23148 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

Source of flooding and location

#Depth in

feet above

ground.

*Elevation

in feet

(NGVD)

Yellow Creek:

2.5 miles upstream of confluence with Ohio River ........ *397

Just downstream of State

Road 144 .............................. *391

Van Buren Creek 70 (flooding

controlled by Ohio River):

At confluence of Van Buren

Creek 70 and Yellow River .. *391

Unnamed Tributary to Van Buren

Creek 70:

At confluence of unnamed tributary to Van Buren Creek 70

and Van Buren Creek .......... *391

Approximately 1,000 feet upstream of State Road 390 .... *391

Maps available for inspection

at the Daviess County Courthouse, 212 St. Ann Street,

Owensboro, Kentucky.

NEW HAMPSHIRE

Keene (City), Cheshire County

(FEMA Docket No. 7199)

Black Brook:

Downstream side of Wilson

Pond Dam ............................ *501

Approximately 1.19 miles upstream of State Route 12 ..... *520

Maps available for inspection

at the Code Enforcement Department, 3 Washington Street,

4th Floor, Keene, New Hampshire.

PENNSYLVANIA

Lock Haven (City), Clinton

County (FEMA Docket No.

7195)

Sugar Run:

At its confluence with West

Branch Susquehanna River *572

Approximately 330 feet upstream of State Route 120 ... *572

Maps available for inspection

at the Lock Haven City Engineer’s Office, Lock Haven City

Hall, 20 East Church Street,

Lock Haven, Pennsylvania.

Woodward (Township), Clinton County (FEMA Docket

No. 7195)

West Branch Susquehanna

River:

Approximately 1 mile downstream of Woodward Avenue *564

Approximately 800 feet upstream of CONRAIL ............. *579

Reeds Run:

At confluence with West

Branch Susquehanna River *566

Approximately 900 feet upstream of Church Street ....... *566

Queens Run:

At confluence with West

Branch Susquehanna River *576

Source of flooding and location

#Depth in

feet above

ground.

*Elevation

in feet

(NGVD)

Approximately 550 feet upstream of Farransville Road *576

Maps available for inspection

at the Woodward Township

Building, 101 Riverside Terrace, Lock Haven, Pennsylvania.

(Catalog of Federal Domestic Assistance No.

83.100, ‘‘Flood Insurance.’’)

Dated: April 16, 1997.

Richard W. Krimm,

Executive Associate Director, Mitigation

Directorate.

[FR Doc. 97–11002 Filed 4–28–97; 8:45 am]

BILLING CODE 6718–04–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Parts 1, 2, 74, 78, 95, and 101

[CC Docket No. 92–297: FCC 97–82]

Use of the 28 GHz and 31 GHz Bands

for Local Multipoint Distribution

Service

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Commission adopts a

Second Report and Order, Order on

Reconsideration, and Fifth Notice of

Proposed Rulemaking in this

proceeding. A summary of the Fifth

Notice of Proposed Rulemaking portion

of this decision was published in the

April 7, 1997 issue of the Federal

Register (62 FR 16514),and seeks

comment on specific rules to be applied

for the partitioning and disaggregation

of LMDS licenses. The Second Report

and Order designates an additional 300

megahertz of spectrum in the 31 GHz

band to LMDS and adopts service rules

for LMDS, as well as competitive

bidding rules for LMDS spectrum. The

Order on Reconsideration denies

petitions for reconsideration of the

Commission’s dismissal of applications

for waiver of the Commission’s point-topoint rules governing the 28 GHz band.

The Second Report and Order contains

modified information collections subject

to the Paperwork Reduction Act of 1995

and has been submitted to the Office of

Management and Budget (OMB) for

review under the PRA. OMB, the

general public, and other Federal

agencies are invited to comment on the

modified information collections

contained in this proceeding.

DATES: The rules in this document will

become effective June 30, 1997;

applications to modify existing 31 GHz

licenses must be filed no later than July

14, 1997. Written comments by the

public on the revised information

collections are due by April 21, 1997.

ADDRESSES: Secretary, Federal

Communications Commission,

Washington, D.C. 20554. In addition to

filing comments with the Secretary, a

copy of any comments on the

information collections contained

herein should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, D.C. 20554, or via

the Internet to dconway@fcc.gov., and to

Timothy Fain, OMB Desk Officer, 10236

NEOB, 725—17th Street, N.W.,

Washington, D.C. 20503 or via the

Internet at fainlt@al.eop.gov. For

additional information regarding the

information collections contained

herein, contact Dorothy Conway at 202–

418–0217 or via the Internet at

dconway@fcc.gov.

FOR FURTHER INFORMATION CONTACT: Bob

James, Private Wireless Division,

(202)418–0680, Mark Bollinger or Jay

Whaley, Auctions Division, (202)418–

0660, or Joseph Levin or Jane Phillips,

Policy Division, (202) 418–1310.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Second Report and

Order and Order on Reconsideration

segment of the Second Report and

Order, Order on Reconsideration and

Fifth Notice of Proposed Rulemaking in

CC Docket No. 92–297, PP–22, FCC 97–

82, adopted March 11, 1997, and

released March 13, 1997. A summary of

the Fifth Notice of Proposed Rulemaking

portion of this decision was published

in the April 7, 1997 issue of the Federal

Register (62 FR 16514). The complete

text of this decision is available for

inspection and copying during normal

business hours in the FCC Reference

Center (Room 239), 1919 M Street, N.W.,

Washington, D.C., and also may be

purchased from the Commission’s copy

contractor, International Transcription

Service, (202) 857–3800, 2100 M Street,

N.W., Suite 140, Washington, DC 20037.

Paperwork Reduction Act

The Second Report and Order

contains a modified information

collection. The Commission, as part of

its continuing effort to reduce

paperwork burdens, invites the general

public and OMB to comment on the

information collections contained in the

Second Report and Order, as required

by the Paperwork Reduction Act of
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23149

1995, Public Law 104–13. Public and

agency comments are due May 29, 1997;

OMB notification of action is due June

30, 1997. Comments should address: (a)

Whether the proposed collection of

information is necessary for the proper

performance of the functions of the

Commission, including whether the

information shall have practical utility;

(b) the accuracy of the Commission’s

burden estimates; (c) ways to enhance

the quality, utility, and clarity of the

information collected; and (d) ways to

minimize the burden of the collection of

information on the respondents,

including the use of automated

collection techniques or other forms of

information technology. OMB Approval Number: 3060–0531.

Title: Redesignation of 27.5 GHz

Frequency Band, Establishing Rules and

Policies for Local Multipoint

Distribution (NPRM CC Docket No. 92–

297).

Form No.: N/A.

Type of Review: Reinstatement, with

change, of a previously approved

collection for which approval has

expired. Respondents: Business or other forprofit entities. Number of Respondents: 986.

Estimated Time Per Response: 41

hours.

Total Annual Burden: 30,381.5 hours.

Total Annual Cost: $2,025,400.

Needs and Uses: The information

requested will be used by FCC

personnel to determine whether the

applicant is qualified legally and

technically to be licensed to use the

radio spectrum. The original NPRM

sought comment on rules governing a

substantial number of filings that an

estimated 10,000 applicants would

make. It was estimated that an average

of 8 hours per respondent would be

required to comply with the proposed

requirements. The Second Report and

Order revised these requirements and

burdens to three specific burdens

involving frequency coordination,

discontinuance of service, and

certification of construction

requirements/renewal expendancy for

an estimated 986 respondents that

would take an average of 41 hours to

comply with the rules.

I. Designation and Licensing of

Spectrum

A. 31 GHz Band and Number of

Licenses

1. The Second Report and Order

allocates an additional 300 megahertz of

spectrum in the 31 GHz band (31.0–

31.3) for LMDS. It also adopts the use

of Basic Trading Areas (BTAs) for

licensing areas. Two licenses, of

unequal size, are proposed for each

BTA. The larger license is for 1150

megahertz, 1000 megahertz of which is

located in the 28 GHz band (27.5–29.5)

and 150 of which is located in the

center of the 300 megahertz segment in

the 31 GHz band. The smaller license is

for a total of 150 megahertz, consisting

of 75 megahertz at either end of the 150

megahertz segment in the 31 GHz band

allocated to LMDS. Incumbent

governmental licensees and private

business users presently operating in

the 75-megahertz segments of the band

encompassed by the smaller, 150

megahertz LMDS license, will be

accorded protection from interference

from the LMDS operator in that band.

(No interference protection will be

accorded to incumbents operating on a

temporary basis in the 31 GHz band.)

The reverse will be the case with the

1150 megahertz LMDS license. The

1150 megahertz LMDS licensee will be

accorded protection from interference

from all incumbents operating in the

center 150 megahertz segment of the 31

GHz band. However, incumbent

governmental licensees and private

business users in that segment will be

permitted to migrate to the 75-

megahertz segments encompassed by

the smaller LMDS license in order to

obtain the protections offered such

incumbents in that band, provided they

file an application to modify their

licenses no later than July 14, 1997.

These applications will not be subject to

petitions to deny. Applications for new

facilities in the 31 GHz band are frozen.

B. Eligibility

2. LECs and cable companies are

barred from owning 1150 megahertz

LMDS licenses that are ‘‘in-region.’’

Incumbent LECs and cable companies

may participate fully in the auction of

1150 MHz licenses, including the

auction of in-region licenses, so long as

they come into compliance with the

restrictions within 90 days by divesting

telephone or cable assets, or partitioning

the LMDS license. An incumbent will

be defined as in-region if its authorized

service area represents 10 percent or

more of the population of the BTA; a 20

percent or greater ownership level will

constitute an attributable interest in a

license. These restrictions will

terminate on the third anniversary of the

close of the auction, unless extended by

the Commission. Parties may seek

waivers to shorten the restriction

period.

C. Buildout and Flexibility of Use

3. LMDS licensees will be subject to

liberal construction requirements.

LMDS licensees may disaggregate or

partition a license at any time, with

certain restrictions for licensees taking

advantage of bidding credits or

installment payments. (The Fifth Notice

of Proposed Rulemaking portion of this

decision proposes specific provisions

regarding partitioning and

disaggregation.) Licensees also have the

flexibility to choose whether they want

to offer common carrier or private

carrier services, or both.

D. Petitions for Reconsideration and

Pioneer’s Preference

4. The Commission has also deferred

decision on CellularVision’s pioneer’s

preference request until completion of a

peer review of CellularVision’s

technology, and issues concerning the

pioneer’s preference license for the

portion of the New York Basic Trading

Area lying outside of the New York

Primary Metropolitan Statistical Area

already licensed to CellularVision are

pending the outcome of such review

process and final disposition of its

preference request. Finally, the Order

denies the petitions for reconsideration

of the Commission’s decision to dismiss

waiver applications filed by entities

seeking a license under Hye Crest

Management, Inc.

II. Competitive Bidding Rules and

Procedures

A. Use of Competitive Bidding

5. The Commission concludes that

auctioning LMDS licenses would further

the Communications Act’s objectives.

First, based on its previous experience

in conducting auctions for other

services, the Commission believes that

use of competitive bidding to award

LMDS licenses, as compared with other

licensing methods, would speed the

development and deployment of this

new technology, products and services

to the public with minimal

administrative or judicial delay, and

would encourage efficient use of the

spectrum as required by Sections

309(j)(3)(A) and 309(j)(3)(D), 47 U.S.C.

§§ 309(j)(3)(A) & 309(j)(3)(D). Second,

auctions meet the objectives of Section

309(j)(3)(B), 47 U.S.C. § 309(j)(3)(B),

because the Commission is adopting

competitive bidding rules that foster

economic opportunity and the

distribution of licenses among a wide

variety of applicants, including small

businesses.

6. The Commission also has

determined that the use of auctions to

assign LMDS licenses will advance the

goals of 47 U.S.C. § 309(j)(3)(C) by

enabling the public to recover a portion

of the value of the public spectrum. If

the Commission uses a licensing
23150 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

methodology that ensures that licenses

are assigned to those who value them

most highly, it follows that such

licensees can be expected to make the

most efficient and intensive use of the

spectrum. Because LMDS is eligible for

competitive bidding under the statutory

requirements set forth in 47 U.S.C.

§ 309(j)(2)(A), the Commission is

precluded from using lotteries to award

LMDS licenses. Accordingly, the

Commission rejects the suggestion that

the Commission use lotteries to award

LMDS licenses.

7. The Commission also declines at

this time to set aside LMDS spectrum

for educational purposes. While the

Commission is not adopting public

interest programming obligations at this

time, it reserves the right to do so on

LMDS providers who provide video

services. Licensees are specifically on

notice that the Commission may adopt

public interest requirements at a later

date. If public interest obligations are

found to be warranted, one option

would be to adopt rules similar to those

Congress enacted for Direct Broadcast

Satellite providers, including a 4

percent to 7 percent set-aside of

capacity for non-commercial

educational and informational

programming. See 47 U.S.C. § 335.

Another option would be to hold LMDS

licensees to a ‘‘promise versus

performance’’ type standard.

B. Competitive Bidding Design for LMDS

Licenses

8. Based on the record in this

proceeding and its successful

experience conducting simultaneous

multiple round auctions for other

services, the Commission believes a

simultaneous multiple round auction is

the most appropriate competitive

bidding design for LMDS. First, for

certain bidders, the value of these

licenses will be significantly

interdependent because of the

desirability of aggregation across

geographic regions. Simultaneous

multiple round bidding will generate

more information about license values

during the course of the auction, and

provide bidders with more flexibility to

pursue back-up strategies, than

auctioning licenses separately.

Simultaneous multiple round bidding

therefore is most likely to award

licenses to the bidders who value them

the most highly and to provide bidders

with the greatest likelihood of obtaining

the license combinations that best

satisfy their service needs. The

Commission currently does not have the

operational capability to use

combinatorial bidding but will consider

doing so in future auctions.

9. The Commission will conduct

simultaneous auctions of two licenses in

each of 492 BTAs for LMDS, for a total

of 984 licenses. Each BTA will have one

license consisting of 1,150 megahertz:

1,000 megahertz in the 28 GHz band

(27.5–28.35 GHz and 29.1–29.25 GHz)

and 150 megahertz in the 31 GHz band

(31.075 GHz–31.225 GHz); and a second

license consisting of 150 megahertz in

the 31 GHz band (31.0–31.075 GHz and

31.225–31.399 GHz) will be auctioned

concurrently. The Commission will not

include the New York BTA at this time

in the licensing process because of the

outstanding issues connected with the

CellularVision pioneer preference

request.

10. The Commission will use the

competitive bidding procedures of part

1, subpart Q, for LMDS with

modifications as indicated below.

1. Bid Increments and Tie Bids

11. As it has done for previous

auctions, the Commission will

announce by Public Notice prior to the

LMDS auction the general guidelines for

bid increments. The Commission retains

the discretion to set and, by

announcement before or during the

auction, vary the minimum bid

increments for individual licenses or

groups of licenses. Where a tie bid

occurs, the Commission will determine

the high bidder by the order in which

the Commission received the bids. The

Commission retains the discretion to

vary both absolute and percentage bid

increments for specific licenses.

2. Stopping Rules

12. The Commission will use a

simultaneous stopping rule for LMDS.

The auction will close after one round

passes in which no new valid bids,

proactive activity rule waivers, or bid

withdrawals are submitted. The

Commission will retain the discretion,

however, to keep the auction open even

if no new valid bids, proactive waivers,

or bid withdrawals are submitted. In the

event that this discretion is exercised,

the effect will be the same as if a bidder

had submitted a proactive waiver. This

will help ensure that the auction is

completed within a reasonable period of

time, because it will enable the

Commission to utilize larger bid

increments, which speed the pace of the

auction, without risking premature

closing of the auction. Since it also

imposes an activity rule, the

Commission believes that allowing

simultaneous closing for all licenses

will afford bidders flexibility to pursue

back-up strategies without running the

risk that bidders will hold back their

bidding until the final rounds. In

addition, the Commission retains the

discretion to declare after forty rounds

that the auction will end after some

specified number of additional rounds.

If this option is used, the Commission

will only accept bids on licenses where

the high bid has increased in at least

one of the last three rounds.

3. Duration of Bidding Rounds

13. Because in simultaneous multiple

round auctions bidders may need a

significant amount of time to evaluate

back-up strategies and develop their

bidding plans, the Commission reserves

the discretion to vary the duration and

frequency of bidding rounds. The

Commission will announce any changes

to the duration of and intervals between

bidding either by Public Notice prior to

the auction or by announcement during

the auction.

4. Bid Withdrawals

14. Because the Commission is

awarding two licenses of different size

(1,150 megahertz and 150 megahertz)

per geographic area, the Commission

finds it unnecessary to address the

merits of comments predicated on the

assumption that the Commission would

award two LMDS licenses of equal size.

The Commission will not make use of

a bid withdrawal period within each

round as in previous auctions, but will

permit a high bidder to withdraw the

high bid from a previous round subject

to the bid withdrawal payments

discussed below. If a high bid is

withdrawn (and not bid upon in the

same round), the license will be offered

in the next round at the second highest

bid price. The Commission may at its

discretion adjust the offer price in

subsequent rounds until a valid bid is

received on the license. In addition, to

prevent a bidder from strategically

delaying the close of the auction, the

Commission retains the discretion to

limit the number of times that a bidder

may re-bid on a license from which it

has withdrawn a high bid.

5. Activity Rules

15. For LMDS auctions, the

Commission will use the MilgromWilson activity rule with some

variations. Milgrom and Wilson divide

the auction into three stages. The

Commission will set, by announcement

before the auction, the minimum

required activity levels for each stage of

the auction. The Commission retains the

discretion to set and, by announcement

before or during the auction, vary the

required minimum activity levels (and

associated eligibility calculations) for

each auction stage. Retaining this

flexibility will improve its ability to
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23151

control the pace of the auction and help

ensure that the auction is completed

within a reasonable period of time.

16. For the LMDS auctions, the

Commission will use the following

transition guidelines: The auction will

begin in Stage One and will generally

move from Stage One to Stage Two and

from Stage Two to Stage Three when the

auction activity level is below ten

percent for three consecutive rounds.

Under no circumstances can the auction

revert to an earlier stage. However, the

Commission retains the discretion to

determine and announce during the

course of an auction when, and

whether, to move from one auction stage

to the next, based on a variety of

measures of bidder activity, including,

but not limited to, the auction activity

level as defined above, the percentage of

licenses (measured in terms of bidding

units) on which there are new bids, the

number of new bids, and the percentage

increase in revenue.

17. 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, the Commission

will provide bidders with a limited

number of waivers of the abovedescribed activity rule. The Commission

believes that some waiver procedure is

needed because the Commission does

not wish to reduce a bidder’s eligibility

due to an accidental act or

circumstances not under the bidder’s

control.

18. The Commission will provide

bidders with five activity rule waivers

that may be used in any round during

the course of the auction. If a bidder’s

activity is below the required activity

level, a waiver will be applied

automatically. That is, for example, if a

bidder fails to submit a bid in a round,

and its activity from any standing high

bids (that is, high bids at the end of the

previous round) falls below its required

activity level, a waiver will be

automatically applied. A waiver will

preserve current eligibility in the next

round. An activity rule waiver applies

to an entire round of bidding and not to

a particular BTA service area.

19. Bidders will be afforded an

opportunity to override the automatic

waiver mechanism when they place a

bid if they intentionally 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 will be permanently reduced,

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 new valid

bids will not keep the auction open.

Bidders will have the option of entering

a proactive activity rule waiver during

any round. If a bidder submits a

proactive waiver in a round in which no

other bidding activity occurs, the

auction will remain open.

20. 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.

C. Procedural and Payment Issues

21. The Commission will generally

follow the procedural and payment

rules established in subpart Q of part 1

of the Commission’s Rules. Any servicespecific modifications based on the

particular characteristics of LMDS will

be set forth by Public Notice by the

Wireless Telecommunications Bureau.

1. Upfront Payments

22. The Commission recognizes that

for purposes of LMDS the formula of

$0.02 per MHz-pop can yield very high

upfront payments given the amount of

spectrum offered in each service area.

The Commission believes that the

concerns of commenters about

potentially high payments may be

alleviated by lowering the amount per

MHz-pop used to calculate the payment.

The Commission delegates authority to

the Chief, Wireless Telecommunications

Bureau, to determine an appropriate

calculation for the upfront payment,

which the Bureau will announce by

Public Notice. In calculating the upfront

payment, the Bureau should take into

consideration the value of similar

spectrum.

2. Down Payments, Long-Form

Applications, and Payment in Full

23. The Commission will require all

winning bidders in LMDS auctions to

supplement their upfront payments

with a down payment sufficient to bring

their total deposits up to 20 percent of

their winning bid(s). Winning bidders,

except for small businesses and

businesses with annual gross revenues

between $40 million and $75 million,

will be required to submit this payment

by wire transfer to the Commission’s

lock-box bank within ten business days

following release of a public notice

announcing the close of bidding and

high bidders. Winning bidders will also

be required to file a long-form

application within ten business days of

the announcement of the high bidders.

If, pursuant to section 309(d) of the

Communications Act, the Commission

dismisses or denies any and all petitions

to deny filed against a long-form

application, or if no petitions to deny

are filed, the Commission will issue an

announcement to this effect, and the

winning bidder will then have ten

business days to submit the balance of

its winning bid, unless it qualifies for an

installment payment plan.

3. Bid Withdrawal, Default, and

Disqualification Payments

24. For the LMDS auctions, the

Commission adopts the bid withdrawal,

default and disqualification rules

contained in sections 1.2104(g) and

1.2109 of the Commission’s Rules. If a

license is re-offered by auction, the

‘‘winning bid’’ refers to the high bid in

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

same auction, the winning bid refers to

the high bid amount, made subsequent

to the withdrawal, in that auction. If the

subsequent high bidder also withdraws

its bid, that bidder will be required to

pay an amount equal to the difference

between its withdrawn bid and the

amount of the subsequent winning bid

the next time the license is offered by

the Commission. If a license that is the

subject of withdrawal or default is not

re-auctioned, but is instead offered to

the highest losing bidders in the initial

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

bid of the highest bidder who accepts

the offer. The Commission recently

addressed the issue of how its bid

withdrawal provisions apply to bids

that are mistakenly placed and

withdrawn in a decision involving the

900 MHz Specialized Mobile Radio

(‘‘SMR’’) and broadband personal

communications services (‘‘PCS’’) C

block auctions. See Atlanta Trunking

Associates, Inc. and MAP Wireless

L.L.C. Request To Waive Bid

Withdrawal Payment Provisions, FCC

96–203, Order (released May 3, 1996)

(summarized in 61 FR 25,807 (May 23,

1996)), recon. pending.

25. If a bidder has withdrawn a bid or

defaulted on one or more licenses 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 on such licenses. When it

becomes possible to calculate and assess

the withdrawal or default payment, any

excess deposit will be refunded. Upfront

payments will be applied to such

deposits and to bid withdrawal and

default payments due before being

applied toward the bidder’s down
23152 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

payment on licenses the bidder has won

and seeks to acquire.

26. In addition, if a default or

disqualification involves gross

misconduct, misrepresentation or bad

faith by an applicant, the Commission

retains the option to declare the

applicant and its principals ineligible to

bid in future auctions, or take any other

action the Commission deems

necessary, including institution of

proceedings to revoke any existing

licenses held by the applicant.

D. Regulatory Safeguards

1. Transfer Disclosure

27. 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. § (j)(4)(E). The

Commission will adopt the transfer

disclosure requirements contained in

Section 1.2111(a) of the Commission’s

Rules, 47 CFR § 1.2111(a), for all LMDS

licenses obtained through the

competitive bidding process.

2. Anti-Collusion Rules

28. The Commission will apply the

anti-collusion rules set forth in Sections

1.2105 and 1.2107 of the Commission’s

Rules, 47 CFR §§ 1.2105 & 1.2107, to

LMDS auctions. In addition, where

specific instances of collusion in the

competitive bidding process are alleged

in petitions to deny, 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 or the Commission’s

rules in connection with participation

in the auction process may be subject to

forfeiture of their down payment or

their full bid amount and revocation of

their license(s), and they may be

prohibited from participating in future

auctions.

E. Treatment of Designated Entities

1. Overview

29. The Commission is committed to

meeting the objectives of 47 U.S.C.

§ 309(j) 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. In

Adarand Constructors v. Pen ̃ a, 115 S.

Ct. 2097 (1995), the Supreme Court held

that federal race-based measures are

subject to strict scrutiny. Gender-based

measures, on the other hand, are

required to meet an intermediate

standard of review. United States v.

Commonwealth of Virginia, 116 S. Ct.

2264 (1996). Because commenters have

submitted no evidence or data to

support LMDS race- or gender-based

auction provisions, the Commission

concludes that it does not have a

sufficient record to support such special

provisions at this time. The Commission

therefore adopts installment payments

and bidding credits for small businesses

in LMDS auctions as detailed below.

The Commission believes that these

special provisions will provide small

businesses with a meaningful

opportunity to obtain LMDS licenses.

Moreover, many minority- and womenowned entities are small businesses and

will therefore qualify for these same

special provisions.

2. Installment Payments, Upfront

Payments, Down Payments, and Unjust

Enrichment

30. In order to promote the innovation

that small businesses can bring to the

development of LMDS, the Commission

adopts installment payments for small

businesses bidding for LMDS licenses.

The Commission will define small

businesses as entities that, together with

affiliates and controlling principals,

have average gross revenues not

exceeding $40 million for the three

preceding years. Because considerable

capital will be needed to bring LMDS to

the public, the Commission also makes

provision for entities with gross

revenues exceeding $40 million and

will provide for installment payments

for entities with $75 million or less in

average gross revenues for the three

preceding years. The Commission

believes that the high cost of LMDS and

the presence of very large companies in

the markets for various LMDS services

make this option fully consistent with

Congress’s intent in enacting 47 U.S.C.

§ 309(j)(4)(A) to avoid a competitive

bidding program that has the effect of

favoring communications providers

with established revenue streams over

smaller entities.

31. Under the rules adopted,

installment payments will be available

to applicants that, together with

affiliates and controlling principals,

have average gross revenues for the

three preceding years of more than $40

million but not more than $75 million.

Interest on their installment payments

will be equal to the rate for U.S.

Treasury obligations of maturity equal

to the license term, fixed at the time of

licensing, plus 2.5 percent. Payments of

interest and principal shall be amortized

over the ten years of the license term.

Small businesses—i.e., applicants that,

together with affiliates and controlling

principals, have average gross revenues

for the three preceding years not

exceeding $40 million—will be eligible

for installment payments at an interest

rate based on the rate for U.S. Treasury

obligations of maturity equal to the

license term, fixed at the time of

licensing, plus 2.5 percent (the same

rate as that imposed on entities with $40

million to $75 million in average gross

revenues). Payments for small

businesses shall include interest only

for the first two years and payments of

interest and principal amortized over

the remaining eight years of the license

term. The rate of interest on the 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.

32. The Commission believes it is

appropriate to also adopt the unjust

enrichment provisions of its broadband

PCS rules in order to prevent large

companies from becoming the

unintended beneficiaries of these

installment payment plans. The

Commission believes that these rules are

preferable to its current general unjust

enrichment rules set forth at 47 CFR

§ 1.2111(c) because they provide greater

specificity about funds due at the time

of transfer or assignment and

specifically address changes in

ownership that would result in loss of

eligibility for installment payments,

which the general rules do not address.

These rules specify that applicants

seeking to assign or transfer control of

a license to an entity not meeting the

eligibility standards for installment

payments must pay not only unpaid

principal as a condition of Commission

approval but also any unpaid interest

accrued through the date of assignment

or transfer.

33. Additionally, these rules provide

that if a licensee utilizing installment

payment financing seeks to change its

ownership structure in such a way that

would result in a loss of eligibility for

installment payments, it must pay the

unpaid principal and accrued interest as

a condition of Commission approval of

the change. Finally, in recognition of the

tiered installment payment plans

offered to broadband PCS licensees, the

rule provides that if a licensee seeks to

make any change in ownership that

would result in the licensee qualifying

for a less favorable installment plan, it

must seek Commission approval of such
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23153

a change and adjust its payment plan to

reflect its new eligibility status. A

licensee, under this rule, may not

switch its payment plan to a more

favorable plan.

34. For purposes of determining small

business status, or status as a business

with average gross revenues of more

than $40 million but not more than $75

million, the Commission will attribute

the gross revenues of all controlling

principals and affiliates of the small

business applicant. The Commission

chooses not to impose specific equity

requirements on controlling principals.

The Commission will still require,

however, that in order for an applicant

to qualify as a small business, qualifying

small business principals must maintain

control of the applicant. The term

‘‘control’’ includes both de facto and de

jure control of the applicant. 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 day-to-day activities of the

licensees; 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.

35. The Commission adopts a uniform

upfront payment for all bidders. Its

experience in previous auctions

indicates that the Commission has

underestimated the value of spectrum

and that upfront payments have not

created a barrier to small business

participation in its auctions. The

Commission believes that this action is

consistent with its policy reason for

requiring upfront payments—to deter

insincere and speculative bidding and

to ensure that bidders have the financial

capacity to build out their systems.

36. With regard to reduced down

payments for small businesses, its

experience in previous auctions leads

the Commission to adopt a uniform 20

percent down payment provision for all

bidders. The Commission believes that

this sizeable down payment will

discourage insincere bidding and

increase the likelihood that licenses are

awarded to parties who are best able to

serve the public. A 20 percent down

payment should also provide a strong

assurance against default and sufficient

funds to cover default payments in the

unlikely event of default. Small

businesses and entities with average

gross revenues for the preceding three

years of between $40 million and $75

million will be required to supplement

their upfront payments to bring their

total payment to 10 percent of their

winning bids within 10 business days of

a public notice announcing the close of

the auction. Prior to licensing, they will

be required to pay an additional 10

percent. The government will then

finance the remaining 80 percent of the

purchase price.

3. Bidding Credits and Unjust

Enrichment

37. Based on the record before it, the

Commission adopts a 25 percent

bidding credit for small businesses in

LMDS auctions, and a 15 percent

bidding credit for entities with average

gross revenues of more than $40 million

but not exceeding $75 million.

Commenters who advocated higher

credits offered no data upon which to

base such credits. The Commission

declines to adopt a bidding credit for

commercial entities that set aside part of

their capacity for educational

institutions at preferential rates. At this

time, the Commission does not believe

that it has an adequate record regarding

the legal and policy implications of

such bidding credits.

38. The Commission believes it is

appropriate to align its unjust

enrichment rules for LMDS with its

narrowband PCS and 900 MHz SMR

unjust enrichment rules as they relate to

bidding credits. 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 total 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 transfer

will be permitted.

39. The rules which the Commission

now adopts additionally provide that, if,

within the original term, a licensee

applies to assign or transfer control of a

license to an entity that is eligible for a

lower bidding credit, the difference

between the bidding credit obtained by

the assigning party and the bidding

credit for which the acquiring party

would qualify, plus interest at the rate

imposed for installment financing at the

time the license was awarded, must be

paid to the United States Treasury as a

condition of approval of the 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. Additionally, 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,

this unjust enrichment provision will

apply.

40. 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, in the case of small

businesses transferring to businesses

having average gross revenues between

$40 million and $75 million, 100

percent of the difference between the

bidding credit received by the former

and the bidding credit for which the

latter 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 assessments will have

to be paid to the U.S. Treasury as a

condition of approval of the assignment,

transfer, or ownership change.

4. Rural Telephone Companies

41. The Commission does not believe

that special provisions are needed to

ensure adequate participation by rural

telephone companies in the provision of

LMDS services for the same reasons

stated in the Third Notice of Proposed

Rulemaking (Third NPRM) (60 FR

43740, August 23, 1995). Further,

because the Commission is providing

installment payments for entities with

average annual gross revenues as high as

$75 million, the Commission believes

that many rural telephone companies

may qualify for installment payments.

Also, the degree of flexibility the

Commission will afford in the use of

this spectrum, including provisions for

partitioning or disaggregating spectrum,

should assist in satisfying the spectrum

needs of rural telephone companies at

low cost. Therefore, the Commission
23154 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

concludes that the interests of rural

telephone companies are adequately

addressed by its LMDS rules.

Final Regulatory Flexibility Analysis

42. As required by the Regulatory

Flexibility Act of 1980, Public Law 96–

354, 94 Stat. 1164, as amended by the

Contract with America Advancement

Act of 1996, Public Law 104–121, 110

Stat. 847, 5 U.S.C. § 601 et seq., the

Commission has prepared a Final

Regulatory Flexibility Analysis of the

expected impact of the rule changes

adopted in this proceeding on small

entities. The Secretary shall send a copy

of this Second Report and Order, Order

on Reconsideration, and Fifth Notice of

Proposed Rulemaking, including the

Final Regulatory Flexibility Analysis, to

the Chief Counsel for Advocacy of the

SBA, in accordance with paragraph

603(a) of the Regulatory Flexibility Act.

Final Regulatory Flexibility Analysis

Table of Contents

I. Need for and Objectives of Action

II. Summary of Issues Raised by Public

Comments in Response to Initial

Regulatory Flexibility Analysis

A. IRFA Issues

B. Other Service Issues

C. Competitive Bidding Issues

III. Description and Estimate of Small Entities

Subject to Rules

A. Estimates of Potential Applicants of

LMDS

B. Estimates of LECs and Cable Companies

Ineligible Under the Temporary, InRegion Eligibility Restriction

1. Local Exchange Carriers

2. Cable Services or Systems

C. Estimates of Incumbent Services in 31

GHz Band

IV. Summary of Projected Reporting,

Recordkeeping, and Other Compliance

Requirements

V. Significant Alternatives to Proposed Rules

Which Minimize Significant Economic

Impact on Small Entities and

Accomplish Stated Objectives

A. Alternatives To Minimize Impact of

Redesignation of 31 GHz for LMDS

B. Alternatives To Minimize Impact of

LMDS Service Rules

C. Alternatives To Minimize Impact of

LMDS Auction Rules

VI. Report to Congress

43. As required by the Regulatory

Flexibility Act, 5 U.S.C. § 603 (RFA), an

Initial Regulatory Flexibility Analysis

(IRFA) was incorporated in the First

Notice of Proposed Rulemaking (First

NPRM) (58 FR 06400, January 28, 1993),

the Third Notice of Proposed

Rulemaking (Third NPRM) (60 FR

43740, August 23, 1995), and the Fourth

Notice of Proposed Rulemaking (Fourth

NPRM) (61 FR 39425, July 29, 1996) in

this proceeding. The Commission

sought written public comments on the

proposals in each of the Notices,

including on the IRFA. The

Commission’s Final Regulatory

Flexibility Analysis (FRFA) in this

Second Report and Order (hereinafter in

this Appendix referred to as the

‘‘Order’’) conforms to the RFA, as

amended by the Contract with America

Advancement Act of 1996 (CWAAA),

Public Law No. 104–121, 110 Stat. 847

(1996). (Title II of the Contract with

America Act is ‘‘The Small Business

Regulatory Enforcement Fairness Act of

1996’’ (SBREFA), codified at 5 U.S.C.

§§ 601 et seq.)

I. Need for and Objectives of Action

44. We adopt licensing and service

rules to establish a flexible regulatory

framework for the implementation of

Local Multipoint Distribution Service

(LMDS), a new broadband wireless

communications service. We designate

spectrum in the 31.0–31.3 GHz (31 GHz)

band for LMDS, in addition to the 28

GHz designated in the First Report and

Order (61 FR 44177, August 28, 1996),

to ensure adequate spectrum needed for

the broad array of video programming

and one-way or two-way

telecommunications and data services

that may be offered by LMDS providers

and to promote competition with

incumbent cable and local exchange

telephone service (LEC) providers.

45. We provide for licenses based on

broad geographic areas known as BTAs

and issued in two sizes for each area,

1,150 megahertz and 150 megahertz.

The larger size service areas may offer

economies of scale, while the smaller

service areas may encourage new

entrants and technological experiments

to meet local or special needs. We limit

the eligibility of incumbent LECs and

cable companies from being issued the

larger license in their areas of operation

for three years, in order to promote the

development of LMDS and ensure a

meaningful increase in competition in

the local telephone and cable markets.

46. The adoption of competitive

bidding rules promotes the expedited

delivery of this technology to the public

and permits recovery for the public of

a portion of the value of the public

spectrum resource made available for

commercial use. Additional objectives

in adopting these rules are to assure that

the spectrum is used efficiently, to

provide entities of any size a meaningful

opportunity to bid on this spectrum

despite limited capital resources, and to

avoid unjust enrichment through the

methods used to award uses of this

resource.

47. We deny petitions for

reconsideration of our dismissal in the

First NPRM of applications for waiver

which sought to allow petitioners to

provide LMDS in the 28 GHz band

under the existing point-to-point rules.

We defer consideration of the comments

filed in response to our tentative

decision in the Third NPRM to grant

CellularVision a Pioneer Preference,

until the record is supplemented upon

conclusion of a peer review process that

we require in the Order.

II. Summary of Issues Raised by Public

Comments in Response to Initial

Regulatory Flexibility Analysis

A. IRFA Issues

48. We received one comment in

direct response to the IRFA in the

Fourth NPRM based on our request for

comment on our proposal to designate,

on a primary protected basis, the 31.0–

31.3 GHz (31 GHz) band to LMDS. SBA

opposes our proposed designation

because it contends that the Fourth

NPRM fails to consider the impact on

existing users of the spectrum, which it

argues are largely small governmental

entities and small businesses. SBA

contends that, in Section IV of the IRFA,

the description and estimate of the

number of small entities to which the

proposed rule will apply misconstrues

and underestimates the small entities

that are incumbent licensees. It asserts

that rather than 25 or 26 licensees, as we

estimated, the comments of Sunnyvale

indicate there are more than 40

incumbent local governments holding

licenses. SBA contends that Sierra

asserts there are as many as 100

incumbent licensees and there are over

a dozen marketers or resellers of its

equipment that are small businesses. We

consider in the Order the comments of

SBA and other commenters on the

number of licensees in the 31 GHz

service, as discussed fully in paragraphs

44–51 of the Order, and later in this

FRFA.

49. SBA further argues that, in Section

VI of the IRFA, we failed to consider

significant alternatives to redesignating

the entire 31 GHz band to LMDS that

might minimize the impact on the

incumbent licensees that are small

entities. It argues that the only

alternative to the proposed 31 GHz

designation that we considered in the

IRFA involved alternative spectrum

bands for LMDS to use, rather than any

alternatives for the incumbent licensees.

50. We consider in the Order the

comments of SBA and other

commenters on numerous alternatives

to accommodate existing licensees in

the 31 GHz services, as discussed fully

in paragraphs 69–103 of the Order, and

later in this FRFA. The IRFA itself did

not identify any alternatives to our
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23155

proposed designation of 31 GHz for

LMDS in order to reduce the impact on

incumbent licensees. However, the text

of the Fourth NPRM, in paragraphs 100–

104, specifically identified several

alternative methods by which

incumbent operations could be

accommodated if LMDS were

authorized on a primary protected basis

in the 31 GHz band. We requested

comments on those alternatives and any

other options we should consider that

would not impose undue economic

burdens on the new LMDS operations.

We modify our proposal and adopt a

band-sharing plan that provides nonLTTS incumbent licensees with

protection from LMDS on a portion of

the 31 GHz band, while designating the

entire band for LMDS.

B. Other Service Issues

51. We also consider significant issues

raised in comments to our proposals in

the First NPRM, Third NPRM, and

Fourth NPRM that may have a

significant economic impact on a

substantial number of small entities. In

response to the Fourth NPRM, several

comments were filed in response to our

proposal to designate, on a primary

protected basis, the 31 GHz band for

LMDS and our request for comments on

various alternatives for accommodating

the incumbent 31 GHz licensees.

Several comments were received from

proponents of LMDS, including

CellularVision, in favor of designating

31 GHz for LMDS, while several

comments were received from

proponents of the existing 31 GHz

services that oppose changes to the

services and their being relegated to

secondary status to LMDS.

52. We received several comments in

response to the accommodation

proposals. All of the comments

opposing our proposal, including IMSA

and ITE on behalf of their members,

argue that permitting LMDS to operate

in the entire 300 megahertz on a

primary basis essentially would

eliminate their operations and that coexistence under these circumstances

would not be possible. Palm Springs

argues that it would be forced to

disband its 31 GHz traffic

communication system, creating undue

hardship. On the other hand,

CellularVision and Endgate assert that,

as LMDS licensees, they would offer

leasing options to incumbents, if

available. Several comments argue

against our suggestion that current 31

GHz services could move to another

frequency band where protection for

such operations is provided under our

rules, such as 23 GHz. Sierra, as the

primary manufacturer of the 31 GHz

equipment, asserts that the cost of

modifying equipment for other bands

would be more than replacement costs

and also would require the development

of new equipment. Topeka argues that

moving to the 21 GHz band would cause

financial hardship that would require

allocating funds through local tax

dollars and it seeks to avoid the costs of

converting or replacing equipment that

may be required by a move.

53. In response to our request for

cooperation among the LMDS providers

and existing licensees to explore

methods for allowing the services to

coexist, CellularVision and Sierra

submit two different band-sharing

plans. In CellularVision’s plan for 25

megahertz at each end of band for

incumbent services, Sierra argues that

the equipment for 31 GHz would not

function in the narrow bandwidth and

important traffic signal services could

not be provided. It argues that the 75

megahertz at each end that it proposes

in its plan would not require expensive

modifications and would accommodate

existing services. Sierra argues that its

plan is supported by current 31 GHz

licensees. SBA and USDOT, as Federal

Government entities, support the Sierra

plan and argue that incumbent services

should be maintained to assist in

meeting national goals of reducing

traffic congestion and air pollution.

54. The governmental entities,

manufacturers, and organizations in

support of incumbent services argue

that we should accept new applications,

modifications, and renewal applications

in the band for traffic control systems.

For example, Palm Springs asserts that

it plans to build out its 31 GHz

microwave system from the current 35

signals to a total of 70 signals over the

next three years. It requests that we

maintain their ability to use the band for

their systems. Topeka argues that, if we

adopt our proposal, we at least

grandfather existing licensees in the

LMDS rules to permit renewals and

modifications and to ensure their

protection from LMDS interference.

55. Of the remaining issues, some

commenters oppose our proposal in the

Fourth NPRM that both the 28 GHz band

and the 31 GHz band be assigned as a

single block in an LMDS license. For

example, the Ad Hoc RTC and others

request that the 31 GHz block be

licensed as a separate unit in each

LMDS service area. Emc 3 argues that as

little as 150 megahertz of spectrum

could be used to provide a viable

service using digital technology. WCA

argues for three licenses per geographic

area, the smallest being 150 megahertz.

These commenters argue that additional

licenses of smaller bandwidth would

provide for smaller operators, encourage

the development of niche markets, and

promote economical services similar to

those in narrower bandwidth licenses,

particularly in rural areas.

56. Some commenters, including

M3ITC, oppose our proposal in the

Third NPRM to license LMDS on broad

geographic areas based on the Rand

McNally Commercial and Marketing

Guide Basic Trading Areas (BTAs). They

argue that use of the smaller

designations of Metropolitan Statistical

Areas (MSAs) and Rural Service Areas

(RSAs) would provide more manageable

territories within which to initiate

service and be more affordable for

entrepreneurs.

57. CellularVision and other

commenters support our proposal to

permit the disaggregation of spectrum

by LMDS licensees and to permit the

geographic partitioning of any part of an

LMDS license.

58. Many comments support our

request for comments in the Fourth

NPRM on whether to temporarily

restrict eligibility of incumbent LECs

and cable companies that seek to obtain

LMDS licenses in their geographic

service areas. CVTT and SkyOptics

argue that LECs and cable companies

should be permanently ineligible in

order to ensure that smaller companies

enter the new market. Other comments,

including WebCel, advocate restrictions

limited to those areas in which LECs

and cable companies currently operate.

Other parties, including CellularVision,

argue that we should impose restrictions

on the largest LECs and cable companies

or allow incumbents to hold only one

LMDS license. Some parties oppose our

proposal to define in-region incumbent

LECs or cable companies based on a 20

percent population threshold and to

define an attributable interest to be an

ownership interest of 10 percent. Some

parties, including RioVision and other

small entities, agree that the restrictions

could end when competition is

sufficient, either after a five-year period

or under a test established by the

Commission.

59. Virtually all the comments

support our proposal in the First NPRM

to designate a new LMDS service from

the existing point-to-point microwave

common carrier service to a local

multipoint distribution service that

allows non-common carrier service as

well as common carrier service.

CellularVision, M3ITC, and other small

entities seek a broad service definition

that allows the LMDS provider to

choose any common or non-common

carrier service within the technical

rules. CellularVision and other

commenters oppose our proposal to
23156 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

apply a presumption that a service is

common carriage. They argue that the

licensing framework should be

sufficiently open and flexible to allow

the business judgments of licensees to

shape the nature of the services to be

offered.

60. Some comments, including

M3ITC, oppose our proposal in the

Third NPRM to impose construction

requirements on licensees and require

service to be available to a minimum of

one-third of the population of their

geographic areas within five years from

the date of license grant, and to twothirds of the population within ten years

from the date of the grant of the license.

M3ITC alternatively argues that a time

limit such as eight years would be

sufficient to claim a service area, after

which unserved areas should be opened

for licensing. ComTech, on the other

hand, supports the requirements and

requests that we impose a faster

requirement for companies that acquire

a license adjacent to their existing

service area to ensure against anticompetitive behavior.

61. With respect to the technical rules

proposed in the Third NPRM,

CellularVision, Endgate, and other

commenters oppose an alternative

proposal to establish a power flux

density (PFD) rather than require

applicants to coordinate frequencies

among themselves at their service area

boundaries. They argue that LMDS

development is in its infancy and it

would be difficult to determine a PFD

standard to be protective of all LMDS

system designs. CellularVision opposes

requiring LMDS operators to use active

power control and interlock techniques

in their systems, which it contends are

unnecessary, expensive, and will

complicate designs. Next, Endgate

opposes our proposal to restrict the use

of various signal polarizations and

require orthogonally-polarized signals

as unnecessary. Further, Endgate

opposes our proposal to restrict the

maximum equivalent isotropically

radiated power (EIRP) at which LMDS

systems operate in the 28 GHz band to

a –52 dBW/Hz. It opposes any limit less

than –18 dBW/Hz and contends that the

proposed limit will not provide

coverage to justify an LMDS systems

economically. CellularVision offers a

compromise maximum limit of –35

dBW/Hz, which it argues is sufficient to

meet the needs of LMDS subscribers and

is conducive to frequency coordination.

CellularVision and ComTech also argue

that our proposal to adopt a frequency

tolerance standard for subscriber

transceiver equipment would be too

costly.

C. Competitive Bidding Issues

62. With respect to competitive

bidding (para. 303 of the Order), most

commenters supported the

Commission’s proposal to auction

LMDS spectrum. M3ITC, however,

disagreed and proposed the use of

lotteries, expressing a concern that

small businesses may lack the financial

ability to participate in the auction,

particularly in the major markets. It

suggested the imposition of a royalty or

other fee on lottery winners to generate

revenue in lieu of auctions.

63. The Commission’s proposal to

require participants in LMDS auctions

to tender to the Commission a

substantial upfront payment was

generally supported (paras. 328–330 of

the Order), but CellularVision and

ComTech objected to establishing an

upfront payment of $0.02 per MHz-pop

for the largest combination of MHz-pops

a bidder anticipates being active on in

any single round of bidding, as this

would yield an upfront payment of

approximately $20 million for a BTA

with one million pops and an upfront

payment of approximately $5 billion for

the whole Nation.

64. The Commission proposed

adoption of the transfer disclosure

requirements contained in 47 CFR

§ 1.2111(a) for all LMDS licenses

obtained through the competitive

bidding process. CellularVision agreed

with the Commission’s proposal not to

limit transfers and assignments of LMDS

licenses.

65. The Commission sought comment

on the best way to promote

opportunities for businesses owned by

minorities and women in light of the

Supreme Court’s decision in Adarand

Constructors v. Pen ̃ a, which held that

federal race-based programs are subject

to strict scrutiny. Commenters were also

asked to document discrimination

against such businesses. RioVision

argued that the Commission should

develop special provisions to provide

designated entities with realistic

opportunities to participate in the

auction process, but RioVision and

other commenters failed to supply

evidence of discrimination against such

businesses (paras. 344–346 of the

Order).

66. The Commission’s proposal to

establish a small business definition for

LMDS and adopt installment payments

for small businesses bidding for LMDS

licenses met with general approval from

commenters. However, CellularVision

recommended that the Commission

establish a higher limit on average

annual gross revenues in its definition

of small business, arguing that the

proposed limit of $40 million in average

annual gross revenues was too low to

help small businesses. The

Commission’s request for comment on

the related issue of reduced upfront

payments for small businesses yielded

comments from CellularVision and

Emc3 in favor of reduced upfront

payments for these entities (paras. 344–

345 of the Order).

67. The Commission’s proposal to

make the unjust enrichment provisions

adopted in the Competitive Bidding

Second Report and Order applicable to

installment payments by small business

applicants (paras. 344–345 of the Order)

received general support, although

CellularVision argued against

restrictions after the seventh year of the

license term. ComTech urged the

Commission to adopt transfer rules

which would relieve the transferor of

any regulatory or other burdens

associated with the newly created

license. The Commission’s proposal to

make available a bidding credit of 25

percent for small businesses and the

corresponding imposition of a payment

requirement on transfers of such

licenses to entities that are not small

businesses was supported by

commenters M3ITC, Emc3, and

CellularVision, the latter encouraging

the Commission to consider other

regulatory measures, including a small

business bidding credit higher than 25

percent. (para. 355 of the Order).

III. Description and Estimate of Small

Entities Subject to Rules

68. The service regulations we adopt

to implement LMDS would apply to all

entities seeking an LMDS license,

including small entities. In addition, the

in-region, temporary eligibility

restrictions we adopt would apply to

qualifying LECs and cable companies.

Finally, the rules we adopt to designate

additional spectrum for LMDS in the

31.0–31.3 GHz band would apply to all

entities providing incumbent services

under existing rules for 31 GHz services.

We consider these three groups of

affected entities separately below.

A. Estimates of Potential Applicants of

LMDS

69. SBA has developed definitions

applicable to radiotelephone companies

and to pay television services. We are

using these definitions that SBA has

developed because these categories

approximate most closely the services

that may be provided by LMDS

licensees. The definition of

radiotelephone companies provides that

a small entity is a radiotelephone

company employing fewer than 1,500

persons. (13 CFR § 121.201, Standard
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23157

Industrial Classification (SIC) 4812.)

The definition of a pay television

service is one which has annual receipts

of $11 million or less. (SIC 4841)

70. The size data provided by SBA do

not enable us to make an accurate

estimate of the number of

telecommunications providers which

are small entities because it combines

all radiotelephone companies with 500

or more employees. We therefore use

the 1992 Census of Transportation,

Communications, and Utilities,

conducted by the Bureau of the Census,

which is the most recent information

available. This document shows that

only 12 radiotelephone firms out of a

total of 1,178 such firms which operated

during 1992 had 1,000 or more

employees. Likewise, the size data

provided by SBA do not enable us to

make a meaningful estimate of the

number of cable and pay television

providers which are small entities

because it combines all such providers

with revenues of $11 million or less. We

therefore use the 1992 Census of

Transportation, Communications, and

Utilities (Table 2D), conducted by the

Bureau of the Census, which is the most

recent information available. This

document shows that only 36 of 1,788

firms providing cable and pay television

service have a revenue of greater than

$10 million. Therefore, the majority of

LMDS entities to provide video

distribution and telecommunications

services may be small businesses under

SBA’s definition.

71. The Commission has not

developed a definition of small entities

applicable to LMDS licensees, which is

a new service being licensed in the

Order. The RFA amendments were not

in effect until shortly before the Fourth

NPRM was released, and no data has

been received establishing the number

of small businesses associated with

LMDS. However, in the Third NPRM we

proposed to auction the spectrum for

assignment and requested information

regarding the potential number of small

businesses interested in obtaining

LMDS spectrum, in order to determine

their eligibility for special provisions

such as bidding credits and installment

payments to facilitate participation of

small entities in the auction process. In

the Order we adopt criteria for defining

small businesses for purposes of

determining such eligibility. We will

use this definition for estimating the

potential number of entities applying for

auctionable spectrum that are small

businesses.

72. As discussed in Section II.D.2.e. of

the Order, we adopt criteria for defining

small businesses and other eligible

entities for purposes of defining

eligibility for bidding credits and

installment payments. We define a

small business as an entity that, together

with affiliates and controlling

principals, has average gross revenues

not exceeding $40 million for the three

preceding years (paras. 345 and 348 of

the Order). Additionally, bidding credits

and installment payments are available

to applicants that, together with

affiliates and controlling principals,

have average gross revenues for the

three preceding years of more than $40

million but not more than $75 million

(paras. 349 and 358 of the Order).

73. SBREFA was not in effect until the

record in the Third NPRM closed, and

we did not seek comment on the

potential number of prospective

applicants for LMDS that might qualify

as small businesses. Therefore, we are

unable to predict accurately the number

of applicants for LMDS that would fit

the definition of a small business for

competitive bidding purposes. However,

using the definition of small business

we adopted for auction eligibility, we

can estimate the number of applicants

that are small businesses by examining

the number of applicants in similar

services that qualified as small

businesses. For example, MDS

authorizes non-common carrier services

similar to what may be developed

through LMDS. The MDS rules provide

a similar definition of a small business

as an entity that, together with its

affiliates, has annual gross revenues for

the three preceding years not in excess

of $40 million. A total of 154

applications were received in the MDS

auction, of which 141, or 92 percent,

qualified as small businesses.

74. We plan to issue 2 licenses for

each of the 492 BTAs, excluding New

York, that are the geographic basis for

licensing LMDS. Thus, 984 licenses will

be made available for authorization in

the LMDS auction. Inasmuch as 92

percent of the applications were

received in the MDS auction were from

entities qualifying as small businesses,

we anticipate receiving at least the same

from LMDS applicants interested in

providing non-common carrier services.

75. There is only one company,

CellularVision, that is currently

providing LMDS video services.

Although the Commission does not

collect data on annual receipts, we

assume that CellularVision is a small

business under both the SBA definition

and our proposed auction rules.

B. Estimates of LECs and Cable

Companies Ineligible Under the

Temporary, In-Region Eligibility

Restriction

1. Local Exchange Carriers

76. Neither the Commission nor the

SBA has developed a definition for

small providers of local exchange

services (LECs). The closest applicable

definition under the SBA rules is for

telephone communications companies

other than radiotelephone (wireless)

companies. (13 CFR § 121.201, SIC

4813) The most reliable source of

information regarding the number of

LECs nationwide of which we are aware

appears to be the data that we collect

annually in connection with the TRS

Worksheet. According to our most

recent data, 1,347 companies reported

that they were engaged in the provision

of local exchange services. Although it

seems certain that some of these carriers

are not independently owned and

operated, or have more than 1,500

employees, we are unable at this time to

estimate with greater precision the

number of LECs that would qualify as

small business concerns under SBA’s

definition. Consequently, we estimate

that there are fewer than 1,347 small

incumbent LECs.

77. Because the small incumbent

LECs subject to these rules are either

dominant in their field of operations or

are not independently owned and

operated, consistent with our prior

practice, they are excluded from the

definition of ‘‘small entity’’ and ‘‘small

business concerns.’’ Accordingly, our

use of the terms ‘‘small entities’’ and

‘‘small businesses’’ does not encompass

small incumbent LECs. Out of an

abundance of caution, however, for

regulatory flexibility analysis purposes,

we will consider small incumbent LECs

within this analysis and use the term

‘‘small incumbent LECs’’ to refer to any

incumbent LECs that arguably might be

defined by SBA as ‘‘small business

concerns.’’

2. Cable Services or Systems

78. The SBA has developed a

definition of small entities for cable and

other pay television services, which

includes all such companies generating

$11 million or less in revenue annually.

(13 CFR § 121.201, SIC 4841) This

definition includes cable systems

operators, closed circuit television

services, direct broadcast satellite

services, multipoint distribution

systems, satellite master antenna

systems and subscription television

services. According to the Census

Bureau, there were 1,788 total cable and
23158 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

other pay television services and 1,423

have $11 million or less in revenue.

79. The Commission has developed

its own definition of a small cable

system operator for the purposes of rate

regulation. Under the Commission’s

Rules, a ‘‘small cable company,’’ is one

serving fewer than 400,000 subscribers

nationwide. (47 CFR § 76.901(e)) Based

on our most recent information, we

estimate that there were 1,439 cable

operators that qualified as small cable

system operators at the end of 1995.

Since then, some of those companies

may have grown to serve over 400,000

subscribers, and others may have been

involved in transactions that caused

them to be combined with other cable

operators. Consequently, we estimate

that there are fewer than 1,439 small

entity cable system operators.

80. The Communications Act also

contains a definition of a small cable

system operator, which is ‘‘a cable

operator that, directly or through an

affiliate, serves in the aggregate fewer

than 1 percent of all subscribers in the

United States and is not affiliated with

any entity or entities whose gross

annual revenues in the aggregate exceed

$250,000,000.’’ The Commission has

determined that there are 61,700,000

subscribers in the United States.

Therefore, we found that an operator

serving fewer than 617,000 subscribers

shall be deemed a small operator, if its

annual revenues, when combined with

the total annual revenues of all of its

affiliates, do not exceed $250 million in

the aggregate. Based on available data,

we find that the number of cable

operators serving 617,000 subscribers or

less totals 1,450. We do not request nor

do we collect information concerning

whether cable system operators are

affiliated with entities whose gross

annual revenues exceed $250,000,000,

and thus are unable at this time to

estimate with greater precision the

number of cable system operators that

would qualify as small cable operators

under the definition in the

Communications Act.

81. We find that the definition of

small entities developed by SBA

includes categories of services that are

not included in LMDS, such as satellite

master antenna systems. Thus, the

estimated figure that 1,423 cable

systems are small businesses that would

be affected by our rule would be an

overstatement. There is no other

definition for us to use, since none has

been developed for cable systems

limited to LMDS-type services.

Moreover, there is no harm in relying on

the SBA number, which overestimates

rather than underestimates potential

cable systems that might be affected.

C. Estimates of Incumbent Services in 31

GHz Band

82. We proposed in the Fourth NPRM

to designate the 31 GHz band for LMDS,

on a primary protected basis, and

requested comment on how to

accommodate incumbent licensees,

which are not protected from harmful

interference under their licenses. In the

IRFA, we estimated the number of small

entities to which the proposed rule

would apply based on the number of

incumbent licensees in the 31 GHz band

that are governmental entities. We

stated there are 27 incumbent licensees

and that a total of 25 or 26 are small

entities. Our adjustment was based on

the requirement that we estimate the

number of governmental entities with

populations of less than 50,000 that

would be affected by our new rules. (See

5 U.S.C. § 601(5).) We then applied the

Census Bureau ratio that 96 percent of

all counties, cities, and towns in the

Nation have populations of fewer than

50,000. We requested comment in the

IRFA on the number of small entities

significantly impacted by our proposed

designation of 31 GHz for LMDS.

83. We address SBA’s comments in

paras. 44–46 of the Order, where we

agree that we did not reflect the correct

number of total licensees in the 31 GHz

band. We consider the lists of licensees

and users submitted by Sunnyvale and

Sierra, which we find include

duplicates and several users that are not

licensed. Based on a review of our

database, we found there are a total of

86 licensees for 31 GHz services under

the current rules. We found that

licensees fall into three categories of

services, as follows: (1) Governmental

entities using the band primarily for

traffic control systems; (2) cellular and

other communications companies

providing LTTS; and (3) private

business users.

84. Of the total licensees, 59 licensees

are LTTS licensees, 8 are private

business users, and 19 are governmental

entities. Of the 19 governmental entities,

14 are municipalities and the remainder

are counties or states. The cities appear

small in size, except for the Cities of

Charlotte, San Diego, and Topeka. Thus,

the correct number of small

governmental entities that are licensees

in the 31 GHz services should be 11 or

less, rather than the 26 or 27 we stated

in the IRFA. As for the entire number of

licensees that qualify as small entities,

we cannot determine from the

remaining 59 LTTS licensees or 8

private business licensees which are

small. Many of the LTTS licensees are

not small, such as MCI or Bell Atlantic

New Jersey, Inc. Nevertheless, to ensure

that no small interests are overlooked,

we will assume that most of these are

small licensees and, together with the

11 small governmental entities, will

consider at least 50 of all 86 licensees

to be small entities.

IV. Summary of Projected Reporting,

Recordkeeping, and Other Compliance

Requirements

85. The Order adopts a number of

rules that will entail reporting,

recordkeeping, and third party

consultation. We find that these

requirements are the minimum needed

to ensure the integrity and efficiency of

LMDS licensing and serve the public

interest, as reflected in this record.

86. In designating the 31 GHz band for

LMDS, we adopt in the Order a bandsharing plan that designates the two

outer 75 megahertz segments for nonLTTS incumbent licensees to be

protected from harmful interference

from LMDS. We adopt technical rules

that require LMDS licensees to

coordinate frequencies with incumbent

licensees. We adopt a procedure to

allow non-LTTS incumbent licensees in

the middle 150 megahertz segment that

is not protected to relocate to the outer

segments within 15 days after the

effective date of the Order and to file an

application to modify their licenses to

reflect the new frequencies (paras. 91–

92 of the Order). Relocation and

protection are accorded to all

incumbents except LTTS, which are

temporary services that operate on a

secondary basis and in any band, so that

the protections would not benefit them.

Many of the non-LTTS incumbent

licensees are small entities. We find that

the relocation and coordination process

we have established does not impose

undue cost burdens and we believe it is

administratively manageable. Moreover,

we have found that while relocation of

such incumbents to adjacent bands will

involve some costs for adjusting

equipment, we do not expect at this

time that such costs will impose an

undue burden on small incumbents.

87. We limit the eligibility of

incumbent LECs and cable companies to

hold the larger license of 1,150

megahertz in each BTA for LMDS. They

are barred (for a period of three years

from the effective date of LMDS rules)

from holding an attributable interest is

such a license in the service area in

which they operate. We adopt rules

similar to the CMRS spectrum cap that

defines in-region if 10 percent or more

of the population of the BTA is within

the applicant’s service area. We adopt

attribution rules that apply when an

ownership interest is at least 20 percent.

However, we permit incumbent LECs
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23159

and cable companies to participate fully

in the auction of any in-region license,

so long as they come into compliance

after conclusion of the auction. We

require such LMDS licensees to divest

overlapping ownership interests by

selling their existing system or by

partitioning within 90 days after the

grant of their license. We find that these

requirements should not affect many

small entities, which are not likely to be

incumbents LECs or cable companies.

These requirements may also create

opportunities for small businesses who

wish to bid for LMDS licenses and

compete in the LMDS market.

88. We adopt a number of service

rules to initiate LMDS under procedures

for licensing and filing applications,

conducting operations, and establishing

technical parameters. Applicants are

required to submit a completed FCC

Form 175. Auction winners are required

to file a completed FCC Form 600. All

applications are submitted for 30-day

public notice and applicants are

required to keep FCC Form 600 up-todate concerning all of the foreign

ownership information requested on the

form. Licensees may change status

between common carriage and noncommon carriage or add an additional

status to conduct both operations upon

notification to the Commission that does

not require prior approval. However,

common carriers discontinuing or

reducing operations must adhere to

statutory notification requirements

imposed in Part 63 of the Commission’s

Rules.

89. We adopt limited technical

regulations. We impose a coordination

process on each LMDS licensee prior to

initiating service in the 27.5–28.35 GHz

band in which each adjacent LMDS

licensee and each potentially-affected,

adjacent-channel FSS licensee must

provide values for the appropriate

operational parameters. Coordinating

parties must supply information related

to their channelization and frequency

plan, receiver parameters, and system

geometry. Coordination between

adjacent LMDS systems need only

encompass hubs located within 20

kilometers of BTA boundaries. We

would resolve any conflicts between

licensees. LMDS licensees in the two

outer segments of the 31 GHz band also

must coordinate with non-LTTS

incumbent licensees to protect those

licensees from harmful interference. In

some cases, the services of persons with

technical or engineering expertise may

be required to assist with the

coordination information.

90. We are directed by Section

309(j)(4)(E) of the Communications Act

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.’’ The Commission adopted

safeguards designed to ensure that the

requirements of this section are

satisfied, including a transfer disclosure

requirements for licenses obtained

through the competitive bidding process

for LMDS. An applicant seeking

approval for a transfer of control or

assignment of a license within three

years of receiving a new license through

competitive bidding procedures 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.

91. With respect to small businesses,

we have 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 entities

with more than $40 million but not

more than $75 million in average gross

revenues for the three preceding years

that seek to transfer their licenses to

larger entities, as a condition of

approval of the transfer, must remit to

the government a payment equal to a

portion of the total value of the benefit

conferred by the government.

V. Significant Alternatives to Proposed

Rules Which Minimize Significant

Economic Impact on Small Entities and

Accomplish Stated Objectives

92. We modify a number of our

proposals in the Third NPRM and

Fourth NPRM to minimize any

significant economic impact on small

entities consistent with the objectives of

the Order based on the comments we

have received in this proceeding.

A. Alternatives To Minimize Impact of

Redesignation of 31 GHz for LMDS

93. Specifically, we decided that

LMDS needed the additional 300

megahertz of spectrum at 31 GHz in

order to obtain the 1 gigahertz of

unencumbered spectrum for broadband

services and sufficient spectrum to

experiment with services and

technology that competes with

telephone and cable operators. We deny

requests from CellularVision and other

commenters to consider an alternative

allocation to spectrum below 27.5 GHz

or the request from ICE–G to consider

allocation to the 40 GHz band. We

considered these matters in the First

Report and Order and their availability

has not changed since then.

94. Among the alternatives, we decide

that co-existence of incumbent 31 GHz

licensees with LMDS would not be

possible because incumbents would be

reduced to a secondary status if LMDS

were accorded primary protected status

and the interference from LMDS would

render such services useless. We agree

with CellularVision that incumbents

could lease or otherwise arrange to

continue to use redesignated spectrum,

but find that incumbents cannot rely on

these arrangements as a reasonable

alternative to minimize the impact. We

also decide that movement to another

band such as 23 GHz that provides

protection for incumbent services is not

feasible because of the major costs to

incumbents to modify or replace

equipment.

95. We decide that the plans

submitted by CellularVision and Sierra

to share the 31 GHz band establish a

framework for us to reach a compromise

based on the needs of both LMDS and

31 GHz proponents and adopt an

outcome that is more equitable and

balanced. We decide to segment the 300

megahertz for establishing protections

based on the enumerations used by

Sierra. Under this plan, the middle 150

megahertz is designated for LMDS on a

primary protected basis and incumbent

licensees are not granted protection

from harmful interference. At each end

of the band, a segment of 75 megahertz

each is designated for protection of nonLTTS incumbent licensees from LMDS

to enable them to continue existing

operations. We decide that the plan of

CellularVision to increase the middle

segment to 250 megahertz on a primary

protected basis and leave incumbents

protected in only 25 megahertz at each

end would not accommodate traffic

signal technology at intersections and

would be too costly. We decide that

LMDS requires no more than 150

megahertz of unencumbered spectrum

in the middle.

96. We do not adopt Sierra’s

limitations on LMDS use or access of

the entire 31 GHz band. We agree with

CellularVision and other comments that
23160 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

the benefits to according LMDS access

to the entire band and to allowing the

full array of LMDS services can be

achieved while according the

protections that non-LTTS incumbent

licensees need to continue their

operations. Thus, we accord LMDS a

protected status throughout the band,

but require LMDS in return to protect

non-LTTS existing services in the outer

segments. We do not agree with

CellularVision that incumbents should

be excluded altogether from the middle

segment, inasmuch as LMDS has

primary status there and is protected

from harmful interference there.

97. To accommodate incumbents, we

permit them to relocate to the outer

segments and adopt a procedure that

requires them to file an application to

modify their licenses within 15 days

after the rules adopted in the Order take

effect, if they choose to relocate. Under

our current rules, any 31 GHz licensee

filing a modification application in

accordance with the Order will be able

to implement license changes any time

during the 18-month period after the

Commission grants the modification.

Moreover, because the incumbents are

not authorized to provide service on a

common carriage basis, their

modification applications are not

subject to the public notice and petition

to deny requirements of section 101.37

of the Commission’s Rules. Thus,

applications for modification of an

incumbent’s license under the

relocation procedure would be

expedited.

98. We find that relocation within the

band gives existing 31 GHz licensees a

reasonable opportunity to continue their

operations with a minimum of expense

and disruption. We decide not to

include LTTS licensees for protection in

the outer segments nor permit them to

relocate, but to leave their status

unchanged because of the nature of their

services. These decisions are discussed

more fully at paras. 85–93 of the Order.

99. We decide to limit the bandsharing plan to achieve protections for

existing 31 GHz non-LTTS licensees in

order to minimize the impact of our

objective of implementing LMDS in 31

GHz on existing traffic control systems

provided by small municipalities and

other governmental entities.

Commenters, including Palm Springs,

demonstrate that public funds have

been expended that would be wasted if

incumbents were not protected and that

these systems help control traffic and air

pollution in furtherance of Federal

goals. However, we decide not to allow

future licensing under the existing rules

and to limit incumbent licensees to their

existing operations. We carefully

consider the advantages and

disadvantages of future growth under

such rules, and conclude that it would

be inconsistent with our objective to

permit the licensing of LMDS on 31 GHz

in order to meet the consumer demand

for those telecommunications and video

services it will provide.

100. We decide to permit incumbent

licensees to renew and to modify their

licenses to the extent they are not

expanding service. As a result, the plans

of Palm Springs and other licensees to

expand existing operations under

current rules cannot be achieved. The

impact on small entities would not be

extensive, inasmuch as we have shown

that all incumbents are few in number

and engaged in short-range services, as

compared with the potential harm to

LMDS development if the entire 31 GHz

spectrum were not available and was

encumbered by changing, incompatible,

localized services.

101. Because we do not permit the

licensing of new 31 GHz services, we

find the dismissal of all pending

applications to be consistent with our

objectives. As we noted in para. 100 of

the Order, we have concluded that it is

in the public interest to dismiss the

pending applications. Moreover, a

review of our database indicates that all

pending applications were filed after the

release date of the Fourth NPRM and by

new applicants not currently licensed.

Thus, these applicants were on notice

that we were considering a change in

our rules for the 31 GHz band. To the

extent any of these applicants are small

entities, the impact would not be

considerable because they have not

invested fully in such new systems and

alternative spectrum or options to gain

access to 31 GHz is available, such as

leasing from LMDS licensees.

B. Alternatives To Minimize Impact of

LMDS Service Rules

102. To accommodate concerns

expressed by Ad Hoc RTG and others

about our proposal to license LMDS as

a single block of the 28 GHz and 31 GHz

spectrum, we decided to auction two

licensees of different sizes for each BTA.

We considered the band-segmentation

plan we adopted for protecting nonLTTS incumbent licensees in 31 GHz

and the comments of LMDS proponents

that 150 megahertz is viable for certain

LMDS services. We decide to issue one

license for 1,150 megahertz, consisting

of 1,000 megahertz located in the 28

GHz band and 150 megahertz in the

middle of the 300 megahertz located in

the 31 GHz band. We also will issue a

smaller license for 150 megahertz

consisting of the two 75 megahertz

segments located at each end of the 300

megahertz block in 31 GHz. The small

license can be acquired by LMDS to

achieve the objectives of the broadest

spectrum for its experimentation, or

may be used by incumbent licensees to

accommodate their needs to continue

using the 31 GHz band on a protected

basis or by small entities such as rural

interests to develop niche markets or

provide more economical narrower

bandwidth services. We have decided to

establish a 1,150 megahertz license

because we believe that a large block of

unencumbered spectrum will provide

LMDS providers with an opportunity to

compete with broadband services and

develop two-way services.

103. We decide that our proposal to

license LMDS based on BTA geographic

service areas is the most logical area for

LMDS. We decline to use the smaller

MSAs and RSAs requested by M3ITC

and other commenters because their

areas are smaller than existing video

programming and telephony service

areas and their use might result in

unnecessary fragmentation of natural

markets. BTAs ensure that the wide

array of LMDS services can be provided,

afford greater economies of scale, and

vary in size to afford building blocks for

establishing an LMDS system. We do

not restrict the number of BTAs a

licensee may acquire at auction, but also

point out that the varying sizes provide

more opportunities for smaller

businesses to enter the market.

104. We decide that our proposal for

disaggregating spectrum and allowing

the geographic partitioning of an LMDS

licensed area would benefit small

business and allow some areas, such as

rural areas, to be served more readily

(para. 145 of the Order).

105. We agree with WebCel and other

small entities to adopt our proposal to

restrict eligibility of incumbent LECs

and cable companies and decide that

they may not acquire the larger LMDS

license of 1,150 megahertz in their

geographic service areas for three years.

We find that such firms would not need

the small license for unencumbered

service and thus would not have the

incentive to hobble competition. We do

not adopt the request of SkyOptics and

CVTT for permanent ineligibility to

protect smaller entities, because they

can bid for the smaller license and the

3-year period may be sufficient to allow

new entrants to become established. We

do not agree with commenters from the

rural telephone community that argue

against any restrictions on LEC

ownership of LMDS licenses. We find

our restrictions should not hinder

LMDS in rural areas, because they do

not have the overlap that triggers our

restriction and they can acquire
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23161

spectrum from an LMDS licensee

through contract or partitioning and

disaggregation. We modify our proposal

to define in-region incumbent LECs or

cable companies to reflect the same

provisions in the CMRS spectrum cap.

This ensures consistency in our rules for

wireless services for ease of compliance

and efficiency.

106. In adopting application

procedures for LMDS, we agree with

CellularVision and other small entities

to adopt a broad service definition that

allows the LMDS provider to provide

any fixed microwave service, whether

common or non-common carrier. We

expand our proposal to allow an

applicant or licensee to apply for both

common and non-common

authorization in the same license,

depending on the services it seeks to

provide. We clarify the effect of the

Telecommunications Act of 1996 on the

nature of the video programming and

telecommunications services that we

originally identified as potential

services in LMDS to assist applicants

and licensees in determining the

regulatory status to govern their

operations. We agree with commenters

to not apply the presumption we

proposed to treat LMDS as common

carriage.

107. By authorizing both common and

non-common carrier service in a single

license, we eliminate the burden in our

proposed procedures that would require

a licensee to submit an application

whenever it sought to change its

services between common and noncommon carrier services. We decide this

achieves economies in the licensing

process, ensures the flexibility licensees

need to provide the full array of LMDS

offerings, and promotes the

development of the services that may

compete with existing

telecommunications and video

programming services. To ensure that

applicants or licensees are in

compliance with the statutory

requirements imposed on common

carriers and reflected in the Part 101

rules that govern LMDS, we decide to

subject all LMDS applications to the 30-

day public notice provisions and require

all applicants to submit information in

response to all the alien ownership

eligibility restrictions. Consequently, we

can rely on a simplified procedure for

licensees to notify us of any change in

their regulatory status, either by

changing or adding common carrier or

non-common carrier status, through

notification by application after the

change is implemented, unless the

change results in the impairment of a

common carrier service that requires

prior approval under the discontinuance

rules. These procedures are adopted to

ensure implementation of LMDS under

a simplified format.

108. For the technical rules, we agree

with commenters to use the prior

frequency coordination procedures

rather than a service area boundary PFD

limit, which could stifle technology and

inhibit flexibility in system design. We

decide to adopt uniform polarization to

achieve greater system efficiency. We

disagree with CellularVision and

ComTech that adopting a frequency

stability standard would be costly, but

find that it aids in coordinating usage to

assist the rapid development of service.

C. Alternatives To Minimize Impact of

LMDS Auction Rules

109. We decline to adopt the use of

lotteries in lieu of auctions. We

conclude that auctioning LMDS licenses

would further the Communications

Act’s objectives: first, by speeding the

development and deployment of this

new technology, products and services

to the public with minimal

administrative or judicial delay, and

encouraging efficient use of the

spectrum; second, by fostering

economic opportunity and the

distribution of licenses among a wide

variety of applicants, including small

businesses; and, third, by enabling the

public to recover a portion of the value

of the public spectrum. Concerns

regarding small businesses having the

financial ability to participate in LMDS

auctions are addressed by the special

provisions adopted for small businesses.

We also decline to adopt Public

Television’s suggestion of a set-aside of

spectrum for educational purposes.

110. We adopt a uniform upfront

payment for all applicants for LMDS

auctions, and decide not to adopt a

reduced down payment for small

businesses, because we believe that this

action is consistent with our reason for

requiring upfront payments, i.e., to deter

insincere and speculative bidding and

to ensure that bidders have the financial

capacity to build out their system. We

delegate authority to the Wireless

Telecommunications Bureau to

determine an appropriate calculation for

the upfront payment, which the Bureau

will announce by Public Notice. The

Bureau will take into consideration

CellularVision’s and ComTech’s

objection to the proposed formula of

$0.02 per MHz-pop for the largest

combination of MHz-pops a bidder

anticipates being active on in any single

round of bidding.

111. Because we believe the record

with regard to past discrimination,

continuing discrimination, and other

significant barriers experienced by

minorities and women is insufficient to

support race- and gender-based

competitive bidding provisions under

the standards of judicial review

applicable to such provisions, we do not

adopt such provisions. Instead, we

adopt race- and gender-neutral

provisions such as installment

payments and bidding credits for small

businesses in order to provide small

businesses with an opportunity to

obtain LMDS licenses. Many minorityand women-owned entities are small

businesses and will therefore qualify for

these same special provisions.

112. CellularVision recommended a

definition of small business with a

ceiling of $100 million in annual gross

revenues. We choose, for the purposes

of LMDS auctions, to define a small

business as an entity that, together with

affiliates and controlling principals, has

average gross revenues not exceeding

$40 million for the three preceding

years. To address CellularVision’s

concerns, we also adopt bidding credits

and installment payments for LMDS

applicants that, together with affiliates

and controlling principals, have average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million, as elaborated in

paras. 346–348 of the Order.

113. Emc3 and CellularVision

proposed a small business bidding

credit of 25 percent or more. The rules

adopted in the Order provide a 25

percent bidding credit for small

business applicants in the LMDS

auctions, and a 15 percent bidding

credit for entities with average gross

revenues of more than $40 million but

not exceeding $75 million. Commenters

who advocated higher credits offered no

data upon which to base such credits.

We also decline to offer a bidding credit

to commercial entities that set aside part

of their capacity for educational

institutions at preferential rates. We do

not believe that we have an adequate

record regarding the legal and policy

implications of such credits.

VI. Report to Congress

114. We will submit a copy of this

Final Regulatory Flexibility Analysis,

along with the Order, in a report to

Congress pursuant to 5 U.S.C.

§ 801(a)(1)(A). A copy of this FRFA will

also be published in the Federal

Register.

Ordering Clauses

115. It is ordered that the actions of

the Commission herein are taken

pursuant to sections 4(i), 257, 303(r),

and 309(j) of the Communications Act of

1934, 47 U.S.C. §§ 154(i), 257, 303(r),

309(j).
23162 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

116. It is further ordered that the

Commission’s Rules are amended as set

forth in Appendix A, effective June 30,

1997.

117. It is further ordered that the

Petitions for Reconsideration of the

Memorandum Opinion and Order in

Application of Hye Crest Management,

Inc., for License Authorization in the

Point-to-Point Microwave Radio Service

in 27.5–29.5 GHz Band and Request for

Waiver of the Rules, File No. 10380–CF–

P–88, filed by the University of TexasPan American, RioVision of Texas, Inc.,

the City of Gustine, California, Video/

Phone Systems, Inc., Northeast

Wireless, High Band Broadcasting

Corporation, FM Video Broadcasters,

Western Sierra Bancorp, M3 Illinois

Telecommunications Corporation, Perry

W. Haddon as President of GHz

Equipment Company; Connecticut

Home Theater Corporation, Alliance

Associates, Stevan A. Birnbaum, BMW

Associates, Joseph B. Buchwald, Celltel

Communications Corporation, Linda

Chester, Thomas F. Clark, the

Committee to Promote Competition in

the Cable Industry, Arnold Cornblatt,

CT Communications Corporation,

Evanston Transmission Company, Judy

Feinberg, Lawrence Fraiberg, Freedom

Technologies, Inc., Rosalie Y. Goldberg,

Harry A. Hall, Lloyd Hascoe, L.D.H.

International, Inc., Paul R. Likins,

William Lonergan, Herbert S. Meeker,

James L. Melcher, Frederick Myers,

Frederick M. Peyser, PMJ Securities,

Inc., Robert E. La Blanc Associates, Inc.,

Jeanne P. Robertson, Sanford Robertson,

Robert Rosenkranz, R&R

Telecommunications Partners, SCNY

Communications, Inc., Seaview

Telesystems Partners, Lewis W. Siegel,

Michael S. Siegel, Kim Sloan, SMC

Associates, Charles D. Snelling,

Telecom Investment Corp.,

Telecommunications/Haddock

Investors, Video Communications

Corporation, Diane Wechsler, and Ivan

Wolff are denied.

118. It is further ordered that Local

Multipoint Distribution Service

licensees shall attach appropriate labels

to every subscriber transceiver antenna

and provide notice to users regarding

the potential hazard of remaining within

the Maximum Permissible Exposure

separation distance of these high gain

antennas, as indicated herein.

119. It is further ordered that,

effective upon adoption of this Order,

applications will not be accepted for

filing under Part 101 of the

Commission’s Rules either for new

services or for license modifications in

the 31 GHz band, except those filed by

incumbent city licensees and private

business users pursuant to the terms of

this Order, and that all such

applications for license modifications

shall be filed no later than 15 days

following the effective date of this

Order.

120. It is further ordered that the

applications filed for authorization to

operate under the existing licensing

rules for the 31,000–33,000 MHz band

and pending review under the existing

rules shall be dismissed, and applicants

that submitted filing fees with the

applications shall be refunded.

121. It is further ordered that,

pursuant to section 1.402(h) of the

Commission’s Rules, the Chief, Office of

Engineering and Technology, shall

select a panel of experts to review the

specific technologies set forth in the

pioneer preference request that was

filed by the Suite 12 Group, on

September 23, 1991, as amended on

November 19, 1991, and that was

accepted and placed on Public Notice

on December 16, 1991.

122. It is further ordered that,

pursuant to Section 5(c) of the

Communications Act of 1934, the Chief,

Wireless Telecommunications Bureau,

is granted delegated authority to

implement and modify auction

procedures in the Local Multipoint

Distribution Service, including the

general design and timing of the

auction; the number and grouping of

authorizations to be offered in a

particular auction; the manner of

submitting bids; the amount of 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.

List of Subjects

47 CFR Part 1

Administrative practice and

procedure, Environmental impact

statements, Radio, Reporting and

recordkeeping requirements,

Telecommunications.

47 CFR Part 2

Radio.

47 CFR Part 74

Radio.

47 CFR Part 78

Radio.

47 CFR Part 95

Radio.

47 CFR Part 101

Communications common carriers,

Radio, Reporting and recordkeeping

requirements.

Federal Communications Commission

William F. Caton,

Acting Secretary

Rule Changes

Parts 1, 2, 74, 78, 95, and 101 of Title

47 of the Code of Federal Regulations

are amended as follows:

PART 1—PRACTICE AND

PROCEDURE

1. The authority citation for Part 1

continues to read as follows:

Authority: 47 U.S.C. §§ 151, 154, 303 and

309(j), unless otherwise noted.

2. Section 1.1307 is amended by

revising the section heading and adding

a new entry at the end of Table 1 in

paragraph (b)(1) as follows:

§ 1.1307 Actions that may have a

significant environmental effect, for which

Environmental Assessments (EAs) must be

prepared.

(1) * * *

* * * * *

(b) * * *

TABLE 1.—TRANSMITTERS, FACILITIES,

AND OPERATIONS SUBJECT TO ROUTINE ENVIRONMENTAL EVALUATION

Service (Title

47 CFR Rule

Part)

Evaluation required if:

* * * * *

Local

Multipoint Distribution Service (subpart L

of part 101).

Non-rooftop antennas: Height

above ground level to radiation center <10 m and

power >1640 W EIRP.

Rooftop antennas: Power >

1640 W EIRP.

LMDS licensees are required

to attach a label to subscriber transceiver antennas

that (1) provides adequate

notice regarding potential

radio frequency safety hazards, e.g., information regarding the safe minimum

separation distance required

between users and transceiver antennas; and (2) references the applicable FCC

radio frequency emission

guidelines contained in FCC

OST Bulletin 65, 2d Edition.

3. Section 1.77 is amended by revising

paragraph (i) to read as follows:

§ 1.77 Detailed application procedures,

cross references.

* * * * *

(i) Rules governing applications for

authorizations in the Common Carrier

and Private Radio terrestrial microwave

services and Local Multipoint
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23163

Distribution Services are set out in part

101 of this chapter.

4. Section 1.2102 is amended by

adding paragraph (a)(9) as follows:

§ 1.2102 Eligibility of applications for

competitive bidding.

(a) * * *

(9) Local Multipoint Distribution

Service (LMDS) (see 47 CFR part 101).

PART 2—FREQUENCY ALLOCATIONS

AND RADIO TREATY MATTERS;

GENERAL RULES AND REGULATIONS

5. The authority citation for Part 2

continues to read as follows:

Authority: Sec 4, 302, 303, and 307 of the

Communications Act of 1934, as amended,

47 U.S.C. Sections 154, 302, 303 and 307,

unless otherwise noted.

6. Section 2.106 is amended by

revising the entries for 27.5–29.5 GHz

and 31.0–31.3 GHz to read as follows:

§ 2.106 Table of Frequency Allocations.

International table United States table FCC use designators

Region 1—allocation GHzRegion 2—allocation GHzRegion 3—allocation GHz

Government Non-Government

Rule part(s) Special-use frequencies. Allocation GHz Allocation GHz

(1) (2) (3) (4) (5) (6) (7)

* * * * * * *

27.5–29.5 27.5–29.5 27.5–29.5 27.5–29.5

FIXED

FIXED-SATELLITE (Earthto-space)

MOBILE

FIXED

FIXED-SATELLITE (Earthto-space)

MOBILE

SATELLITE COMMUNICATIONS

(25)

FIXED MICROWAVE (101)

* * * * * *

31.0–31.3 31.0–31.3 31.0–31.3 31.0–31.3

FIXED

MOBILE

Standard Frequency and

Time SignalSatellite (spaceto-Earth)

Space Research

Standard Frequency and

Time SignalSatellite (spaceto-Earth)

FIXED MOBILE

Standard Frequency and

Time SignalSatellite (spaceto-Earth)

FIXED MICROWAVE (101)

884 885 886 886 US211 884 886 US211

* * * * * * *

* * * * *

PART 74—EXPERIMENTAL RADIO,

AUXILIARY, SPECIAL BROADCAST

AND OTHER PROGRAM

DISTRIBUTIONAL SERVICES

7. The authority citation for Part 74

continues to read as follows:

Authority: Secs. 4, 303, 48 Stat. 1066, as

amended, 1082, as amended; 47 U.S.C.

§§ 154, 303, 554.

§ 74.602 [Amended]

8. In § 74.602, paragraph (h) is

removed and paragraphs (i) and (j) are

redesignated as paragraphs (h) and (i).

PART 78—CABLE TELEVISION RELAY

SERVICE

9. The authority citation for Part 78

continues to read as follows:

Authority: Secs. 2, 3, 4, 301, 303, 307, 308,

309, 48 Stat., as amended, 1064, 1065, 1066,

1081, 1082, 1083, 1084, 1085; 47 U.S.C. 152,

153, 154, 301, 303, 307, 308, 309.

§ 78.18 [Amended]

10. In § 78.18, paragraph (a)(5) is

removed and paragraphs (a)(6) through

(a)(8) are redesignated as paragraphs

(a)(5) through (a)(7).

PART 95—PERSONAL RADIO

SERVICES

11. The authority citation for Part 95

continues to read as follows:

Authority: Secs. 4 , 303, 48 Stat. 1066,

1082, as amended; 47 U.S.C. 154, 303.

§ 95.1 [Amended]

12. In § 95.1, paragraph (b) is removed

and paragraph (c) is redesignated as (b).

PART 101—FIXED MICROWAVE

SERVICE

13. The authority citation for Part 101

continues to read as follows:

Authority: 47 U.S.C. §§ 154, 303, 309(j),

unless otherwise noted.

14. Section 101.1 is amended by

revising paragraph (a) to read as follows:

§ 101.1 Scope and authority.

(a) The purpose of the rules in this

part is to prescribe the manner in which

portions of the radio spectrum may be

made available for private operational,

common carrier, and Local Multipoint

Distribution Service fixed, microwave

operations that require transmitting

facilities on land or in specified offshore

coastal areas within the continental

shelf.

* * * * *

15. Section 101.3 is amended by

revising the two definitions in

alphabetical order to read as follows:

* * * * *

Local Multipoint Distribution Service

Hub Station. A fixed point-to-point or

point-to-multipoint radio station in a

Local Multipoint Distribution Service

System that provides one-way or twoway communication with Local

Multipoint Distribution Service

Subscriber Stations.

* * * * *

Local Multipoint Distribution Service

System. A fixed point-to-point or pointto-multipoint radio system consisting of

Local Multipoint Distribution Service

Hub Stations and their associated Local

Multipoint Distribution Service

Subscriber Stations.

* * * * *
23164 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

16. Section 101.5 is amended by

revising paragraph (d) to read as

follows:

§ 101.5 Station authorization required.

* * * * *

(d) For stations authorized under

subpart H (Private Operational Fixed

Point-to-Point Microwave Service),

subpart I (Common Carrier Fixed Pointto-Point Microwave Service), and

subpart L of this part (Local Multipoint

Distribution Service), construction of

new or modified stations may be

initiated prior to grant of an

authorization. As a condition to

commencing construction under this

paragraph (d), the Commission may, at

any time and without hearing or notice,

prohibit such construction for any

reason. Any construction conducted

under this paragraph is at the

applicant’s sole risk.

17. Section 101.11 is amended by

revising paragraph (a) to read as follows:

§ 101.11 Filing of applications, fees, and

number of copies.

(a) Part 1 of this chapter contains

information on application filing

procedures and requirements for all

services authorized under this part. All

filings, unless they are filed

electronically, must include the original

application plus one copy. Instructions

for electronic filing will be provided by

public notice.

* * * * *

18. Section 101.15 is amended by

revising paragraph (a) to read as follows:

§ 101.15 Application forms for common

carrier fixed stations.

(a) New or modified facilities. Except

for Local Multipoint Distribution

Service in subpart L of this part, FCC

Form 415 must be submitted and a

license granted for each station. FCC

Form 415 also must be submitted to

amend any license application, to

modify any license pursuant to

§§ 101.57(a) and 101.59, and to notify

the Commission of modifications made

pursuant to § 101.61. Cancellation of a

license may be made by letter.

* * * * *

19. Section 101.19 is amended by

revising paragraph (a)(5) to read as

follows:

§ 101.19 General application requirements.

(a) * * *

(5) Show compliance with the special

requirements applicable to each radio

service and make all special showings

that may be applicable (e.g., those

required by §§ 101.103(d), 101.701, and

101.1001 through 101.1015).

* * * * *

20. Section 101.21 is amended by

revising the introductory paragraph and

adding a new paragraph (g) as follows:

§ 101.21 Technical content of applications.

Applications, except FCC Form 175,

must contain all technical information

required by the application form and

any additional information necessary to

fully describe the proposed facilities

and to demonstrate compliance with all

technical requirements of the rules

governing the radio service involved

(see subparts C, F, G, I, J, and L of this

part, as appropriate). The following

paragraphs describe a number of

technical requirements.

* * * * *

(g) Each application in the Local

Multipoint Distribution Service must

contain all technical information

required by FCC Form 600 and any

other applicable form or associated

Public Notices and by any applicable

rules in this part.

21. Section 101.29 is amended by

revising paragraph (a) to read as follows:

§ 101.29 Amendment of pending

applications.

(a) Any pending application may be

amended as a matter of right if the

application has not been designated for

hearing, or for comparative evaluation

pursuant to § 101.51, or for the random

selection process, or is not subject to the

competitive bidding process, provided,

however, that the amendments must

comply with the provisions of § 101.41

as appropriate.

* * * * *

22. Section 101.35 is amended by

adding new paragraph (e) as follows:

§ 101.35 Preliminary processing of

applications.

* * * * *

(e) Competitive bidding applications

will be processed pursuant to part 1,

subpart Q, of this chapter and subpart

M of this part.

23. Section 101.37 is amended by

revising paragraphs (a)(1), (a)(3), and

(a)(5) and adding new paragraph (e) to

read as follows:

§ 101.37 Public notice period.

(a) * * *

(1) The acceptance for filing of

common carrier applications, Local

Multipoint Distribution Service

applications, and major amendments

thereto;

* * * * *

(3) The receipt of common carrier

applications and Local Multipoint

Distribution Service applications for

minor modifications made pursuant to

§ 101.59;

* * * * *

(5) Special environmental

considerations as required by part 1 of

this chapter.

* * * * *

(e) Paragraphs (a) through (c) of this

section shall not apply to FCC Form

175.

24. Section 101.45 is amended by

revising introductory paragraph (b) as

follows:

§ 101.45 Mutually exclusive applications.

* * * * *

(b) A common carrier application,

except in the Local Multipoint

Distribution Service, will be entitled to

be included in a random selection

process or to comparative consideration

with one or more conflicting

applications only if:

* * * * *

25. Section 101.47 is amended by

revising introductory paragraph (f) to

read as follows:

§ 101.47 Consideration of applications.

* * * * *

(f) Except with respect to applications

subject to subpart L of this part,

whenever the public interest would be

served thereby, the Commission may

grant one or more mutually exclusive

applications expressly conditioned

upon final action on the applications,

and then either conduct a random

selection process (in specified services

under this part), designate all of the

mutually exclusive applications for a

formal evidentiary hearing or (whenever

so requested) follow the comparative

evaluation procedures of § 101.51, as

appropriate, if it appears:

* * * * *

26. Section 101.57 is amended by

revising paragraph (a) to read as follows:

§ 101.57 Modification of station license.

(a)(1) Except as provided in § 101.59,

and except in the case of licenses

authorized for operation in the 31,000–

31,300 MHz band prior to March 11,

1997, and except in the Local

Multipoint Distribution Service as

provided in § 101.61(c)(10), no

modification of a license issued

pursuant to this part (or the facilities

described thereunder) may be made

except upon application to the

Commission.

(2) Notwithstanding the provisions of

subparagraph (1) of this paragraph,

licensees (other than licensees in the

Local Television Transmission Service)

authorized to operate in the 31,000–

31,300 MHz band prior to March 11,
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23165

1997, may submit applications to the

Commission for modification of such

licenses not later than the end of the 15-

day period following June 30, 1997.

* * * * *

27. Section 101.59 is amended by

revising paragraphs (a) and (b)(1) to read

as follows:

§ 101.59 Processing of applications for

facility minor modifications.

(a) Except in the Local Multipoint

Distribution Service as provided in

§ 101.61(c)(10), unless an applicant is

notified to the contrary by the

Commission, as of the twenty-first day

following the date of public notice, any

application that meets the requirements

of paragraph (b) of this section and

proposes only the change specified in

paragraph (c) of this section will be

deemed to have been authorized by the

Commission.

(b) * * *

(1) It is in the Private Operational

Fixed Point-to-Point Microwave,

Common Carrier Fixed Point-to-Point

Microwave, Local Television

Transmission, Digital Electronic

Message Services, and Local Multipoint

Distribution Services;

* * * * *

28. Section 101.61 is amended by

revising introductory paragraph (b), and

paragraph (b)(3), adding new paragraphs

(c)(9) and (c)(10), and revising

paragraph (d) to read as follows:

§ 101.61 Certain modifications not

requiring prior authorization.

* * * * *

(b) Licensees of fixed stations in the

Private Operational Fixed Point-to-Point

Microwave, Common Carrier Fixed

Point-to-Point Microwave, Local

Television Transmission, Digital

Electronic Message Services, and Local

Multipoint Distribution Services may

make the facility changes listed in

paragraph (c) of this section without

obtaining prior Commission

authorization, if:

* * * * *

(3) The Commission is notified of

changes made to facilities by the

submission of a completed FCC Form

415 within 30 days after the changes are

made, except that licensees in the Local

Multipoint Distribution Service must

notify the Commission by the

submission of a completed FCC Form

600 within 30 days or, if the change is

subject to § 101.305(b) or 101.305(c),

within the time periods required in

those sections.

* * * * *

(c) * * *

(9) In the Local Multipoint

Distribution Service, changes in

regulatory status from common carrier

to non-common carrier status or noncommon carrier to common carrier

status, or from the addition of common

carrier or non-common carrier status to

an existing license in order to be

authorized to provide both common

carrier and non-common carrier

services; except that changes that result

in the discontinuance, reduction, or

impairment of the existing service are

subject to the requirements of § 101.305

(b) and (c).

(10) In the Local Multipoint

Distribution Service, the addition,

removal, or relocation of facilities

within the area authorized by the

license, except as provided in

§ 101.1009.

(d) Licensees may notify the

Commission of permissible changes or

correct erroneous information on a

license not involving a major change

(i.e., a change that would be classified

as a major amendment as defined by

§ 101.29) without obtaining prior

commission approval by filing FCC

Form 415, except in Local Multipoint

Distribution Service by filing FCC Form

600.

29. Section 101.63 is amended by

revising paragraph (a) to read as follows:

§ 101.63 Period of construction;

certification of completion of construction.

(a) Each station, except in the Local

Multipoint Distribution Services,

authorized under this part must be in

operation within 18 months from the

initial date of grant. Modification of an

operational station must be completed

within 18 months of the date of grant of

the applicable modification request.

* * * * *

30. Section 101.101 is amended by

removing the entry for ‘‘27,500–29,500’’

MHz and adding entries for ‘‘27,500–

28,350,’’ and ‘‘29,100–29,250’’ and

revising the entry for ‘‘31,000–31,300’’

MHz and adding LMDS in alphabetical

order following the table to read as

follows:

§ 101.101 Frequency availability.

Frequency band (MHz)

Radio service

Common

carrier

(Part 101)

Private radio

(Part 101)

Broadcast

auxiliary

(Part 74)

Other

(Parts 15,

21, 24, 25,

74, 78 &

100)

Notes

* * * * * * *

27,500–28,350 ................................................................................... LMDS

29,100–29,250 ................................................................................... LMDS SAT

31,000–31,300 ................................................................................... CC–LMDS OFS F/M/TF

LTTS

* * * * * * *

* * * * * * *

LMDS: Local Multipoint Distribution Service (including non-common carrier and common carrier services)—(Part 101, Subpart L).

* * * * *

31. Section 101.103 is amended by

revising paragraph (b) and adding new

paragraphs (g) and (h) to read as follows:

§ 101.103 Frequency coordination

procedures.

* * * * *

(b)(1) Operations in the bands 31,000–

31,075 MHz and 31,225–31,300 MHz

licensed prior to March 11, 1997, were

licensed on an unprotected basis and

are subject to harmful interference from

similarly licensed operations in that

band.

(i) Operations licensed in the Local

Mulitpoint Distribution Service and

those operations licensed prior to March

11, 1997, except in the Local Television

Transmission Service, operating in these

bands are equally protected against

harmful interference from each other.
23166 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

(ii) In the case of operations licensed

prior to March 11, 1997, except in the

Local Television Transmission Service,

that are licensed on a point-to-radius

basis, LMDS licensees shall be subject to

the protection requirement established

in this section in the case of existing

links operated by such licensees, and in

the case of links added by such

licensees in the future in accordance

with the terms of their point-to-radius

licenses.

(iii) An LMDS licensee may not

initiate operations within the point-toradius area licensed to an operator

(other than an operator in the Local

Television Transmission Service) prior

to March 11, 1997, even if such operator

has not initiated operations to the fullest

extent of the license. An LMDS licensee,

however, may initiate operations at the

border of such operator’s license area

without prior coordination if the LMDS

licensee’s operations would not cause

harmful interference to the other

operator’s existing operations.

(iv) An operator (other than an

operator in the Local Television

Transmission Service) licensed on a

point-to-radius basis prior to March 11,

1997, may add additional stations

within its license area. Such operator

shall coordinate with any affected

LMDS licensee if its new operations

might cause harmful interference to the

existing operations of such LMDS

licensee.

(v) Operations licensed prior to March

11, 1997, on a point-to-point basis may

not be extended or otherwise modified

through the addition of point-to-point

links. Such operations shall be limited

to the use of frequency pairs licensed as

of March 11, 1997. Operations licensed

in the Local Television Transmission

Service as of March 11, 1997, may

continue to operate, but such operators

may not expand existing operations nor

initiate new operations.

(2) Operations in the 31,075–31,225

MHz band licensed prior to March 11,

1997, shall receive no protection against

harmful interference from authorized

operations in the Local Multipoint

Distribution Service in that band.

* * * * *

(g) Licensees operating in Basic

Trading Areas authorized in the Local

Multipoint Distribution Service. (1)

When the transmitting facilities in a

Basic Trading Area (BTA) are to be

operated in the bands 27,500–28,350

MHz; 29,100–29,250 MHz; and 31,000–

31,300 MHz and the facilities are

located within 20 kilometers of the

boundaries of a BTA, each licensee must

complete the frequency coordination

process of paragraph (d)(2) of this

section with respect to neighboring BTA

licensees that may be affected by its

operations prior to initiating service. In

addition, all licensed transmitting

facilities operating in the bands 31,000–

31,075 MHz and 31,225–31,300 MHz

and located within 20 kilometers of

neighboring facilities must complete the

frequency coordination process of

paragraph (d)(2) of this section with

respect to such authorized operations

before initiating service.

(2) Response to notification should be

made as quickly as possible, even if no

technical problems are anticipated. Any

response to notification indicating

potential interference must specify the

technical details and must be provided

to the applicant, either electronically or

in writing, within the 30-day

notification period. Every reasonable

effort should be made by all licensees to

eliminate all problems and conflicts. If

no response to notification is received

within 30 days, the licensee will be

deemed to have made reasonable efforts

to coordinate and commence operation

without a response. The beginning of

the 30-day period is determined

pursuant to paragraph (d)(2)(v) of this

section.

(h) Special requirements for

operations in the band 29,100–29,250

MHz. (1)(i) Local Multipoint

Distribution Service (LMDS) receive

stations operating on frequencies in the

29,100–29,250 MHz band within a

radius of 75 nautical miles of the

geographic coordinates provided by a

non-GSO–MSS licensee pursuant to

§ 101.113(c)(2) or (c)(3)(i) (the ‘‘feeder

link earth station complex protection

zone’’) shall accept any interference

caused to them by such earth station

complexes and shall not claim

protection from such earth station

complexes.

(ii) LMDS licensees operating on

frequencies in the 29,100–29,250 MHz

band outside a feeder link earth station

complex protection zone shall cooperate

fully and make reasonable efforts to

resolve technical problems with the

non-GSO MSS licensee to the extent

that transmissions from the non-GSO

MSS operator’s feeder link earth station

complex interfere with an LMDS receive

station.

(2) No more than 15 days after the

release of a public notice announcing

the commencement of LMDS auctions,

feeder link earth station complexes to be

licensed pursuant to § 25.257 of this

chapter shall be specified by a set of

geographic coordinates in accordance

with the following requirements: no

feeder link earth station complex may

be located in the top eight (8)

metropolitan statistical areas (MSAs),

ranked by population, as defined by the

Office of Management and Budget as of

June 1993, using estimated populations

as of December 1992; two (2) complexes

may be located in MSAs 9 through 25,

one of which must be Phoenix, AZ (for

a complex at Chandler, AZ); two (2)

complexes may be located in MSAs 26

to 50; three (3) complexes may be

located in MSAs 51 to 100, one of which

must be Honolulu, Hawaii (for a

complex at Waimea); and the three (3)

remaining complexes must be located at

least 75 nautical miles from the borders

of the 100 largest MSAs or in any MSA

not included in the 100 largest MSAs.

Any location allotted for one range of

MSAs may be taken from an MSA below

that range.

(3)(i) Any non-GSO MSS licensee may

at any time specify sets of geographic

coordinates for feeder link earth station

complexes with each earth station

contained therein to be located at least

75 nautical miles from the border of the

100 largest MSAs.

(ii) For purposes of paragraph (h)(3)(i)

of this section, non-GSO MSS feeder

link earth station complexes shall be

entitled to accommodation only if the

affected non-GSO MSS licensee

preapplies to the Commission for a

feeder link earth station complex or

certifies to the Commission within sixty

days of receiving a copy of an LMDS

application that it intends to file an

application for a feeder link earth

station complex within six months of

the date of receipt of the LMDS

application.

(iii) If said non-GSO MSS licensee

application is filed later than six months

after certification of the Commission,

the LMDS and non-GSO MSS entities

shall still cooperate fully and make

reasonable efforts to resolve technical

problems, but the LMDS licensee shall

not be obligated to re-engineer its

proposal or make changes to its system.

(4) LMDS licensees or applicants

proposing to operate hub stations on

frequencies in the 29,100–29,250 MHz

band at locations outside of the 100

largest MSAs or within a distance of 150

nautical miles from a set of geographic

coordinates specified under paragraphs

(h)(2) or (h)(3)(i) of this section shall

serve copies of their applications on all

non-GSO MSS applicants, permittees or

licensees meeting the criteria specified

in § 25.257(a). Non-GSO MSS licensees

or applicants shall serve copies of their

feeder link earth station applications,

after the LMDS auction, on any LMDS

applicant or licensee within a distance

of 150 nautical miles from the

geographic coordinates that it specified

under § 101.113(c)(2) or (c)(3)(i). Any

necessary coordination shall commence
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23167

upon notification by the party receiving

an application to the party who filed the

application. The results of any such

coordination shall be reported to the

Commission within sixty days. The nonGSO MSS earth station licensee shall

also provide all such LMDS licensees

with a copy of its channel plan.

32. Section 101.107 is amended by

removing the entry for ‘‘19,700 to

40,000’’ MHz, adding the entries for

‘‘19,700 to 27,500, 27,500 to 28,350,

29,100 to 29,250, 31,000 to 31,075,

31,075 to 31,225, 31,225 to 31,300 and

31,300 to 40,000’’ and adding a footnote

8 to read as follows:

§ 101.107 Frequency tolerance.

* * * * *

Frequency tolerance (percent)

Frequency (MHz) All fixed and

Base stations

Mobile stations over 3

Watts

Mobile stations 3 Watts

or less

* * * * * * *

19,700 to 27,500 6 ...................................................................................................................... 0.03 ........................ ........................

27,500 to 28,350 ......................................................................................................................... 0.001 ........................ ........................

29,100 to 29,250 ......................................................................................................................... 0.001 ........................ ........................

31,000 to 31,075 8 ...................................................................................................................... 0.001 ........................ ........................

31,075 to 31,225 8 ...................................................................................................................... 0.001 ........................ ........................

31,225 to 31,300 8 ...................................................................................................................... 0.001 ........................ ........................

31,300 to 40,000 6 ...................................................................................................................... 0.03 ........................ ........................

* * * * * * *

8For stations authorized prior to March 11, 1997, transmitter frequency tolerance shall not exceed 0.03 percent.

33. Section 101.109(c) is amended by removing the entry ‘‘31,000 to 31,300’’ and adding the entries for ‘‘31,000

to 31,075, 31,075 to 31,225, and 31,225 to 31,300’’ in numerical order to read as follows:

§ 101.109 Bandwidth.

* * * * * * *

(c) * * *

Frequency band

(MHz)

Maximum

authorized

bandwidth

* * * * * * *

31,000 to 31,075 ........................................................................................................................................................................................ 75 MHz

31,075 to 31,225 ........................................................................................................................................................................................ 150 MHz

31,225 to 31,300 ........................................................................................................................................................................................ 75 MHz

* * * * * * *

34. Section 101.113(a) is amended by removing the entry ‘‘31,000 to 31,300’’ MHz and adding entries for ‘‘31,000

to 31,075, 31,075–31,225, and 31,225 to 31,300,’’ removing the first footnote 7, revising the second footnote 7, revising

footnote 8 and adding footnote 9 to read as follows:

§ 101.113 Transmitter power limitations.

(a) * * *

Frequency band (MHz)

Maximum allowable

EIRP1, 2

Fixed

(dBW)

Mobile

(dBW)

* * * * * * *

+30 dBW/

MHz

27,500 to 28,350 9

29,100 to 29,250 ........................................................................................................................................................... (7)

31,000 to 31,075 8, 9 ...................................................................................................................................................... 30 dBW/MHz 30 dBW/MHz

31,075 to 31,225 8, 9 ...................................................................................................................................................... 30 dBW/MHz 30 dBW/MHz

31,225 to 31,300 8, 9 ...................................................................................................................................................... 30 dBW/MHz 30 dBW/MHz

* * * * * * *

* * * * * * * 7See § 101.113(c). 8For stations authorized prior to March 11, 1997, transmitter output power shall not exceed 0.05 watt.

9For subscriber transceivers authorized in these bands, the EIRP shall not exceed 55dBW or 42 dBW/MHz.
23168 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

* * * * *

35. Section 101.147 is amended by

revising paragraph (a), removing the

entries for ‘‘27,500–29,500 MHz’’and

adding entries for 27,500–28,350 MHz

(16) and 29,100–29,250 MHz (16),

revising the entry for ‘‘31,000–31,300

MHz’’ (16), revising note 16 in

paragraph (a), removing paragraph (x),

redesignating paragraphs (t) through (w)

as paragraphs (u) through (x), adding a

new paragraph (t), and revising newly

designated paragraph (u), to read as

follows:

§ 101.147 Frequency assignments

(a) Frequencies in the following bands

are available for assignment for fixed

microwave services.

* * * * *

27,500–28,350 MHz (16)

29,100–29,250 MHz (5), (16)

31,000–31,300 MHz (16)

* * * * *

(5) Frequencies in this band are shared

with stations in the fixed-satellite service.

* * * * *

(16) As of June 30, 1997, frequencies in

these bands are available for assignment only

to LMDS radio stations. Stations initially

authorized prior to that date may continue to

operate within the existing terms of the

outstanding licenses.

* * * * *

(t) 27,500–28,350; 29,100–29,250;

31,000–31,300 MHz. These frequencies

are available for LMDS systems. Each

assignment will be made on a BTA

service area basis, and the assigned

spectrum may be subdivided as desired

by the licensee.

(u) 31,000–31,300 MHz. Stations

licensed in this band prior to March 11,

1997, may continue their authorized

operations, subject to license renewal,

on the condition that harmful

interference will not be caused to LMDS

operations licensed in this band after

June 30, 1997. In the sub-bands 31,000–

31,075 and 31,225–31,300 MHz, stations

initially licensed prior to March 11,

1997, except in LTTS, and LMDS

operations authorized after June 30,

1997, are equally protected against

harmful interference from each other in

accordance with the provisions of

§ 101.103(b). For stations, except in

LTTS, permitted to relocate to these

sub-bands, the following paired

frequencies are available:

Transmit

(receive)

(MHz)

Receive

(transmit)

(MHz)

(1) 25 MHz Authorized Bandwidth Channels

31,012.5 .................................... 31,237.5

31,037.5 .................................... 31,262.5

31,062.5 .................................... 31,287.5

Transmit

(receive)

(MHz)

Receive

(transmit)

(MHz)

(2) 75 MHz Authorized Bandwidth Channel

31,037.5 .................................... 31,275.0

* * * * *

36. Section 101.305 is amended by

revising paragraphs (a) through (c) to

read as follows:

§ 101.305 Discontinuance, reduction, or

impairment of service.

(a) If the public communication

service provided by a station in the

Common Carrier Radio Services and the

Local Multipoint Distribution Service is

involuntarily discontinued, reduced or

impaired for a period exceeding 48

hours, the station licensee must

promptly notify the Commission, in

writing, at Federal Communications

Commission, Common Carrier Radio

Services, 1270 Fairfield Road,

Gettysburg, Pennsylvania 17325. In

every such case, the licensee must

furnish full particulars as to the reasons

for such discontinuance, reduction or

impairment of service, including a

statement as to when normal service is

expected to be resumed. When normal

service is resumed, prompt notification

thereof must be given in writing to the

Federal Communications Commission,

Common Carrier Radio Services, 1270

Fairfield Road, Gettysburg,

Pennsylvania, 17325.

(b) No station licensee subject to title

II of the Communications Act of 1934,

as amended, may voluntarily

discontinue, reduce or impair public

communication service to a community

or part of a community without

obtaining prior authorization from the

Commission pursuant to the procedures

set forth in part 63 of this chapter. In the

event that permanent discontinuance of

service is authorized by the

Commission, the station licensee must

promptly send the station license to the

Federal Communications Commission,

Common Carrier Radio Services, 1270

Fairfield Road, Gettysburg,

Pennsylvania 17325 for cancellation;

except that station licensees in the Local

Multipoint Distribution Service need

not surrender the license for

cancellation if the discontinuance is a

result of a change of status by the

licensee from common carrier to noncommon carrier pursuant to § 101.61.

(c) Any licensee not subject to title II

of the Communications Act of 1934, as

amended, who voluntarily discontinues,

reduces or impairs public

communication service to a community

or a part of a community must give

written notification to the Commission

within 7 days thereof. In the event of

permanent discontinuance of service,

the station licensee must promptly send

the station license to the Federal

Communications Commission, Common

Carrier Radio Services, 1270 Fairfield

Road, Gettysburg, Pennsylvania 17325

for cancellation; except that station

licensees in the Local Multipoint

Distribution Service need not surrender

the license for cancellation if the

discontinuance is a result of a change of

status by the licensee from non-common

carrier to common carrier pursuant to

§ 101.61.

* * * * *

37. Section 101.311 is revised to read

as follows:

§ 101.311 Equal employment

opportunities.

Equal opportunities in employment

must be afforded by all common carrier

licensees and all Local Multipoint

Distribution Service licensees in

accordance with the provisions of

§ 21.307.

38. Section 101.803 is amended by

revising note (7) of paragraph (a),

revising note (9) of paragraph (d),

removing paragraph (e), and

redesignating paragraphs (f), (g), and (h)

as (e), (f), and (g), to read as follows:

§ 101.803 Frequencies.

(a) * * *

(7) As of June 30, 1997, frequencies in these

band only are available for assignment to

LMDS radio stations. Stations authorized

prior to that date may continue to operate

within the existing terms of the outstanding

licenses, subject to renewal.

* * * * *

(d) * * *

(9) As of June 30, 1997, frequencies in these

band only are available for assignment to

LMDS radio stations. Stations authorized

prior to that date may continue to operate

within the existing terms of the outstanding

licenses, subject to renewal.

* * * * *

39. Subpart K is added and reserved

in part 101 and Subpart L is added,

reading as follows:

Subpart L—Local Multipoint

Distribution Service

Sec.

101.1001 Eligibility.

101.1003 LMDS eligibility restrictions for

incumbent LECs and cable companies.

101.1005 Frequencies available.

101.1007 Geographic service areas and

number of licenses.

101.1009 System operations.

101.1011 Construction requirements and

criteria for renewal expectancy.
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23169

101.1013 Permissible communications

services.

101.1015 Application form and contents.

101.1017 Requesting regulatory status.

§ 101.1001 Eligibility.

Any entity, other than one precluded

by § 101.7 and by § 101.1003, is eligible

for authorization to provide Local

Multipoint Distribution Service (LMDS)

under this subpart. Authorization will

be granted upon proper application filed

under the rules in this part.

§ 101.1003 LMDS eligibility restrictions for

incumbent LECs and cable companies.

(a) Eligibility for LMDS license. Except

as provided in paragraph (b) of this

section, no incumbent LEC or

incumbent cable company, as defined in

paragraph (c) of this section, nor any

entity owning an attributable interest in

an incumbent LEC or incumbent cable

company, shall have an attributable

interest in an LMDS license whose

geographic service area significantly

overlaps such incumbent’s authorized

or franchised service area.

(1) Termination of restriction. This

restriction shall terminate three years

following June 30, 1997 unless the

Commission extends its applicability

based on a determination that

incumbent LECs or incumbent cable

companies continue to have substantial

market power in the provision of local

telephony or cable television services.

(2) Waiver of restriction. Upon

completion of the initial award of LMDS

licenses, an incumbent LEC or

incumbent cable company may petition

for a waiver of the restriction on

eligibility based upon a showing that

the petitioner no longer has market

power in its authorized or franchised

service area as the result of the entry of

new competitors, other than an LMDS

licensee, into such service area.

(b) Exception to eligibility restriction.

The restriction set forth in paragraph (a)

of this section shall not apply to any

license for the 31,000–31,075 megahertz

and 31,225–31,300 megahertz bands of

LMDS spectrum.

(c) Incumbent LECs and cable

companies defined. The terms

incumbent LEC and incumbent cable

company shall be defined as follows:

(1) Incumbent LEC. The term

incumbent local exchange carrier or

incumbent LEC shall be defined, in

accordance with section 251(h) of the

Communications Act, to mean, with

respect to an area, that:

(i) On February 8, 1996, the LEC

provided telephone exchange service in

such area and was deemed to be a

member of the exchange carrier

association pursuant to § 69.601(b) of

this chapter; or

(ii) Is a person or entity that, on or

after February 8, 1996, became a

successor or assign of a member

described in paragraph (c)(1)(i) of this

section; or

(iii) Is an entity, or a member of a

class or category of entities, that the

Commission has determined under

section 251(h)(2) of the

Communications Act to treat as a local

exchange carrier.

(2) Incumbent cable company. The

term incumbent cable company means a

company that is franchised to provide

cable service and is not subject to

effective competition under the

following definition of effective

competition in section 623(l) of the

Communications Act:

(i) Fewer than 30 percent of the

households in the franchise area

subscribe to the cable service of a cable

system; or

(ii) The franchise area is:

(A) Served by at least two unaffiliated

multichannel video programming

distributors each of which offers

comparable video programming to at

least 50 percent of the households in the

franchise area; and

(B) The number of households

subscribing to programming services

offered by multichannel video

programming distributors other than the

largest multichannel video

programming distributor exceeds 15

percent of the households in the

franchise area; or

(iii) A multichannel video

programming distributor operated by

the franchising authority for that

franchise area offers video programming

to at least 50 percent of the households

of that franchise area; or

(iv) A local exchange carrier or its

affiliate (or any multichannel video

programming distributor using the

facilities of such carrier or its affiliate)

offers video programming services

directly to subscribers by any means

(other than direct-to-home satellite

services) in the franchise area of an

unaffiliated cable operator which is

providing cable service in that franchise

area, but only if the video programming

services so offered in that area are

comparable to the video programming

services provided by the unaffiliated

cable operator in that area.

(d) Significant overlap with

authorized or franchised service area.

For purposes of paragraph (a) of this

section, a significant overlap of an

incumbent LEC’s or incumbent cable

company’s authorized or franchised

service area occurs when at least 10

percent of the population of the LMDS

licensed service area, as determined by

the 1990 census figures for the counties

contained in such service area, is within

the authorized or franchised service

area.

(e) Definition of attributable interest.

For purposes of paragraph (a) of this

section, an entity shall be considered to

have an attributable interest in an

incumbent LEC, incumbent cable

company, or LMDS licensee pursuant to

the following criteria:

(1) A controlling interest shall

constitute an attributable interest.

Controlling interest means majority

voting equity ownership, any general

partnership interest, or any means of

actual working control (including

negative control) over the operation of

the entity, in whatever manner

exercised.

(2) Partnership and similar ownership

interests and any stock interest

amounting to 20 percent or more of the

equity, or outstanding stock or

outstanding voting stock of an entity.

(3) Stock interests held in trust that

exceed the limit set forth in paragraph

(e)(2) of this section shall constitute an

attributable interest of any person who

holds or shares the power to vote such

stock, of any person who has the sole

power to sell such stock, and, in the

case of stock held in trust, of any person

who has the right to revoke the trust at

will or to replace the trustee at will. If

the trustee has a familial, personal, or

extra-trust business relationship to the

grantor or the beneficiary, the stock

interests held in trust shall constitute an

attributable interest of such grantor or

beneficiary, as appropriate.

(4) Non-voting stock shall constitute

an attributable interest in the issuing

entity if it exceeds the limit set forth in

paragraph (e)(2) of this section.

(5) Debt and interests such as

warrants and convertible debentures,

options, or other interests (except nonvoting stock) with rights of conversion

to voting interests shall not constitute

attributable interests unless and until

conversion is effected.

(6) Limited partnership interests

amounting to 20 percent or more,

calculated according to both the

percentage of equity paid in and the

percentage of distribution of profits and

losses, shall constitute an attributable

interest of each such limited partner.

(7) Officers and directors of an

incumbent LEC or incumbent cable

company, an LMDS licensee, or an

entity that controls such incumbent

LEC, incumbent cable company, or

LMDS licensee, shall be considered to

have an attributable interest in such

incumbent LEC, incumbent cable

company, or LMDS licensee.

(8) Ownership interests that are held

indirectly by any party through one or
23170 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

more intervening corporations or other

entities shall be determined by

successive multiplication of the

ownership percentages for each link in

the vertical ownership chain and

application of the relevant attribution

benchmark to the resulting product,

except that, if the ownership for any

interest in any link in the chain exceeds

50 percent or represents actual control,

it shall be treated as if it were a 100

percent interest.

(9) Any person who manages the

operations of an incumbent LEC or

incumbent cable company or an LMDS

licensee pursuant to a management

agreement shall be considered to have

an attributable interest in such

incumbent LEC, incumbent cable

company or LMDS licensee, if such

person or its affiliate has authority to

make decisions or otherwise engage in

practices or activities that determine, or

significantly influence:

(i) The nature or types of services

offered by such entity;

(ii) The terms upon which such

services are offered; or

(iii) The prices charged for such

services.

(10) Any person or its affiliate who

enters into a joint marketing

arrangement with an incumbent LEC, an

incumbent cable company, an LMDS

licensee, or an affiliate of such entity,

shall be considered to have an

attributable interest in such incumbent

LEC, incumbent cable company, LMDS

licensee, or affiliate, if such person or its

affiliate has authority to make decisions

or otherwise engage in practices or

activities that determine:

(i) The nature or types of services

offered by such entity;

(ii) The terms upon which such

services are offered; or

(iii) The prices charged for such

services.

(f) Divestiture. Any incumbent LEC or

incumbent cable company, or any entity

owning an attributable interest in an

incumbent LEC or incumbent cable

company, that would otherwise be

barred from participating in an LMDS

auction by the eligibility restriction in

paragraph (a) of this section, may be a

party to an LMDS application (i.e., have

an attributable interest in the applicant),

and such applicant will be eligible for

an LMDS license, pursuant to the

divestiture procedures set forth in

paragraphs (f)(1) through (f)(6) of this

section.

(1) Divestiture shall be limited to the

following prescribed means:

(i) An LMDS applicant holding an

attributable interest in an incumbent

LEC or incumbent cable company may

divest such interest in the incumbent

LEC or cable company.

(ii) Other LMDS applicants

disqualified under paragraph (a) of this

section, will be permitted to:

(A) Partition and divest that portion of

the existing authorized or franchised

service area that causes it to exceed the

overlap restriction in paragraph (d) of

this section, subject to applicable

regulations of state and local

governments; or

(B) Partition and divest that portion of

the LMDS geographic service area that

exceeds the overlap restriction in

paragraph (d) of this section.

(iii) Divestiture may be to an interim

trustee if a buyer has not been secured

in the required period of time, as long

as the LMDS applicant has no interest

in or control of the trustee and the

trustee may dispose of the license as it

sees fit.

(2) The LMDS applicant shall certify

as an exhibit to its short form

application that it and all parties to the

application will come into compliance

with paragraph (a) of this section.

(3) If such LMDS applicant is a

successful bidder in an auction, it must

submit with its long-form application a

signed statement describing its efforts to

date and future plans to come into

compliance with the eligibility

restrictions in paragraph (a) of this

section.

(4) If such an LMDS applicant is

otherwise qualified, its application will

be granted subject to a condition that

the applicant shall come into

compliance with the eligibility

restrictions in paragraph (a) of this

section, within ninety (90) days of final

grant of such LMDS license.

(5) An LMDS applicant will be

considered to have come into

compliance with paragraph (a) of this

section if:

(i) In the case of the divestiture of a

portion of an LMDS license, it has

submitted to the Commission an

application for license assignment or

transfer of control of the requisite

portion of the LMDS geographic service

area.

(ii) In all other cases, it has submitted

to the Commission a signed certification

that it has come into compliance with

paragraph (a) of this section by the

following means, identified in such

certification:

(A) By divestiture of a disqualifying

interest in an incumbent LEC or

incumbent cable company, identified in

terms of the interest owned, the owner

of such interest (and, if such owner is

not the applicant itself, the relationship

of the owner to the applicant), the name

of the party to whom such interest has

been divested, and the date such

divestiture was executed; or

(B) By divestiture of the requisite

portion of the incumbent LEC’s or

incumbent cable company’s existing

authorized or franchised service area,

identified in terms of the name of the

party to whom such interest has been

divested, the date such divestiture was

executed, the name of any regulatory

agency that must approve such

divestiture, and the date on which an

application was filed for this purpose

with the regulatory agency.

(6) If no such certification or

application is tendered to the

Commission within ninety (90) days of

final grant of the initial license, the

Commission may consider the short

form certification and the long form

divestiture statement to be material, bad

faith misrepresentations and shall

invoke the condition on the initial

license, cancelling or rescinding it

automatically, shall retain all monies

paid to the Commission, and, based on

the facts presented, shall take any other

action it may deem appropriate.

Note to § 101.1003: Waivers of

§ 101.1003(e) may be granted upon an

affirmative showing:

1. That the interest holder has less than a

50 percent voting interest in the licensee and

there is an unaffiliated single holder of a 50

percent or greater voting interest;

2. That the interest holder is not likely to

affect the local market in an anticompetitive

manner;

3. That the interest holder is not involved

in the operations of the licensee and does not

have the ability to influence the licensee on

a regular basis; and

4. That grant of a waiver is in the public

interest because the benefits to the public of

common ownership outweigh any potential

anticompetitive harm to the market.

§ 101.1005 Frequencies available.

(a) The following frequencies are

available for assignment to LMDS in two

license blocks:

Block A of 1,150 MHz

27,500–28,350 MHz

29,100–29,250 MHz

31,075–31,225 MHz

Block B of 150 MHz

31,000–31,075 MHz

31,225–31,300 MHz

(b) In Block A licenses, the

frequencies are authorized as follows:

(1) 27,500–28,350 MHz is authorized

on a primary protected basis and is

shared with Fixed Satellite Service

(FSS) systems.

(2) 29,100–29,250 MHz is shared on a

co-primary basis with feeder links for

non-geostationary orbit Mobile Satellite

Service (NGSO/MSS) systems in the

band and is limited to LMDS hub-to-
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23171

subscriber transmissions, as provided in

§ 25.257 and § 101.103(h).

(3) 31,075–31,225 MHz is authorized

on a primary protected basis and is

shared with private microwave point-topoint systems licensed prior to March

11, 1997, as provided in § 101.103(b).

(c) In Block B licenses, the

frequencies are authorized as follows:

(1) On a primary protected basis if

LMDS shares the frequencies with

systems licensed as Local Television

Transmission Service (LTTS) licensed

prior to March 11, 1997, as provided in

§ 101.103(b).

(2) On a co-equal basis with systems

not licensed as LTTS prior to March 11,

1997, as provided in § 101.103(g).

§ 101.1007 Geographic service areas and

number of licenses.

LMDS service areas are Basic Trading

Areas (BTAs) as defined in the Rand

McNally 1992 Commercial Atlas &

Marketing Guide, 123rd Edition, at

pages 38–39, that identifies 487 BTAs

based on the 50 States and as defined to

include the BTA-like areas of the United

States Virgin Islands, American Samoa,

Guam, Mayaguez/Aguadilla-Ponce,

Puerto Rico, San Juan, Puerto Rico, and

the Commonwealth of Northern

Marinas, for a total of 493 BTAs.

§ 101.1009 System operations.

(a) The licensee may construct and

operate any number of fixed stations

anywhere within the area authorized by

the license without prior authorization,

except as follows:

(1) A station would be required to be

individually licensed if:

(i) International agreements require

coordination;

(ii) Submission of an Environmental

Assessment is required under § 1.1307

of this chapter.

(iii) The station would affect the radio

quiet zones under § 101.123.

(2) Any antenna structure that

requires notification to the Federal

Aviation Administration (FAA) must be

registered with the Commission prior to

construction under § 17.4 of this

chapter.

(b) Whenever a licensee constructs or

makes system changes as described in

paragraph (a) of this section, the

licensee is required to notify the

Commission within 30 days of the

change under § 101.61 and include a

statement of the technical parameters of

the changed station.

§ 101.1011 Construction requirements and

criteria for renewal expectancy.

(a) LMDS licensees must make a

showing of ‘‘substantial service’’ in their

license area within ten years of being

licensed. ‘‘Substantial’’ service is

defined as service which is sound,

favorable, and substantially above a

level of mediocre service which might

minimally warrant renewal. Failure by

any licensee to meet this requirement

will result in forfeiture of the license

and the licensee will be ineligible to

regain it.

(b) A renewal applicant involved in a

comparative renewal proceeding shall

receive a preference, commonly referred

to as a renewal expectancy, that is the

most important comparative factor to be

considered in the proceeding as long as

the applicant’s past record for the

relevant license period demonstrates

that:

(1) The renewal applicant has

provided ‘‘substantial’’ service during

its past license term; and

(2) The renewal applicant has

substantially complied with applicable

FCC rules, policies, and the

Communications Act of 1934, as

amended.

(c) In order to establish its right to a

renewal expectancy, an LMDS renewal

applicant involved in a comparative

renewal proceeding must submit a

showing explaining why it should

receive a renewal expectancy. At a

minimum, this showing must include:

(1) A description of its current service

in terms of geographic coverage and

population served:

(2) An explanation of its record of

expansion, including a timetable of new

construction to meet changes in demand

for service:

(3) A description of its investments in

its LMDS system; and

(4) Copies of all FCC orders finding

the licensee to have violated the

Communications Act or any FCC rule or

policy; and a list of any pending

proceedings that relate to any matter

described in this paragraph.

(d) In making its showing of

entitlement to a renewal expectancy, a

renewal applicant may claim credit for

any system modification applications

that were pending on the date it filed its

renewal application. Such credit will

not be allowed if the modification

application is dismissed or denied.

§ 101.1013 Permissible communications

services.

(a) Authorizations for stations in the

Local Multipoint Distribution Service

will be granted to provide services on a

common carrier basis or a non-common

carrier basis or on both a common

carrier and non-common carrier basis in

a single authorization.

(b) Stations may render any kind of

communications service consistent with

the Commission’s rules and the

regulatory status of the station to

provide services on a common carrier or

non-common carrier basis.

(c) An applicant or licensee may

submit a petition at any time requesting

clarification of the regulatory status

required to provide a specific

communications service.

§ 101.1015 Application form and contents.

(a) Applications for initial

authorization are filed on FCC Form 175

in accordance with Subpart M of this

part, and part 1 of this chapter, subpart

Q. FCC Form 600 is submitted

subsequently either by the winning

bidder, if an auction is held to decide

among two or more mutually exclusive

applications, or, in cases of no mutual

exclusivity, by the sole applicant.

Applications to amend pending

applications and to modify licenses are

filed on FCC Form 600.

(b) Foreign ownership information.

All LMDS applicants will provide the

information requested on FCC Form 600

to address all of the eligibility

requirements in § 101.7. All licensees

will keep the information updated.

§ 101.1017 Requesting regulatory status.

(a) Initial applications. An applicant

will specify on FCC Form 600 if it is

requesting authorization to provide

services on a common carrier basis, a

non-common carrier basis, or on both a

common carrier and non-common

carrier basis.

(b) Amendment of pending

applications. (1) Any pending

application may be amended to:

(i) Change the carrier status requested,

or

(ii) Add to the pending request in

order to obtain both common carrier and

non-common carrier status in a single

license.

(2) Amendments to change, or add to,

the carrier status in a pending

application are minor amendments filed

under § 101.29.

(c) Modification of license. (1) A

licensee may modify a license to:

(i) Change the carrier status

authorized, or

(ii) Add to the status authorized in

order to obtain both common carrier and

non-common carrier status in a single

license.

(2) Applications to change, or add to,

the carrier status in a license are

modifications not requiring prior

Commission authorization filed under

§ 101.61. If the change results in the

discontinuance, reduction, or

impairment of an existing service, the

licensee is also governed by § 101.305(b)

or (c) and submits the application under

§ 101.61 in conformance with the time
23172 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

frames and requirements of § 101.305(b)

or (c).

40. Subpart M consisting of

§§ 101.1101 through 101.1112 is added

to part 101 to read as follows:

Subpart M—Competitive Bidding

Procedures for LMDS

Sec.

101.1101 LMDS service subject to

competitive bidding.

101.1102 Competitive bidding design for

LMDS.

101.1103 Competitive bidding mechanisms.

101.1104 Bidding application (FCC Forms

175 and 175–S).

101.1105 Submission of payments.

101.1106 Long-form application (FCC Form

600).

101.1107 Bidding credits for small

businesses and entities with average

gross revenues of not more than $75

million.

101.1108 Installment payments for licenses

won by small businesses and entities

with average gross revenues of not more

than $75 million.

101.1109 Certifications, disclosures, records

maintenance and audits.

101.1110 Petitions to deny.

101.1111 Procedures for partitioned

licenses.

101.1112 Definitions.

§ 101.1101 LMDS service subject to

competitive bidding.

Mutually exclusive initial

applications for LMDS licenses are

subject to competitive bidding

procedures. The procedures set forth in

part 1, subpart Q, of this chapter will

apply unless otherwise provided in this

part.

§ 101.1102 Competitive bidding design for

LMDS.

The Commission will employ a

simultaneous multiple round auction

design when choosing from among

mutually exclusive initial applications

to provide LMDS, unless otherwise

specified by the Wireless

Telecommunications Bureau before the

auction.

§ 101.1103 Competitive bidding

mechanisms.

(a) Sequencing. The Commission will

establish and may vary the sequence in

which LMDS licenses are auctioned.

(b) Grouping. The Commission will

determine which licenses will be

auctioned simultaneously or in

combination based on interdependency

and administrative circumstances.

(c) Minimum bid increments. The

Commission may, by public

announcement before or during an

auction, require minimum bid

increments in dollar or percentage

terms.

(d) Stopping rules. The Commission

may establish stopping rules before or

during an auction in order to terminate

the auction within a reasonable time.

(e) Activity rules. The Commission

may establish activity rules which

require a minimum amount of bidding

activity. In the event that the

Commission establishes an activity rule

in connection with a simultaneous

multiple round auction, each bidder

may request waivers of such rule during

the auction. The Commission may, by

public announcement either before or

during the auction, specify or vary the

number of waivers available to each

bidder.

(f) Bid withdrawal, default and

disqualification payments. The

Commission 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.

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.

(g) Tie bids. Where a tie bid occurs,

the high bidder will be determined by

the order in which the bids were

received by the Commission.

§ 101.1104 Bidding application (FCC

Forms 175 and 175–S).

Each applicant to participate in

competitive bidding for LMDS licenses

must submit an application (FCC Forms

175 and 175–S) pursuant to the

provisions of § 1.2105 of this chapter.

§ 101.1105 Submission of payments.

(a) Each applicant to participate in an

LMDS auction will be required to

submit an upfront payment in

accordance with § 1.2106 of this chapter

as announced by the Wireless

Telecommunications Bureau by Public

Notice.

(b) Winning bidders in LMDS

auctions, except those businesses

meeting the definition of small business

or qualifying as a business with average

gross revenues for the preceding three

years of not more than $75 million

under § 101.1112, must submit a down

payment to the Commission in an

amount sufficient to bring their total

deposits up to 20 percent of their

winning bids within ten business days

following the release of a Public Notice

announcing the close of the auction.

Winning bidders, except those

qualifying for installment payments,

must pay the full balance of their

winning bids within ten business days

following the release of a Public Notice

that the Commission is prepared to

award the licenses.

(c) Winning bidders in LMDS

auctions that meet the definition of

small business or businesses with

average gross revenues for the preceding

three years of not more than $75 million

under § 101.1112 must submit a down

payment to the Commission in an

amount sufficient to bring their total

deposits up to 10 percent of their

winning bids within ten business days

following the release of a Public Notice

announcing the close of the auction, and

up to 20 percent of their winning bids

within ten business days of the release

of a Public Notice that the Commission

is prepared to award the licenses. The

remaining 80 percent of the purchase

price will then be subject to the

installment financing provisions of

§ 101.1108.

§ 101.1106 Long-form application (FCC

Form 600).

Each successful bidder for an LMDS

license 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 LMDS 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

Commission may issue in connection

with an auction. After an auction, the

Commission will not accept long-form

applications for LMDS licenses from

anyone other than the auction winners

and parties seeking partitioned licenses

pursuant to agreements with auction

winners under § 101.1111 of this

chapter.

§ 101.1107 Bidding credits for small

businesses and entities with average gross

revenues of not more than $75 million.

(a) A winning bidder that qualifies as

a small business pursuant to § 101.1112

may use a bidding credit of 25 percent

to lower the cost of its winning bid.

(b) A winning bidder that has average

gross revenues for the preceding three

years of more than $40 million but not

more than $75 million pursuant to

§ 101.1112 may use a bidding credit of

15 percent to lower the cost of its

winning bid.

(c) The bidding credits referenced in

paragraphs (a) and (b) of this section are

not cumulative.

(d) Unjust enrichment. (1) A licensee

that utilizes a bidding credit, and that

during the initial license term seeks to

assign or transfer control of a license to

an entity that does not meet the
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23173

eligibility criteria for a bidding credit,

will be required to 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 Commission approval of

the assignment or transfer. If, within the

initial term of the license, a licensee that

utilizes a bidding credit seeks to assign

or transfer control of a license to an

entity that is eligible for a lower bidding

credit, the difference between the

bidding credit obtained by the assigning

party and the bidding credit for which

the acquiring party would qualify, plus

interest at the rate imposed for

installment financing at the time the

license was awarded, must be paid to

the U.S. government as a condition of

Commission approval of the assignment

or transfer. If, within the initial license

term, a licensee that utilizes a bidding

credit seeks to make any ownership

change that would result in the licensee

losing eligibility for a bidding credit (or

qualifying for a lower bidding credit),

the amount of the bidding credit (or the

difference between the bidding credit

originally obtained and the bidding

credit for which the restructured

licensee would qualify), plus interest at

the rate imposed for installment

financing at the time the license was

awarded, must be paid to the U.S.

government as a condition of

Commission approval of the ownership

change.

(2) The amount of payments made

pursuant to paragraph (d)(1) of this

section will be reduced over time as

follows:

(i) 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, in the case of

small businesses transferring to

businesses having average gross

revenues of more than $40 million but

not more than $75 million, 100 percent

of the difference between the bidding

credit received by the former and the

bidding credit for which the latter is

eligible);

(ii) In year three of the license term

the payment will be 75 percent;

(iii) In year four the payment will be

50 percent; and

(iv) In year five the payment will be

25 percent, after which there will be no

required payment.

§ 101.1108 Installment payments for

licenses won by small businesses and

entities with average gross revenues of not

more than $75 million.

(a) A winning bidder that qualifies as

a small business pursuant to § 101.1112

must submit to the Commission a down

payment of 20 percent of the net auction

price for the license pursuant to

§ 101.1105(c) and may pay the

remaining 80 percent of the net auction

price for the license in installment

payments over the term of the license.

Interest shall be imposed based on the

rate for ten-year U.S. Treasury

obligations applicable on the date the

license is granted, plus 2.5 percent.

Payments shall include interest only for

the first two years and payments of

interest and principal amortized over

the remaining eight years of the license

term.

(b) A winning bidder that has average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million pursuant to

§ 101.1112 must submit to the

Commission a down payment of 20

percent of the net auction price for the

license pursuant to § 101.1105(c) and

may pay the remaining 80 percent of the

net auction price for the license in

installment payments. Interest shall be

imposed based on the rate for ten-year

U.S. Treasury obligations applicable on

the date the license is granted, plus 2.5

percent. Payment of interest and

principal shall be amortized over the ten

years of the license term.

(c) Unjust enrichment. A licensee that

utilizes installment financing and that

seeks to assign or transfer control of a

license to an entity not meeting the

eligibility standards for installment

payments must pay not only unpaid

principal but also any unpaid interest

accrued through the date of assignment

or transfer as a condition of Commission

approval. If a licensee that utilizes

installment financing seeks to assign or

transfer control of a license to an entity

qualifying for a less favorable

installment plan, its payment plan will

be adjusted to reflect the assignee’s or

transferee’s eligibility status as a

condition of Commission approval of

the assignment or transfer. If a licensee

that utilizes installment financing seeks

to change its ownership structure in

such a way that would result in a loss

of eligibility for installment payments, it

must pay the unpaid principal and

accrued interest as a condition of

Commission approval of the change. If

such a change in ownership would

result in the licensee qualifying for a

less favorable installment plan, it must

adjust its payment plan to reflect its

new eligibility status as a condition of

Commission approval. A licensee may

not change its payment plan to a more

favorable plan.

(d) Late installment payment. Any

licensee that submits a scheduled

installment payment more than fifteen

days late will be charged a late payment

fee equal to five percent of the amount

of the past due payment.

(e) Payments will be applied in the

following order: late charges, interest

charges, principal payments.

§ 101.1109 Certifications, disclosures,

records maintenance and audits.

(a) Short-form applications:

certifications and disclosure. In addition

to certifications and disclosures

required in part 1, subpart Q, of this

chapter, each applicant for an LMDS

license which qualifies as a small

business or a business with average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million shall append the

following information as an exhibit to

its FCC Form 175:

(1) The identity of the applicant’s

affiliates and controlling principals; and

(2) The applicant’s gross revenues,

computed in accordance with

§ 101.1112.

(b) Long-form applications:

certifications and disclosure. In addition

to the requirements in § 1.2107 of this

chapter, each applicant submitting a

long-form application for an LMDS

license and qualifying as a small

business or a business with average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million shall, in an

exhibit to its long-form application:

(1) Disclose separately and in the

aggregate the gross revenues, computed

in accordance with § 101.1112, for each

of the following: the applicant, the

applicant’s affiliates, the applicant’s

controlling principals, and, if a

consortium of small businesses or

businesses with average gross revenues

for the three preceding years of more

than $40 million but not more than $75

million, 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 or a business with average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million, 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
23174 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

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

or businesses with average gross

revenues for the three preceding years of

more than $40 million but not more

than $75 million shall maintain at their

principal place of business an updated

file of ownership, revenue, and asset

information, including any document

necessary to establish eligibility as a

small business or business with average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million. 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 shortform application (FCC Form 175),

whichever is earlier.

(d) Audits. (1) Applicants and

licensees claiming eligibility as a small

business or business with average gross

revenues for the three preceding years of

more than $40 million but not more

than $75 million 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 LMDS service, and

shall also include consent to the

interview of principals, employees,

customers and suppliers of the

applicant or licensee.

§ 101.1110 Petitions to deny.

Procedures regarding petitions to

deny long-form applications in the

LMDS service will be governed by

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

§ 101.1111 Procedures for partitioned

licenses.

(a) LMDS licensees may apply to

partition their licensed geographic

service area or disaggregate their

licensed spectrum.

(b) If partitioned licenses or

disaggregated licenses are being applied

for in conjunction with a license(s) to be

awarded through competitive bidding

procedures—

(1) 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,

which must disclose as part of its shortform application all parties to

agreement(s) with or among entities to

partition or disaggregate the license

pursuant to this section, if won at

auction. See § 1.2105(a)(2)(viii).

(2) Each entity that is a party to an

agreement to partition the license shall

file a long-form application for its

respective, mutually agreed-upon

geographic area or spectrum together

with the application for the remainder

of the BTA or spectrum filed by the

auction winner.

(c) If the partitioned or disaggregated

license is being applied for as a partial

assignment of the license following

grant of the initial license, request for

authorization for partial assignment of a

license shall be made pursuant to

§ 101.115(f).

§ 101.1112 Definitions.

(a) Scope. The definitions in this

section apply to §§ 101.1101 through

101.1112, unless otherwise specified in

those sections.

(b) Small business; consortium. (1) A

small business is an entity that, together

with its affiliates and controlling

principals, has average gross revenues

for the three preceding years of not more

than $40 million.

(2) For purposes of determining

whether an entity meets the definition

of small business or qualifies as a

business with average gross revenues for

the three preceding years of more than

$40 million but not more than $75

million, the gross revenues of the

applicant, its affiliates and controlling

principals shall be considered on a

cumulative basis and aggregated.

(3) Consortium. A consortium of small

businesses, or a consortium of

businesses with average gross revenues

for the three preceding years of more

than $40 million but not more than $75

million, 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 or business with average gross

revenues for the three preceding years of

more than $40 million but not more

than $75 million. Each individual

member must establish its eligibility as

a small business or business with

average gross revenues for the three

preceding years of more than $40

million but not more than $75 million.

Where an applicant (or licensee) is a

consortium of small businesses or a

consortium of businesses with average

gross revenues for the three preceding

years of more than $40 million but not

more than $75 million, the gross

revenues of each 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),

as evidenced by audited financial

statements for the relevant number of

most recently completed calendar years,

or, if audited financial statements were

not prepared on a calendar-year basis,

for the most recently completed fiscal

years preceding the filing of the

applicant’s short-form application (FCC

Form 175). 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 predecessorin-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
Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations 23175

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 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 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

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, step-brother

or -sister, step-son or -daughter, halfbrother 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

an LMDS license 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 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 owns, controls,

or has the power to control less than 50

percent of the concern’s voting stock, if

the block of stock 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 an LMDS 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 percent (70 of 100

outstanding shares) of the voting stock of

company A, who holds a controlling interest

in an LMDS license 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 or the

management (or both) of another entity.

(8) Affiliation through common

facilities. Affiliation generally arises

where one concern shares office space,

employees, or other facilities (or any

combination of the foregoing) 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
23176 Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / Rules and Regulations

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 or individuals

(or both), 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.

[FR Doc. 97–9711 Filed 4–28–97; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[MM Docket No. 87–267; FCC 97–68]

Implementation of the AM Expanded

Band Allotment Plan

AGENCY: Federal Communications

Commission.

ACTION: Final rule; petitions for

reconsideration.

SUMMARY: In Implementation of the AM

Expanded Band Allotment Plan, FCC

97–68, the Federal Communications

Commission granted in part and denied

in part petitions for reconsideration of

Comments in Response to

Reconsideration of Implementation of

the AM Expanded Band and Allotment

Plan, FCC 96–113, April 18, 1996 (61 FR

16878), and Public Notice, Mass Media

Bureau Announces Revised Expanded

AM Broadcast Band Improvement

Factors and Allotment Plan, DA 96–408

(released March 22, 1996). By this

action the Commission rescinds the

second allotment plan for the AM

expanded band, i.e., 1605–1705 kHz,

modifies the frequency preclusion

program, and eliminates software and

coding errors in the frequency

preclusion and allotment computer

programs. This action was taken to

ensure that the stations assigned

expanded band frequencies would

protect existing stations, conform to

international agreements, and provide

interference-free reception within their

service areas.

EFFECTIVE DATE: March 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Peter H. Doyle, Audio Services Division,

Mass Media Bureau, (202) 418–2625.

SUPPLEMENTARY INFORMATION:

Concurrent with the release of

Implementation of the AM Expanded

Band Allotment Plan, the Commission’s

Mass Media Bureau released a Public

Notice announcing a revised eightyeight station Expanded Band Allotment

Plan in the frequency band between

1605 and 1705 kHz. The Revised

Expanded Band Allotment Plan

identifies stations eligible for specific

allotments. See Public Notice DA 97–

537, released March 17, 1997. Such

licensees will also be notified

individually by letter. Identified stations

are afforded until June 16, 1997 to file

an application for construction permit

on the allotted channel. Applications

will be subject to petitions to deny but

not to competing applications. Each

Expanded Band permittee, following

grant of construction permit

applications and construction of

authorized facilities, will be required to

file an application for covering license

on FCC Form 302. Expanded Band

licensees will receive authorizations

permitting dual frequency operations for

a period not to exceed five years. The

full text of the Implementation of the

AM Expanded Band Allotment Plan,

FCC 97–68, adopted February 27, 1997

and released March 17, 1997 is available

for inspection and copying during

normal business hours in the FCC

Dockets Branch (Room 230), 1919 M

Street, NW, Washington, D.C. (See MM

Docket 87–267). The complete text of

this order may also be purchased from

the Commission’s copy contractor,

International Transcription Service

(ITS), 2100 M Street, NW, Suite 140,

Washington, D.C. 20037.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–10844 Filed 4–28–97; 8:45 am]

BILLING CODE 6712–01–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 679

[Docket No. 970226037–7094–02; I.D.

022197F]

RIN 0648–AJ39

Fisheries of the Exclusive Economic

Zone Off Alaska; Management

Measures to Reduce Seabird Bycatch

in the Hook-and-Line Groundfish

Fisheries

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Final rule.

SUMMARY: NMFS issues regulations to

require operators of hook-and-line

vessels fishing for groundfish in the

Bering Sea and Aleutian Islands

management area (BSAI) and the Gulf of

Alaska (GOA), and operators of hookand-line vessels that are required to

obtain a Federal permit and are fishing

for groundfish in Alaskan waters

adjacent to the BSAI and to the GOA, to

conduct fishing operations in a

specified manner, and to employ

specified bird avoidance techniques to

reduce seabird bycatch and incidental

seabird mortality. This measure is

necessary to mitigate hook-and-line

fishery interactions with the short-tailed

albatross, an endangered species

protected under the Endangered Species

Act (ESA), and other seabird species.

This measure is intended to accomplish

the objectives of the ESA and of the

Fishery Management Plan for

Groundfish of the Gulf of Alaska and the

Fishery Management Plan for the

Groundfish Fishery of the Bering Sea

and Aleutian Islands Area (Groundfish

FMPs) with respect to the management

of the GOA groundfish fishery and the

BSAI groundfish fishery and the marine

environment.

EFFECTIVE DATE: May 29, 1997.

ADDRESSES: Copies of the

Environmental Assessment/Regulatory

Impact Review/Final Regulatory

Flexibility Analysis (EA/RIR/FRFA)

prepared for the final rule may be

obtained from the North Pacific Fishery

Management Council, Suite 306, 605

West 4th Avenue, Anchorage, AK

99501–2252; telephone: 907–271–2809.

FOR FURTHER INFORMATION CONTACT: Kim

S. Rivera, 907–586–7228.

SUPPLEMENTARY INFORMATION: The U.S.

groundfish fisheries of the GOA and the

BSAI in the Exclusive Economic Zone