concern before

it actually does so.

Example 1 for paragraph (d)(5). If company

B holds an option to purchase a controlling

interest in company A, who holds a

controlling interest in a paging geographic

area authorization application, the situation

is treated as though company B had exercised

its rights and had become owner of a

controlling interest in company A. The gross

revenues of company B must be taken into

account in determining the size of the

applicant.

Example 2 for paragraph (d)(5). If a large

company, BigCo, holds 70% (70 of 100

outstanding shares) of the voting stock of

company A, who holds a controlling interest

in a paging geographic area authorization

application, and gives a third party, SmallCo,

an option to purchase 50 of the 70 shares

owned by BigCo, BigCo will be deemed to be

an affiliate of company A, and thus the

applicant, until SmallCo actually exercises

its options to purchase such shares. In order

to prevent BigCo from circumventing the

intent of the rule which requires such

options to be considered on a fully diluted

basis, the option is not considered to have

present effect in this case.

Example 3 for paragraph (d)(5). If company

A has entered into an agreement to merge

with company B in the future, the situation

is treated as though the merger has taken

place.

(6) Affiliation under voting trusts. (i)

Stock interests held in trust shall be

deemed controlled by any person who

holds or shares the power to vote such

stock, to any person who has the sole

power to sell such stock, and to any

person who has the right to revoke the

trust at will or to replace the trustee at

will.

(ii) If a trustee has a familial, personal

or extra-trust business relationship to

the grantor or the beneficiary, the stock

interests held in trust will be deemed

controlled by the grantor or beneficiary,

as appropriate.

(iii) If the primary purpose of a voting

trust, or similar agreement, is to separate

voting power from beneficial ownership

of voting stock for the purpose of

shifting control of or the power to

control a concern in order that such

concern or another concern may meet

the Commission’s size standards, such

voting trust shall not be considered

valid for this purpose regardless of

whether it is or is not recognized within

the appropriate jurisdiction.

(7) Affiliation through common

management. Affiliation generally arises

where officers, directors, or key

employees serve as the majority or

otherwise as the controlling element of

the board of directors and/or the

management of another entity.

(8) Affiliation through common

facilities. Affiliation generally arises

where one concern shares office space

and/or employees and/or other facilities

with another concern, particularly

where such concerns are in the same or

related industry or field of operations,

or where such concerns were formerly

affiliated, and through these sharing

arrangements one concern has control,

or potential control, of the other

concern.

(9) Affiliation through contractual

relationships. Affiliation generally

arises where one concern is dependent

upon another concern for contracts and

business to such a degree that one

concern has control, or potential

control, of the other concern.

(10) Affiliation under joint venture

arrangements. (i) A joint venture for size

determination purposes is an

association of concerns and/or

individuals, with interests in any degree

or proportion, formed by contract,

express or implied, to engage in and

carry out a single, specific business

venture for joint profit for which

purpose they combine their efforts,

property, money, skill and knowledge,

but not on a continuing or permanent

basis for conducting business generally.

The determination whether an entity is

a joint venture is based upon the facts

of the business operation, regardless of

how the business operation may be

designated by the parties involved. An

agreement to share profits/losses

proportionate to each party’s

contribution to the business operation is

a significant factor in determining

whether the business operation is a joint

venture.

(ii) The parties to a joint venture are

considered to be affiliated with each

other.

§ 22.225 Certifications, disclosures,

records maintenance and audits.

(a) Short-form applications:

certifications and disclosure. In addition

to certifications and disclosures

required by part 1, subpart Q, of this

chapter, each applicant for a paging

license which qualifies as a small

business or consortium of small

businesses shall append the following

information as an exhibit to its FCC

Form 175:

(1) The identity of the applicant’s

controlling principals and affiliates,

and, if a consortium of small businesses,

the members in the joint venture; and

(2) The applicant’s gross revenues,

computed in accordance with § 22.223.

(b) Long form applications:

certifications and disclosure. Each

applicant submitting a long-form

application for a paging geographic area

authorization and qualifying as a small
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11633

business shall, in an exhibit to its longform application:

(1) Disclose separately and in the

aggregate the gross revenues, computed

in accordance with § 22.223, for each of

the following: the applicant, the

applicant’s affiliates, the applicant’s

controlling principals, and, if a

consortium of small businesses, the

members of the joint venture;

(2) List and summarize all agreements

or other instruments (with appropriate

references to specific provisions in the

text of such agreements and

instruments) that support the

applicant’s eligibility as a small

business under §§ 22.217 through

22.223, including the establishment of

de facto and de jure control; such

agreements and instruments include,

but are not limited to, articles of

incorporation and bylaws, shareholder

agreements, voting or other trust

agreements, franchise agreements, and

any other relevant agreements,

including letters of intent, oral or

written; and

(3) List and summarize any investor

protection agreements, including rights

of first refusal, supermajority clauses,

options, veto rights, and rights to hire

and fire employees and to appoint

members to boards of directors or

management committees.

(c) Records maintenance. All winning

bidders qualifying as small businesses

shall maintain at their principal place of

business an updated file of ownership,

revenue, and asset information,

including any documents necessary to

establish eligibility as a small business

and/or consortium of small businesses

under § 22.223. Licensees (and their

successors-in-interest) shall maintain

such files for the term of the license.

Applicants that do not obtain the

license(s) for which they applied shall

maintain such files until the grant of

such license(s) is final, or one year from

the date of the filing of their short-form

application (FCC Form 175), whichever

is earlier.

(d) Audits. (1) Applicants and

licensees claiming eligibility as a small

business or consortium of small

businesses under §§ 22.217 through

22.223 shall be subject to audits by the

Commission. Selection for audit may be

random, on information, or on the basis

of other factors.

(2) Consent to such audits is part of

the certification included in the shortform application (FCC Form 175). Such

consent shall include consent to the

audit of the applicant’s or licensee’s

books, documents and other material

(including accounting procedures and

practices) regardless of form or type,

sufficient to confirm that such

applicant’s or licensee’s representations

are, and remain, accurate. Such consent

shall include inspection at all

reasonable times of the facilities, or

parts thereof, engaged in providing and

transacting business, or keeping records

regarding licensed paging service and

shall also include consent to the

interview of principals, employees,

customers and suppliers of the

applicant or licensee.

(e) Definitions. The terms affiliate,

small business, consortium of small

businesses, and gross revenues, used in

this section are defined in § 22.223.

§ 22.227 Petitions to deny and limitations

on settlements.

(a) Procedures regarding petitions to

deny long-form applications in the

paging service will be governed by

§§ 1.2108(b) through 1.2108(d) of this

chapter, § 22.130, and § 90.163.

(b) The consideration that an

individual or an entity will be permitted

to receive for agreeing to withdraw an

application or a petition to deny will be

limited by the provisions set forth in

§ 22.129, § 90.162, and § 1.2105(c) of

this chapter.

11. Section 22.313 is amended by

revising paragraphs (a)(4), (a)(5) and

adding new paragraph (a)(6) to read as

follows:

§ 22.313 Station identification.

* * * * *

(a) * * *

(4) Stations using Basic Exchange

Telephone Radio Systems in the Rural

Radiotelephone Service;

(5) Nationwide network paging

stations operating on 931 MHz

channels; or,

(6) Stations operating pursuant to

paging geographic area authorizations.

* * * * *

12. Section 22.352 is amended by

revising the introductory paragraph to

read as follows:

§ 22.352 Protection from interference.

Public Mobile Service stations

operating in accordance with FCC rules

that provide technical channel

assignment criteria for the radio service

and channels involved, all other

applicable FCC rules, and the terms and

conditions of their authorizations are

normally considered to be noninterfering. If the FCC determines,

however, that interference that

significantly interrupts or degrades a

radio service is being caused, it may, in

accordance with the provisions of

sections 303(f) and 316 of the

Communications Act of 1934, as

amended, (47 U.S.C. 303(f), 316),

require modifications to any Public

Mobile station as necessary to eliminate

such interference.

* * * * *

13. A new § 22.503 is added, to read

as follows:

§ 22.503 Paging geographic area

authorizations.

The FCC considers applications for

and issues paging geographic area

authorizations in the Paging and

Radiotelephone Service in accordance

with the rules in this section. Each

paging geographic area authorization

contains conditions requiring

compliance with paragraphs (h) and (i)

of this section.

(a) Channels. The FCC may issue a

paging geographic area authorization for

any channel listed in § 22.531 of this

part or for any channel pair listed in

§ 22.561 of this part.

(b) Paging geographic areas. The

paging geographic areas are as follows:

(1) The Nationwide paging geographic

area comprises the District of Columbia

and all States, Territories and

possessions of the United States of

America.

(2) The Major Trading Areas (MTAs)

as defined in the Rand McNally 1992

Commercial Atlas & Marketing Guide,

123rd Edition, at pages 38–39, with the

following changes and additions:

(i) The Seattle paging geographic area

does not include Alaska.

(ii) Alaska is a paging geographic area.

(iii) Guam and the Northern Mariana

Islands (combined) are a paging

geographic area.

(iv) Puerto Rico and the United States

Virgin Islands (combined) are a paging

geographic area.

(v) American Samoa is a paging

geographic area.

(3) The Economic Areas (EAs), as

defined by the Department of

Commerce, Bureau of Economic

Analysis.

(c) Availability. The FCC may

determine whether to issue a paging

geographic area authorization for any

specific channel or channel pair in any

specific paging geographic area. The

FCC may replace existing site specific

authorizations for facilities on a channel

or channel pair located in a paging

geographic area with a paging

geographic area authorization for that

channel or channel pair, if in its sole

discretion, the FCC determines that the

public interest would be served by such

replacement.

(d) Filing windows. The FCC accepts

applications for paging geographic area

authorizations only during filing

windows. The FCC issues Public

Notices announcing in advance the

dates of the filing windows, and the
11634 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

specific paging geographic areas and

channels for which applications may be

accepted.

(e) One grant per geographic area.

The FCC may grant one and only one

application for a paging geographic area

authorization for any specific channel or

channel pair in any specific paging

geographic area defined in paragraph (b)

of this section. Selection from among

mutually exclusive applications for a

paging geographic area authorization

will be made in accordance with the

procedures in §§ 22.131 and 22.200

through 22.299. If after the selection

process but prior to filing a ‘‘long form’’

application, a successful bidder decides

to partition the paging geographic area,

the FCC may require and accept

multiple ‘‘long form’’ applications from

the consortium members.

(f) Exclusive right to expand. During

the term of a paging geographic area

authorization, the FCC does not accept,

from anyone other than the paging

geographic area licensee, any major

application for authorization to operate

a facility that would serve unserved area

within the paging geographic area

specified in that paging geographic area

authorization, on the channel specified

in that paging geographic area

authorization, unless any extension of

the interfering contour of the proposed

facility falls:

(1) Within the composite interfering

contour of another licensee; or,

(2) Into unserved area and the paging

geographic area licensee consents to

such extension.

(g) Subsequent applications not

accepted. During the term of a paging

geographic area authorization, the FCC

does not accept any application for

authorization relating to a facility that is

or would be located within the paging

geographic area specified in that paging

geographic area authorization, on the

channel specified in that paging

geographic area authorization, except in

the following situations:

(1) FCC grant of an application

authorizing the construction of the

facility could have a significant

environmental effect as defined by

§ 1.1307 of this chapter. See

§ 22.115(a)(5).

(2) Specific international coordination

procedures are required, prior to

assignment of a channel to the facility,

pursuant to a treaty or other agreement

between the United States government

and the government of Canada or

Mexico. See § 22.169.

(3) The paging geographic area

licensee or another licensee of a system

within the paging geographic area

applies to assign its authorization or for

FCC consent to a transfer of control.

(h) Adjacent geographic area

coordination required. Before

constructing a facility for which the

interfering contour (as defined in

§ 22.537 or § 22.567, as appropriate for

the channel involved) would extend

into another paging geographic area, a

paging geographic area licensee must

obtain the consent of the relevant cochannel paging geographic area

licensee, if any, into whose area the

interfering contour would extend. In the

event that there is no co-channel paging

geographic area licensee from whom to

obtain consent in the area into which

the interfering contour would extend,

the facility may be constructed and

operated subject to the condition that, at

such time as the FCC issues a paging

geographic area license for that adjacent

geographic area, either consent must be

obtained or the facility modified or

eliminated such that the interfering

contour no longer extends into the

adjacent geographic area.

(i) Protection of existing service. All

facilities constructed and operated

pursuant to a paging geographic area

authorization must provide co-channel

interference protection in accordance

with § 22.537 or § 22.567, as appropriate

for the channel involved, to all cochannel facilities of other licensees

within the paging geographic area that

were authorized on May 12, 1997 and

have remained authorized continuously

since that date.

(j) Site location restriction. The

transmitting antenna of each facility

constructed and operated pursuant to a

paging geographic area authorization

must be located within the paging

geographic area specified in the

authorization.

(k) Coverage requirements. Failure by

a paging geographic area licensee to

meet either of the coverage requirements

in paragraphs (k)(1) and (k)(2) of this

section, or alternatively, the substantial

service requirement in paragraph (k)(3)

of this section, may result in automatic

termination or non-renewal of a paging

geographic area license. For the purpose

of this paragraph, to ‘‘cover’’ area means

to include geographic area within the

composite of the service contour(s)

determined by the methods of §§ 22.537

or 22.567, as appropriate for the

particular channel involved. Licensees

may determine the population of

geographic areas included within their

service contours using either the 1990

census or the 2000 census, but not both.

(1) No later than three years after the

initial grant of a paging geographic area

authorization, the licensee must

construct or otherwise acquire and

operate sufficient facilities to cover one

third of the population in the paging

geographic area. The licensee must

notify the FCC (FCC Form 489), no later

than 15 days after the end of the three

year period, either that it has satisfied

this requirement or that it plans to

satisfy the alternative requirement to

provide substantial service in

accordance with paragraph (k)(3) of this

section.

(2) No later than five years after the

initial grant of a paging geographic area

authorization, the licensee must

construct or otherwise acquire and

operate sufficient facilities to cover two

thirds of the population in the paging

geographic area. The licensee must

notify the FCC (FCC Form 489), no later

than 15 days after the end of the five

year period, either that it has satisfied

this requirement or that it has satisfied

the alternative requirement to provide

substantial service in accordance with

paragraph (k)(3) of this section.

(3) As an alternative to the coverage

requirements of paragraphs (k)(1) and

(k)(2) of this section, the paging

geographic area licensee may

demonstrate that, no later than five

years after the initial grant of its paging

geographic area authorization, it

provides substantial service to the

paging geographic area. ‘‘Substantial

service’’ means service that is sound,

favorable, and substantially above a

level of mediocre service that would

barely warrant renewal.

14. Section 22.507 is revised to read

as follows:

§ 22.507 Number of transmitters per

station.

This section concerns the number of

transmitters licensed under each station

authorization in the Paging and

Radiotelephone Service, other than

paging geographic area authorizations.

(a) Operationally related transmitters.

Each station must have at least one

transmitter. There is no limit to the

number of transmitters that a station

may comprise. However, transmitters

within a station should be operationally

related and/or should serve the same

general geographical area. Operationally

related transmitters are those that

operate together as a system (e.g.,

trunked systems, simulcast systems),

rather than independently.

(b) Split of large systems. The FCC

may split wide-area systems into two or

more stations for administrative

convenience. Except for nationwide

paging and other operationally related

transmitters, transmitters that are

widely separated geographically are not

licensed under a single authorization.

(c) Consolidation of separate stations.

The FCC may consolidate separately

authorized stations upon request (FCC
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11635

Form 600) of the licensee, if appropriate

under paragraph (a) of this section.

(d) Replacement of site-by-site

authorizations with single

authorization. After a paging geographic

area authorization for a channel has

been issued, the FCC may, on its own

motion, replace the authorization(s) of

any other licensee (for facilities located

within that paging geographic area on

that channel) with a single replacement

authorization.

15. Section 22.529 is revised to read

as follows:

§ 22.529 Application requirements for the

Paging and Radiotelephone Service.

In addition to information required by

Subparts B and D of this part,

applications for authorization in the

Paging and Radiotelephone Service

must contain the applicable information

and data described in this section.

(a) Administrative information. The

following information, associated with

Form FCC 600, Schedule A, is required

as indicated. Each application of any

type, including applications for paging

geographic area authorizations, must

contain one and only one Schedule A.

(1) The purpose of the filing is

required for each application of any

type.

(2) The geographic area designator,

channel and geographic area name are

required only for each application for a

paging geographic area authorization.

(3) The FCC control point number, if

any, the location (street address, city or

town, state), the telephone number and

an indication of the desired database

action are required only for each

application proposing to add or delete a

control point.

(4) The FCC location number, file

number and location (street address,

city or town, state) of authorized

facilities that have not been constructed

are required only for each application

requesting an extension of time to

construct those facilities.

(b) Technical data. The following

data, associated with FCC Form 600,

Schedule B, are required as indicated

for each application that is not an

application for a paging geographic area

authorization. Applications for a paging

geographic area authorization must not

contain Schedule B. Other type of

applications may contain as many

Schedule Bs as are necessary for the

intended purpose.

(1) For each transmitting antenna site

to be added, deleted or modified, the

following are required: An indication of

the desired database action, the FCC

location number, if any, the street

address or other description of the

transmitting antenna site, the city,

county and state, the geographical

coordinates (latitude and longitude),

correct to ≤1 second, of the

transmitting antenna site (NAD 27

required, NAD 83 optional), and in the

case of a proposed relocation of a

transmitting antenna, the FCC location

number and geographical coordinates,

correct to ≤1 second, of the current

transmitting antenna site, and an

indication of the datum (NAD 27 or

NAD 83) to which the geographical

coordinates of the current location are

referenced.

(2) For each transmitting antenna site

to be added, deleted or modified, the

following supplementary information is

required: An indication as to whether or

not the transmitting antenna site is

within 200 kilometers (124 miles) of the

U.S.-Mexico border, and an indication

as to whether or not the transmitting

antenna site is North of Line A or East

of Line C. Line A and Line C are defined

in § 2.1 of this chapter. For each

adjacent geographic area within 200

kilometers (124 miles) of each

transmitting antenna site to be added,

deleted or modified, the geographic area

designator and name, and the shortest

distance (in kilometers) to the boundary

of that geographic area.

(3) For each antenna to be added,

deleted or modified, the following is

required: An indication of the desired

database action, an indication of

whether the antenna already exists or is

merely proposed, the FCC antenna

number, if any, the type of antenna (e.g.,

collinear, Yagi, half-wave, corner

reflector, panel, etc.), the name of the

antenna manufacturer and the model

number of the antenna, the height (in

meters) above average terrain of the

center of radiation of the antenna, the

beamwidth of the main lobe of the

horizontal radiation pattern of the

electric field of the antenna, the height

(in meters) to the tip of the antenna

above ground level, a polar plot of the

horizontal gain pattern of the antenna,

the antenna gain in the maximum lobe

and the electric field polarization of the

wave emitted by the antenna when

installed as proposed.

(i) For each transmitter to be added,

deleted or modified, the following is

required: the FCC transmitter number, if

any, an indication of the desired

database action, the center frequency of

the requested channel, the transmitter

classification (e.g. base, fixed mobile),

the designator for any non-standard

emission type to be used, including

bandwidth and modulation type, and

the maximum effective radiated power.

(ii) For each of the eight cardinal

radials, the antenna height above the

average elevation along the radial, and

the effective radiated power of each

transmitter in the direction of the radial.

(iii) For each transmitter proposed to

transmit on a channel reserved for

point-to-multipoint operation involving

transmission to four or more points of

communications (i.e. base transmitters),

the following is required for each point

of communication: an indication of the

desired database action, the FCC

transmitter number or other key

indicator (e.g., I, II, III, IV), the location

(city or town, state), and the

geographical coordinates (latitude and

longitude, NAD 27).

16. Section 22.531 is amended by

revising the preceding centered heading,

the section heading and introductory

text, and adding a new paragraph (f), to

read as follows:

Paging Operation

§ 22.531 Channels for paging operation.

The following channels are allocated

for assignment to base transmitters that

provide paging service, either

individually or collectively under a

paging geographic area authorization.

Unless otherwise indicated, all channels

have a bandwidth of 20 kHz and are

designated by their center frequencies in

MegaHertz.

* * * * *

(f) For the purpose of issuing paging

geographic area authorizations, the

paging geographic areas used for the

UHF channels are the MTAs (see

§ 22.503(b)(2)), and the paging

geographic areas used for the low and

high VHF channels are the EAs (see

§ 22.503(b)(3)).

17. Section 22.539 is amended by

revising paragraph (e) to read as follows:

§ 22.539 Additional channel policies.

* * * * *

(e) Additional transmitters on same

channel. Notwithstanding other

provisions of this section, the following

applications are not considered to be

requests for an additional paging

channel:

(1) Applications for transmitters to be

located in the same geographic area as

an authorized station controlled by the

applicant, and to operate on the same

paging channel;

(2) Applications for transmitters to be

located within a paging geographic area

for which the applicant holds the paging

geographic area authorization for the

requested channel; and,

(3) Applications for paging geographic

area authorizations.

* * * * *

Section 22.551 is revised to read as

follows:
11636 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

§ 22.551 Nationwide network paging

service.

The rules in this section govern the

application for and provision of

nationwide network paging service on

the channels reserved specifically for

such service in § 22.531(b).

(a) Nationwide network providers;

organizers. If and when a nationwide

network paging channel becomes

available for assignment, the FCC will

issue a Public Notice inviting

applications from eligibles seeking to

provide or organize a nationwide

network paging service. The Public

Notice will provide complete details

regarding application requirements and

procedures. (b) Licensing. The FCC may issue a

paging geographic area authorization to

the nationwide network provider or

organizer. All transmissions of

nationwide network messages on the

channels reserved for such service in

§ 22.531(b) are authorized solely under

the authorization(s) of the nationwide

network provider or organizer,

notwithstanding whether or not the

messages pass through facilities owned,

operated or licensed to affiliated local

carriers.

Section 22.559 is amended by revising

the heading and introductory text to

read as follows:

§ 22.559 Paging application requirements.

In addition to information required by

Subparts B and D and § 22.529,

applications for authorization to operate

a paging transmitter on the channels

listed in § 22.531, other than

applications for a paging geographic

area authorization, must contain the

applicable supplementary information

described in this section.

* * * * *

Section 22.561 is amended by revising

the introductory text to read as follows:

§ 22.561 Channels for one-way or two-way

mobile operation.

The following channels are allocated

for paired assignment to transmitters

that provide (or support other

transmitters that provide) one-way or

two-way public land mobile service,

either individually or collectively under

a paging geographic area authorization.

The paging geographic areas used for

these channels are the EAs (see

§ 22.503(b)(3)). These channels may be

assigned for use by mobile or base

transmitters as indicated, and or by

fixed transmitters (including control,

repeater or other fixed transmitters). The

mobile channels may also be assigned

for use by base or fixed transmitters

under certain circumstances (see

§ 22.567(h)). Unless otherwise

indicated, all channels have a

bandwidth of 20 kHz and are designated

by their center frequencies in

MegaHertz.

* * * * *

Section 22.569 is amended by revising

paragraph (d) to read as follows:

§ 22.569 Additional channel policies.

* * * * *

(d) Additional transmitters on same

channel. Notwithstanding other

provisions of this section, the following

applications are not considered to be

requests for an additional channel: (1) Applications for transmitters to be

located in the same geographic area as

an authorized station controlled by the

applicant, and to operate on the same

paging channel; (2) Applications for transmitters to be

located within a paging geographic area

for which the applicant holds the paging

geographic area authorization for the

requested channel; and, (3) Applications for paging geographic

area authorizations.

* * * * *

Section 22.589 is amended by revising

the introductory text to read as follows:

§ 22.589 One-way or two-way application

requirements.

In addition to information required by

subparts B and D and § 22.529,

applications for authorization to operate

a paging transmitter on the channels

listed in § 22.531, other than

applications for a paging geographic

area authorization, must contain the

applicable supplementary information

described in this section.

* * * * *

§ 22.717 [Amended]

Section 22.717 is amended by

removing paragraph (c). A new § 22.721 is added to read as

follows:

§ 22.721 Geographic area authorizations.

Eligible persons may apply for a

paging geographic area authorization in

the Rural Radiotelephone Service, on

the channel pairs listed in § 22.725, by

following the procedures and

requirements set forth in § 22.503 for

paging geographic area authorizations. 25. A new § 22.723 is added to read

as follows:

§ 22.723 Secondary site-by-site

authorizations.

Authorizations for new facilities

(including new sites and additional

channel pairs for existing sites) in the

Rural Radiotelephone Service

(including BETRS facilities) may be

granted after May 12, 1997 only on the

condition that such authorizations shall

be secondary to any existing or future

co-channel paging geographic area

authorization in the Paging and

Radiotelephone Service or the Rural

Radiotelephone Service. If the paging

geographic area licensee notifies the

Rural Radiotelephone Service licensee

that operation of a co-channel secondary

facility must be discontinued because it

may cause interference to existing or

planned facilities, the Rural

Radiotelephone Service licensee must

discontinue operation of that facility on

the particular channel pair involved no

later than six months after such notice.

II. Part 90 of Chapter I of Title 47 of

the Code of Federal Regulations is

amended as follows:

1. The authority citation for part 90

continues to read as follows:

PART 90—PRIVATE LAND MOBILE

RADIO SERVICES

Authority: Sec. 4, 303, 309, and 332, 48

Stat. 1066, 1082, as amended; 47 U.S.C 154,

303, 309, and 332, unless otherwise noted.

2. Section 90.162 is amended by

adding paragraph (f) to read as follows:

§ 90.162 Agreements to dismiss

applications, amendments, or pleadings

* * * * *

(f) Notwithstanding the provisions of

this section, any payments made or

received in exchange for withdrawing a

short-form application for an FCC

authorization awarded through

competitive bidding shall be subject to

the restrictions set forth in section

§ 1.2105(c) of this chapter.

3. A new § 90.493 is added to read as

follows:

§ 90.493 Paging operations on exclusive

channels in the 929–930 MHz band.

Paging operations on the exclusive

channels in the 929–930 MHz band are

subject to the rules set forth in this

section.

(a) Exclusive channels. The center

frequencies of the channels in the 929–

930 MHz band that may be assigned on

an exclusive basis are as follows:

929.0125, 929.1125, 929.1375, 929.1875,

929.2125, 929.2375, 929.2875, 929.3125,

929.3375, 929.3625, 929.3875, 929.4125,

929.4375, 929.4625, 929.4875, 929.5125,

929.5375, 929.5625, 929.5875, 929.6125,

929.6375, 929.6625, 929.6875, 929.7125,

929.7375, 929.7625, 929.7875, 929.8125,

929.8375, 929.8625, 929.8875, 929.9125,

929.9375, 929.9625, and 929.9875 MHz.

(b) Part 22 licensing, construction and

operation rules apply. Licensing,

construction and operation of paging

stations on the exclusive channels in the

929–930 MHz band are subject to the

application filing, licensing procedure,

auction procedure, construction,

operation and notification rules and

requirements that are set forth in part 22
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11637

of this chapter for paging stations

operating in the 931–932 MHz band,

instead of procedures elsewhere in this

part.

(c) Part 22 power limits apply; type

acceptance required. Paging operations

on the exclusive channels in the 929–

930 MHz band are subject to the

transmitting power limits set forth in

part 22 of this chapter for paging

stations operating in the 931–932 MHz

band, instead of power limits elsewhere

in this part. Transmitters used on the

exclusive channels in the 929–930 MHz

band must be of a type accepted under

either part 22 of this chapter or this part

(or both).

4. Section 90.494 is amended by

revising the heading, paragraphs (a), (f)

and (g), to read as follows:

§ 90.494 Paging operations on shared

channels in the 929–930 MHz band.

(a) This section applies to licensing of

paging stations on the shared (nonexclusive) channels in the 929–930 MHz

band. The center frequencies of these

channels are listed in paragraph (b) of

this section.

* * * * *

(f) The effective radiated power for

base stations providing paging service

on the shared channels must not exceed

3500 Watts.

(g) Licenses may be granted on these

shared paging channels only for

expansion (addition of new sites or

relocation of existing sites) or other

modification, assignment or transfer of

control of existing, licensed private

(including Special Emergency Radio

Service) or commercial paging systems,

and for new private (including Special

Emergency Radio Service), internal-use

paging systems. Any application for

authority to operate a new commercial

paging system on any of these shared

channels is unacceptable for filing.

§ 90.495 [Removed]

5. Section 90.495 is removed.

§ 90.496 [Removed]

6. Section 90.496 is removed.

[FR Doc. 97–6092 Filed 3–11–97; 8:45 am]

BILLING CODE 6712–01–P