26502 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

number calls because their switch-based

reseller customers have identified

themselves as responsible for paying the

compensation, those facilities-based

carriers must cooperate with PSPs

seeking to bill for resold services. Thus,

a facilities-based carrier must indicate,

on request by the billing PSP, whether

it is paying per-call compensation for a

particular number. If it is not, then it

must identify the switch based reseller

responsible for paying payphone

compensation for that particular 800

number. Facilities-based IXCs and

switched-based resellers may not avoid

compensating PSPs by withholding the

name of the carrier responsible for

paying per-call compensation, thereby

avoiding the requirements of the

Payphone Orders and Section 276.

IV. Conclusion and Ordering Clauses

31. For the foregoing reasons, we

grant in part AT&T’s letter request to

pay per-phone compensation to PSPs

where payphone-specific coding digits

are not available. We find that allowing

AT&T and other similarly situated IXCs

to pay per-phone instead of per-call

compensation based on the

methodology set forth above, is in the

public interest, because it will further

the goals of Section 276 of the Act, that

PSPs be compensated for each and every

completed call and will ease the

transition to per-call compensation.

32. Accordingly, pursuant to authority

contained in Sections 1, 4, 201–205,

218, 226, and 276 of the

Communications Act of 1934, as

amended, 47 U.S.C. 151, 154, 201–205,

218, 226, and 276, that the policies and

requirements set forth herein are

adopted.

33. It is further ordered that this order

is effective immediately upon release

thereof.

34. It is further ordered that AT&T’s

letter request to pay on a per-phone

instead of a per-call basis is granted to

the extent described herein and is

otherwise denied.

Federal Communication Commission.

A. Richard Metzger, Jr.,

Chief, Common Carrier Bureau.

[FR Doc. 98–12347 Filed 5–12–98; 8:45 am]

BILLING CODE 6712–01–U

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 101

[CC Docket No. 92–297; FCC 98–77]

Rules and Policies for Local Multipoint

Distribution Service and for Fixed

Satellite Services

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This action amends the rules

to adopt partitioning and disaggregation

rules for the Local Multipoint

Distribution Service (LMDS). This

action will encourage spectrum

efficiency and the more rapid

deployment of service to the public. The

effect of these rules is to provide LMDS

licensees greater flexibility to respond to

marketplace demands.

EFFECTIVE DATE: May 28, 1998.

FOR FURTHER INFORMATION CONTACT:

Susan Magnotti of the Public Safety and

Private Wireless Division, Wireless

Telecommunications Bureau at 202–

418–0680 or via email at

smagnott@fcc.gov.

SUPPLEMENTARY INFORMATION:

1. This is a summary of the

Commission’s Fourth Report and Order

to allow partitioning and disaggregation

for LMDS spectrum.

2. On March 11, 1997, the

Commission adopted the Second Report

and Order (Second Report and Order),

62 FR 23148; April 29, 1997, Order on

Reconsideration, and Fifth Notice of

Proposed Rule Making (Fifth NPRM), 62

FR 16514; April 7, 1997, wherein it

established service rules to govern

licensing of LMDS and competitive

bidding rules to select among mutually

exclusive LMDS applications. The

Commission concluded that its actions

would open the door for new broadband

wireless services and that LMDS

spectrum could be used to provide

competition to both local exchange

carriers (LECs) and cable television

systems. It envisioned that our LMDS

service and licensing rules would foster

the future growth of this new service

and permit LMDS licensees to satisfy a

broad array of their customer’s

communications needs. In addition, the

Commission permitted partitioning and

disaggregation by LMDS licensees to

encourage spectrum efficiency and the

more rapid deployment of service, and

to leave the decision of determining the

correct size of licenses to the licensees

and the marketplace. It concluded that

allowing partitioning and disaggregation

for LMDS spectrum would create

powerful tools for licensees to

concentrate on core areas or to deliver

services outside of the major market

areas. The Commission further found

that LMDS partitioning and

disaggregation would provide

opportunities for small businesses

seeking to enter the multipoint video

distribution and local telephony

marketplaces.

3. In the Fifth NPRM, the Commission

sought comment on specific procedural,

administrative and operational rules to

govern LMDS partitioning and

disaggregation. It sought comment on

how rights and obligations of LMDS

licensees would be affected if such

licensees were permitted to avail

themselves of the partitioning and

disaggregation options. It also sought

comment on whether there are any

technical or regulatory constraints

unique to the LMDS service that would

render any aspects of partitioning and

disaggregation impractical or

administratively burdensome. In this

connection, the Commission noted that

it had recently adopted specific

procedures for partitioning and

disaggregation in the broadband

Personal Communications Services

(PCS) and sought comment on whether

such procedures would be appropriate

for LMDS. A total of five comments and

five reply comments were received in

response to the Fifth NPRM.

A. Available License Area

4. Background. In the Fifth NPRM, the

Commission tentatively concluded that

parties to a LMDS partitioning

agreement should be afforded flexibility

in defining partitioned license areas. It

sought comment on this tentative

conclusion and, in particular, asked

whether there are any technical or other

issues unique to LMDS that would

dictate a different approach.

5. Discussion. We conclude that

LMDS licensees should have broad

flexibility in defining partitioned

license areas. As we noted in the Fifth

NPRM, such an approach is consistent

with our treatment of partitioning in

other services, particularly broadband

PCS. In addition, we believe that

allowing LMDS licensees to partition

their service areas along any boundaries

they wish will enhance their ability to

respond quickly to consumer demands.

In this connection, we agree with

CellularVision USA, Inc.

(CellularVision) that such an approach

will allow LMDS licensees to consider

unique geographical or market

characteristics when designing their

business plans. We also are concerned

that requiring LMDS partitioned areas to

be based upon a uniform standard, such
Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations 26503

as geopolitical boundaries or county

lines, might unnecessarily restrict

LMDS partitioning opportunities. For

example, Hardin predicts that LMDS

operations will most likely consist of

cell sites with a small range. In this

context, Hardin contends that

partitioning based upon a minimum

standard, such as geopolitical

boundaries or county lines, would not

accommodate small-scale partitioning

options which may be desirable for

LMDS spectrum. We also previously

concluded that LMDS has the capacity

to meet the more circumscribed needs of

smaller operators and niche markets.

We find that permitting partitioning into

smaller units will further assist small

operators to meet their business goals

and will encourage the development of

niche markets and innovative service

offerings. Thus, we believe that more

flexible partitioning will better serve the

interests of LMDS licensees and the

public.

6. As we have in all other contexts in

which we have permitted partitioning,

we will require that parties seeking

approval to partition an LMDS license

submit a description of the partitioned

service area. The partitioned service

area must be defined by coordinate

points at every 3 degrees along the

partitioned service area agreed to by

both parties, unless either (1) an FCCrecognized service area is utilized (i.e.,

Metropolitan Statistical Area, Rural

Service Area or Economic Area) or (2)

county lines are followed. If the

partitioned service area includes an

FCC-recognized service area or county

and additional areas, applicants are

required to identify the FCC-recognized

service areas or county and give the

aforementioned coordinate data for the

additional areas. These geographical

coordinates must be specified in

degrees, minutes and seconds to the

nearest second of latitude and

longitude. For areas located in the

coterminous United States and Alaska

the geographical coordinates must be

based upon the 1983 North American

Datum (NAD83). For locations in areas

such as Hawaii, Puerto Rico, the South

Pacific Islands, etc. the geographical

coordinates must be based upon the

World Geodetic System of 1984

(WGS84). This coordinate data should

be supplied as an attachment to the

assignment application, but maps need

not be supplied. In cases where an FCC

recognized service area or county lines

are being utilized, applicants must list

the specific area(s) (through use of FCC

designations) or counties that comprise

the partitioned area.

B. Disaggregation Standards

7. Background. In conjunction with

the general rule permitting

disaggregation of LMDS spectrum in the

Second R&O, the Commission did not

propose any restrictions on the amount

of spectrum that licensees could

disaggregate. In the Fifth NPRM, it

nonetheless requested comment as to

whether there should be spectrum limits

on disaggregation. The Commission

asked commenters to indicate any

unique characteristics of LMDS which

would warrant such limitations.

8. Discussion. We conclude that no

minimum or maximum limits should be

imposed on disaggregation of LMDS

spectrum. We agree with commenters’

arguments that we should establish

similar rules in LMDS for disaggregation

as we established for other wireless

services such as broadband PCS. We

also agree with WebCel that regulatory

parity will be achieved by adopting a

similar disaggregation rule for all

wireless services. As with partitioning,

we believe that permitting market forces

to determine whether and how much

spectrum is disaggregated will ensure

that LMDS licensees are able to use their

spectrum more efficiently and to

respond quickly to customer demand. In

addition, we believe that affording

LMDS licensees this flexibility will

facilitate participation by small

businesses in the provision of LMDS.

9. Based on our review of the record,

we are not persuaded that there should

be any restrictions on the amount of

spectrum that LMDS licensees can

disaggregate. We disagree with Texas

Instruments’ argument that LMDS

licensees cannot provide competition to

LECs and cable television operators

unless they are required to retain a

substantial portion of their spectrum. To

the contrary, we find that requiring

LMDS licensees to retain a substantial

portion of their spectrum could

potentially exclude small businesses

from entering the LMDS marketplace.

We believe that such a result would

ultimately limit, rather than encourage,

competition. We also disagree with

Texas Instruments’ contention that

LMDS has unique characteristics

warranting a requirement that a licensee

retain a predominant share of its LMDS

spectrum. Texas Instruments argues that

we should follow the example of our

decision in the direct broadcast satellite

(DBS) proceeding. In the DBS R&O, 60

FR 65587; December 20, 1995, we

required that DBS licensees, after 5

years from date of license grant, use a

predominant share of their authorized

spectrum for DBS service. Texas

Instruments argues that we should

adopt a similar requirement for LMDS

licensees with the majority of LMDS

spectrum remaining with the original

licensee and being used to provide

LMDS. We disagree that LMDS licensees

should be required to retain a certain

amount of their spectrum. In the DBS

R&O, we required licensees to use a

portion of their spectrum to provide

DBS service to ensure that this spectrum

is used principally for DBS service. We

enacted this restriction to ensure the

viability of the DBS service and to carry

out the international allocation of this

spectrum for DBS use. By contrast, there

are no similar unique characteristics of

LMDS, particularly in light of the fact

that LMDS licensees can provide a wide

array of terrestrial services. The fact that

licensees have the freedom under our

rules to use their spectrum for different

applications makes it potentially

constraining to adopt a minimum

disaggregation standard. Therefore, we

find there is no public interest reason to

restrict the amount of LMDS spectrum

that can be disaggregated.

C. Combined Partitioning and

Disaggregation

10. Background. In the Fifth NPRM,

the Commission tentatively concluded

that combined partitioning and

disaggregation should be permitted to

provide LMDS licensees with the

additional flexibility they need to

respond to market forces and service

demands. With combined partitioning

and disaggregation, it contemplated that

an entity would have the flexibility to

obtain a portion of Block A or Block B

spectrum in only a portion of the

original licensee’s BTA.

11. Discussion. We conclude that

permitting combined partitioning and

disaggregation will afford interested

parties flexibility to provide a variety of

service offerings, including those of

particular interest to niche markets. We

believe that this approach will further

our regulatory goals of facilitating the

provision of competitive service

offerings, encouraging new market

entrants, and promoting quality service

to the public.

12. While several parties agree that

combined partitioning and

disaggregation should be permitted,

WebCel and Alcatel contend that such

an approach could be problematic.

WebCel expresses concern regarding the

potential administrative burdens

associated with processing numerous

partitioning and disaggregation requests.

WebCel argues that such an approach

would create the potential for a large

number of applications overwhelming

the Commission’s processing resources

and delaying delivery of LMDS service
26504 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

to the public. We are unpersuaded by

WebCel’s speculative concern. We note

that while this potential also

theoretically exists in the other wireless

services for which we have adopted

partitioning and disaggregation rules,

our experience has shown that we have

been able to handle the partitioning and

disaggregation applications without any

resulting undue delay in the delivery of

new services. In addition, we believe

that any administrative burden of

processing partitioning and

disaggregation applications will be

lessened by implementation of the

Universal Licensing System (ULS) for

wireless services, including LMDS,

which is already partially on-line

accepting electronically-filed

applications. We expect that the

electronic filing and mapping

capabilities of the ULS will ultimately

allow for the expeditious processing of

LMDS partitioning and disaggregation

applications.

13. Alcatel argues that it is unclear

how LMDS licensees are to conduct

frequency coordination for partitioned

and disaggregated licenses. Accordingly,

Alcatel seeks clarification as to the

frequency coordination obligations of

LMDS partitionees and disaggregatees.

We clarify that all LMDS licensees,

including partitionees and

disaggregatees, are required to comply

with the frequency coordination

provisions set forth in § 101.103 of the

Commission’s Rules. We adopted this

approach in the Second R&O and herin

we do not provide an exception for

partitioning and disaggregation. We

further note that the identity of

neighboring LMDS licensees should be

readily available in the Commission’s

database, particularly with the

implementation of ULS. Thus, we

conclude that the concerns expressed by

WebCel and Alcatel do not present

sufficient reasons for not permitting

combined partitioning and

disaggregation.

D. Construction Requirements

14. Background. LMDS licensees must

provide ‘‘substantial service’’ to their

service area within ten years. In the

Fifth NPRM, the Commission proposed

that, for partitioned LMDS licenses, the

partitionee must certify that it will

satisfy the same construction

requirements as the original licensee.

The partitionor and partitionee would

therefore be required to meet separate

substantial service requirements for

their respective portions of the

partitioned service area. For

disaggregation, the Commission

proposed that the parties would be

required to submit a certification, signed

by both the disaggregator and

disaggregatee, stating whether one or

both of the parties will retain

responsibility for meeting the

substantial service requirement for the

service area. It proposed that, if one

party takes responsibility for meeting

the performance requirement, then

actual performance by that party would

be taken into account in a renewal

proceeding at the end of the license

term, but such performance would not

affect the status of the other party’s

license. If the parties agreed to share the

responsibility for meeting the

performance requirement, then the

performance of each of the parties

would be taken into account in their

respective renewal proceedings.

15. Discussion Partitioned Licenses.

We conclude that the public interest

would be furthered by adopting an

approach analogous to that used in

other contexts, particularly broadband

PCS, rather than adopting our proposal

for partitioning. In other wireless

services, we have allowed licensees the

flexibility to negotiate which party will

be responsible for meeting the

applicable construction requirements. In

each of those cases, our goal has been

to ensure that licensees had the

flexibility to structure their business

plans while ensuring that partitioning

not be used as a vehicle to circumvent

the applicable construction

requirements. We have allowed parties

to partitioning agreements in other

wireless services the flexibility to

choose between two options for

satisfying the construction

requirements. For example, we allow

broadband PCS licensees the option of

either agreeing to meet the construction

requirements for their respective

portions of the partitioned market or for

the original licensee to certify that it had

or would meet the five- and ten-year

construction requirements for the entire

market. We adopted this second option

to allow parties the flexibility to agree

that one party would take responsibility

for meeting the construction

requirement for the entire licensed area.

Similarly, we believe that parties

interested in entering into LMDS

partitioning arrangements should be

afforded the same flexibility. Under the

first option, the partitionor and

partitionee would each certify that it

will independently satisfy the

substantial service requirement for its

respective partitioned area. If a licensee

fails to meet its substantial service

requirement during the relevant license

term, the non-performing licensee’s

authorization would be subject to

cancellation at the end of the license

term. Under the second option, the

partitionor certifies that it has met or

will meet the substantial service

requirement for the entire market. If the

partitionor fails to meet the substantial

service standard during the relevant

license term, however, only its license

would be subject to cancellation at the

end of the license term. The

partitionee’s license would not be

affected by that failure.

16. As indicated in the Second R&O,

the availability of partitioning will

promote and facilitate smaller-scale

service offerings and market niches to

develop which would be appropriate for

smaller operators who could not manage

an entire BTA. Our decision to offer two

options is based on our belief that

LMDS licensees may be motivated to

enter into partitioning arrangements for

different reasons and under various

circumstances. For example, as

discussed by DBC, a LMDS licensee

might be motivated to partition its

license in order to reduce its

construction costs. In that case, the

original licensee would have less

population to cover in order to meet its

substantial service requirement. Thus, it

may find the first option most attractive

for its purposes. Under another

scenario, a LMDS licensee that has met

or is close to meeting its substantial

service requirement may be approached

by another entity interested in serving a

niche market in a portion of the service

area. Under these circumstances, the

second option may seem most attractive

to the parties. We believe that the

partitioning rules for LMDS should

address both of these scenarios. We

further believe that in both contexts

partitioning cannot be used to

circumvent the LMDS construction

requirements. In any event, we note that

we will examine each situation on a

case-by-case basis when the licensees

file their renewal applications and will

be able to address any abuses of the

partitioning options in that context.

17. In addition, pursuant to

CellularVision’s request, we clarify if a

partitionor and partitionee elect to meet

the substantial service for their

respective partitioned areas, then we

would make an independent assessment

of the construction efforts of the

partitionor and partitionee based on the

partitioned area, population served, and

actual service provided. We

acknowledge CellularVision’s

observation that the service offering

provided by a partitionee might be quite

different than that provided by the

original licensee.

18. Disaggregated Licenses. As we

proposed in the Fourth NPRM, 61 FR

44177; August 28, 1996, we establish
Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations 26505

1We therefore do not need to consider the

alternative proposals set forth by CellularVision and

DBC concerning the handling of installment

payments with respect to LMDS partitioning and

disaggregation. See CellularVision Comments at 11–

13; DBC Reply Comments at 5–6.

two options for disaggregating licensees.

This approach is consistent with what

we have done in other wireless contexts.

We believe that it would be appropriate

for either the disaggregator or the

disaggregatee to assume full

responsibility for construction within

the shared service area, because service

would be offered over the relevant

population, even if not on the entire

spectrum. As DBC points out in its

comments, supra, we agree that this

option could encourage a LMDS

licensee to make some of its spectrum

available to others. Accordingly, we will

permit two options for meeting the

construction requirements by

disaggregators and disaggregatees.

Under the first option, the disaggregator

and disaggregatee would certify that

they each will share responsibility for

meeting the substantial service

requirement for the geographic service

area. If parties choose this option, both

parties’ performance will be evaluated

at the end of the relevant license term

and both licenses could be subject to

cancellation. The second option would

allow the parties to agree that either the

disaggregator or the disaggregatee would

be responsible for meeting the

substantial service requirement for the

geographic service area. If parties

choose this option, and the party

responsible for meeting the construction

requirement fails to do so, only the

license of the nonperforming party

would be subject to cancellation.

19. We continue to believe that these

build-out provisions fulfill our

obligations under Section 309(j)(4)(B).

We also believe that the auction and

service rules which we are adopting for

LMDS, together with our overall

competition and universal service

policies, constitute effective safeguards

and performance requirements for

LMDS licensing. We believe that service

to rural areas will be promoted by our

proposal to allow partitioning and

disaggregation of LMDS spectrum. The

options established herein are intended

to provide the greatest possible

flexibility to licensees and partitionees

while ensuring that rural and niche

market areas receive LMDS services.

Accordingly, we continue to reserve the

right to impose additional, more

stringent construction requirements on

LMDS licensees in the future in the

event of actual anticompetitive or rural

service problems and if more stringent

construction requirements can

effectively ameliorate those problems.

E. License Term and Renewal

Expectancy

20. Background. LMDS licenses are

granted for ten-year terms. In addition,

an LMDS licensee involved in a

comparative renewal proceeding may

qualify for a renewal expectancy if the

licensee demonstrates that it has

provided substantial service during its

license term, and that it has

substantially complied with the

Communications Act and applicable

Commission rules and policies. In the

Fifth NPRM, the Commission sought

comment on whether our LMDS rules

should provide that parties obtaining

LMDS licenses for partitioned areas or

disaggregated spectrum hold their

license for the remainder of the original

licensee’s ten-year term. It noted that, in

the Broadband PCS R&O, 62 FR 696,

January 6, 1997, the Commission found

that allowing parties acquiring licenses

through partitioning and disaggregation

to ‘‘re-start’’ the license term from the

date of the grant of the assignment

application could allow parties to

circumvent our rules regarding license

terms and unnecessarily delay service to

the public. It also sought comment on

whether LMDS partitionees and

disaggregatees should be afforded the

same renewal expectancy as other

LMDS licensees.

21. Discussion. We find that LMDS

partitionees and disaggregatees should

hold their licenses for the remainder of

the original licensee’s ten-year term.

This approach is supported by the

commenters and is consistent with our

action in other wireless services. We see

no reason to adopt a different approach

for LMDS. As we did with licensees in

other wireless services, we believe that

LMDS licensees would have less of an

incentive to fully utilize their available

spectrum if they were permitted to wait

until the end of their license term to

partition a portion of their market or

disaggregate a portion of their spectrum

to another entity that would receive a

full ten year license term. By limiting

the license term for LMDS partitionees

and disaggregatees, we believe that there

will be maximum incentive for parties

to quickly utilize their spectrum and

expedite the delivery of LMDS services

to the public.

22. In addition, we will permit

partitionees and disaggregatees to obtain

a renewal expectancy on the same basis

as other licensees. All licensees meeting

the substantial service requirement will

be deemed to have met this facet of the

renewal expectancy requirement

regardless of which of the construction

options the licensees chose.

CellularVision asks that we clarify

whether LMDS partitionees and

disaggregatees may seek a renewal

expectancy that is based upon their

reduced license period. CellularVision

maintains that it would be inequitable,

for example, to require a LMDS

partitionee with a three-year initial

license term to meet the same level of

substantial service to obtain a renewal

expectancy as the original licensee. We

decline to recognize a ‘‘scaled-down’’

substantial service construction

requirement for partitionees and

disaggregatees. Rather, we believe that

parties interested in availing themselves

of the partitioning and/or disaggregation

opportunities should factor in their

ability to meet the substantial service

requirement when determining the

timing of such transactions. We believe

that the provisions we have made for

construction options for partitioned and

disaggregated licenses provide

appropriate flexibility, while ensuring

that a reasonable standard of service

will be provided to the public and that

licensees will not be able to bypass our

construction requirements. Moreover,

we will address each situation on a

case-by-case basis taking into account

the amount of time the licensee has had

to employ its service along with other

factors.

F. Competitive Bidding Issues

23. Background. When the

Commission adopted the Fifth NPRM,

the competitive bidding rules for LMDS

included installment payments and

bidding credits for qualified entities. It

also adopted rules to prevent unjust

enrichment by such entities that seek to

transfer licenses obtained through use of

these special provisions to an entity that

would not have qualified for them.

Subsequent to our adoption of the Fifth

NPRM, the Commission eliminated

installment payments for LMDS.

Therefore, the proposals in the Fifth

NPRM concerning whether partitionees

and disaggregatees should be able to

qualify for installment payments and

how to apportion the remaining

government obligation between the

parties are now moot.1 We note,

however, that three levels of bidding

credits are available to LMDS

applicants. In the Fifth NPRM, the

Commission sought comment on how to

calculate unjust enrichment payments

for LMDS licensees that are awarded

bidding credits and subsequently

partition or disaggregate to a larger

business. It asked commenters to

address whether the unjust enrichment

payments should be calculated on a

proportional basis, using population of

the partitioned area and amount of
26506 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

2 47 U.S.C. 310(d). We note that we recently

determined that we would forbear from applying

our procedures for reviewing pro forma transfers of

control and assignments of license involving

wireless telecommunications carriers and we

decided to allow these carriers to simply notify the

Commission after the pro forma transaction has

been consummated. See Federal Communications

Bar Association’s Petition for Forbearance from

Section 310(d) of the Communications Act

Regarding Non-Substantial Assignments of Wireless

Licenses and Transfers of Control Involving

Telecommunications Carriers, Memorandum

Opinion and Order, FCC 98–18 (February 4, 1998).

However, partitioning and disaggregation

transactions are not pro forma in nature and,

therefore, the rationale we followed in that

proceeding would not apply here.

spectrum disaggregated as the objective

measures.

24. Discussion. We recently adopted a

provision in Part 1 of the Commission’s

Rules for all auctionable services that

follows the approach set forth in the

Fifth NPRM for calculating unjust

enrichment payments in the context of

partitioning and disaggregation. Thus,

we will follow the uniform procedure

set forth in Part 1 of our Rules and

calculate unjust enrichment based on

population for partitioned areas and on

the amount of spectrum for

disaggregated spectrum. We note that

population will be calculated based

upon the latest available census data.

We have consistently adopted this

approach for other wireless services,

and we agree with WebCel that this

approach provides an objective means

of calculating unjust enrichment

payments in the context of partitioning

and disaggregation. For purposes of

applying our unjust enrichment

requirements when a combined

partitioning and disaggregation is

proposed, we will use a combination of

both population of the partitioned area

and amount of spectrum disaggregated

to make these pro rata calculations.

G. Licensing

25. Background. Because partitioning

and disaggregation involves the

assignment of a portion of a licensee’s

service area or spectrum to another

entity, in the Fifth NPRM the

Commission proposed to treat the

partitioning and disaggregation of LMDS

licenses as assignments requiring its

prior approval. It proposed to follow the

existing assignment procedures set forth

in Part 101 of our rules for purposes of

reviewing LMDS partitioning and

disaggregation transactions.

26. Discussion. We adopt the

procedures set forth in our Fifth NPRM

for review and approval of LMDS

partitioning and disaggregation

transactions. We agree with

CellularVision that all LMDS

partitioning and disaggregation

agreements should be subject to our

formal assignment process. We decline

to adopt WebCel’s proposal that we

permit parties to enter into agreements

to partition and disaggregate without

prior Commission approval so long as

notification is given to the Commission

by the original LMDS licensee upon

consummation of the transaction. Under

WebCel’s proposal, the original licensee

would retain an ownership interest in

the license and would continue to be

responsible for compliance with the

Commission’s rules, maintaining

records as to the spectrum allocated and

geographic areas served by the different

parties, and engaging in frequency

coordination among all LMDS license

holders within its BTA. WebCel states

that this model would operate like a

‘‘landlord-tenant-subtenant’’

relationship. By contrast, we consider

partitioning and disaggregation

transactions to be partial assignments of

license, for which Commission review

and approval is necessary under Section

310(d) of the Communications Act.2

Although arrangements such as that

proposed by WebCel might be

permissible, we note that the

Commission requires that the licensee

remain in control of its license, and for

this determination, the Commission

relies on the test announced in

Intermountain Microwave. As a result,

any arrangement that would result in a

licensee losing control of its license

pursuant to the Intermountain

Microwave indicia would be

inconsistent with our requirements for

licensee responsibility.

27. WebCel’s proposal also does not

offer procedures for reviewing

transactions where licensees desire to

assign a portion of their market or

spectrum outright to another entity and

do not wish to hold the assigned

portion. We thus believe that adoption

of Webcel’s approach would run

counter to our goal of providing LMDS

licensees with flexibility to structure

partitioning and disaggregation

transactions to meet their specific

business plans. We conclude that

WebCel’s proposed model is not an

appropriate construct for characterizing

partitioning and disaggregation

transactions. For these reasons, we will

not adopt the alternative proposal

suggested by WebCel. The procedures

we adopt herein correspond to the

procedures we have adopted for

reviewing partitioning and

disaggregation transactions in other

wireless services. We find that adoption

of similar partitioning and

disaggregation procedures for all

wireless services will provide regulatory

parity, will permit our processing staff

to develop common forms and

procedures for reviewing all partitioning

and disaggregation applications, and

will streamline and expedite the review

of such applications.

28. We will require that parties

seeking approval for an LMDS

partitioning or disaggregation

transaction follow the existing

assignment procedures set forth in Part

101 of our Rules. Such applications will

be placed on Public Notice and will be

subject to petitions to deny. The LMDS

licensee will be required to file an FCC

Form 702 that is signed by both the

licensee and the partitionee or

disaggregatee. The partitionee or

disaggregatee will also be required to

file an FCC Form 430 to demonstrate its

qualifications, unless a current FCC

Form 430 is already on file with the

Commission.

H. Other Matters

29. Background. In our Second R&O,

we determined that two LMDS licenses,

one for 1150 MHz and one for 150 MHz,

would be awarded for each Basic

Trading Area (BTA) and adopted an

eligibility restriction that prohibits

incumbent LECs and incumbent cable

companies from obtaining an

attributable interest in in-region 1,150

MHz LMDS licenses for three years. We

stated, however, that incumbent LECs

and incumbent cable companies could

obtain LMDS licenses at auction and use

partitioning as a means to divest an

overlapping portion of the BTA to

comply with the eligibility restrictions.

In its comments, WebCel argues that the

Commission should reconsider this

action and should not permit incumbent

LECs and cable companies to use

partitioning as a means of curing

eligibility problems.

30. Discussion. We decided the issue

of whether we should permit incumbent

LECs and cable companies to use

partitioning to come into compliance

with the eligibility restrictions in our

Second R&O. The purpose of our Fifth

NPRM was not to revisit this issue but

to decide the mechanics of

implementing partitioning and

disaggregation for LMDS. Therefore, we

find that, while they were styled as

‘‘Comments,’’ a portion of WebCel’s

pleading is actually an untimely-filed

petition for reconsideration of the

eligibility rules from our Second R&O.

We agree with Bell Atlantic, RTG and

Sprint that this portion of WebCel’s

Comments should not be considered in

this phase of the proceeding. In this

connection, we addressed WebCel’s

arguments in the Third Order on

Reconsideration in this proceeding and

affirmed the divestiture provision.
Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations 26507

31. We conclude that the rules we

adopt herein will provide LMDS

licensees with the flexibility to structure

partitioning and disaggregation

agreements which meet their business

needs. We have followed the general

framework for partitioning and

disaggregation that we have previously

adopted for other wireless services in an

effort to create regulatory parity among

all licensees. As with the other service

and licensing rules we have adopted for

LMDS, we believe that this action will

result in more efficient use of spectrum,

will increase opportunities for small

businesses and other entities to enter

the LMDS marketplace, and will speed

service to unserved areas.

I. PROCEDURAL MATTERS

A. Regulatory Flexibility Act

32. The Final Regulatory Flexibility

Analysis pursuant to the Regulatory

Flexibility Act, 5 U.S.C. 604, is

contained in the attachment.

B. Ordering Clauses

33. Accordingly, it is ordered that,

pursuant to the authority of Sections

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

Communications Act of 1934, as

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

303(r), and 332(a), § 101.1111 of the

Commission’s Rules, 47 CFR 101.1111,

is amended as set forth in the rule

changes attachment.

34. It is further ordered that the rule

change adopted herein shall become

effective July 13, 1998. This action is

taken pursuant to Sections 4(i) and

303(r) of the Communications Act of

1934, as amended, 47 U.S.C. 154(i) and

303(r).

35. It is further ordered that the

Director, Office of Public Affairs, shall

send a copy of this Fourth Report and

Order, including the Final Regulatory

Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small

Business Administration, in accordance

with Section 605(b) of the Regulatory

Flexibility Act, 5 U.S.C. 601(a).

List of Subjects in 47 CFR Part 101

Communications equipment, Radio.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Part 101 of title 47 of the Code of

Federal Regulations is amended as

follows:

PART 101—FIXED MICROWAVE

SERVICES

1. The authority citation for part 101

continues to read as follows:

Authority: 47 U.S.C. 154, 303.

2. Section 101.1111 is revised to read

as follows:

§ 101.1111 Partitioning and

disaggregation.

(a) Definitions.—Disaggregation. The

assignment of discrete portions or

‘‘blocks’’ of spectrum licensed to a

geographic licensee or qualifying entity.

Partitioning. The assignment of

geographic portions of a licensee’s

authorized service area along

geopolitical or other boundaries.

(b) Eligibility. (1) Parties seeking

approval for partitioning and

disaggregation shall request an

authorization for partial assignment of a

license pursuant to § 101.53. Parties

shall submit the forms set forth in

§ 101.15(e).

(2) Licensees may apply to partition

their licensed geographic service area or

disaggregate their licensed spectrum at

any time following the grant of their

licenses.

(c) Technical Standards.—(1)

Partitioning. In the case of partitioning,

requests for authorization for partial

assignment of a license must include, as

an attachment, a description of the

partitioned service area. The partitioned

service area shall be defined by

coordinate points at every 3 degrees

along the partitioned service area unless

an FCC recognized service area is

utilized (i.e., Major Trading Area, Basic

Trading Area, Metropolitan Service

Area, Rural Service Area or Economic

Area) or county lines are followed. The

geographic coordinates must be

specified in degrees, minutes, and

seconds to the nearest second of latitude

and longitude and must be based upon

the 1983 North American Datum

(NAD83). In the case where an FCC

recognized service area or county lines

are utilized, applicants need only list

the specific area(s) (through use of FCC

designations or county names) that

constitute the partitioned area. In such

partitioning cases where an unjust

enrichment payment is owed the

Commission, the request for

authorization for partial assignment of a

license must include, as an attachment,

a calculation of the population of the

partitioned service area and the licensed

geographic service area.

(2) Disaggregation. Spectrum may be

disaggregated in any amount.

(3) Combined Partitioning and

Disaggregation. The Commission will

consider requests for partial assignment

of licenses that propose combinations of

partitioning and disaggregation.

(d) License Term. The license term for

a partitioned license area and for

disaggregated spectrum shall be the

remainder of the original licensee’s

license term as provided for in § 101.67

of this chapter.

(e) Construction Requirements.

Applications requesting approval for

partitioning or disaggregation must

include a certification by each party that

it will satisfy the construction

requirement set forth in § 101.1011 of

this chapter. Failure by a party to meet

its respective construction requirement

will result in the automatic cancellation

of its license without further

Commission action.

Note: The following attachment will not

appear in the Code of Federal Regulations.

Attachment—Final Regulatory Flexibility

Analysis

As required by Section 603 of the

Regulatory Flexibility Act (RFA), 5 U.S.C.

603, an Initial Regulatory Flexibility Analysis

(IRFA) was incorporated in the Fifth Notice

of Proposed Rule Making (Fifth NPRM) in CC

Docket No. 92–297. The Commission sought

written public comment on the proposals in

the Fifth NPRM, including the IRFA. The

Commission’s Final Regulatory Flexibility

Analysis in this Fourth Report and Order

(Fourth R&O) conforms to the RFA, as

amended by the Contract With America

Advancement Act of 1996.

A. Need for and Purpose of This Action

In the Fourth R&O, the Commission

modifies the Local Multipoint Distribution

Service (LMDS) rules to permit partitioning

and disaggregation for all licensees. With

more open partitioning and disaggregation,

additional entities, including small

businesses, may participate in the provision

LMDS without needing to acquire wholesale

an existing license (with all of the bundle of

rights currently associated with the existing

license). Acquiring ‘‘less’’ than the current

license will presumably be a more flexible

and less expensive alternative for entities

desiring to enter these services.

B. Summary of Issues Raised in Response to

the Initial Regulatory Flexibility Analysis

None of the commenters submitted

comments that were specifically in response

to the IRFA.

C. Description and Number of Small Entities

Involved

The rules adopted in the Fourth R&O will

affect all small businesses which avail

themselves of these rule changes, including

small businesses that will obtain LMDS

licenses through auction and subsequently

decide to partition or disaggregate, and small

businesses who may acquire licenses through

partitioning and/or disaggregation.

The Commission has not developed a

definition of small entities applicable to

LMDS. In the Second Order on

Reconsideration, the Commission adopted

criteria for defining small businesses for

purposes of determining eligibility for special

provisions such as bidding credits. The

Commission has adopted a three-tier

definition of small businesses: businesses

with gross annual revenues of not more than
26508 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

$15 million, businesses with gross annual

revenues of more than $15 million but not

more than $40 million and businesses with

gross revenues of more than $40 million but

not more than $75 million. We will use these

definitions for estimating the potential

number of entities choosing to partition or

disaggregate or who may acquire licenses

through partitioning and disaggregation that

are small businesses.

It is not possible to predict how many

LMDS licensees meeting one of the above

definitions will be successful at auction and

subsequently decide to partition or

disaggregate. The Commission plans to issue

2 licenses each for 493 Basic Trading Areas

(BTAs). Thus, 986 licenses will be made

available for authorization. It is expected that

a significant number of successful bidders in

the LMDS auction will satisfy one of the

above definitions. There is only one

company, CellularVision USA, Inc.

(CellularVision), that is currently providing

LMDS video services. Although the

Commission does not collect data on annual

receipts, it is assumed that CellularVision is

a small business under all of the above

outlined definitions. Similarly, it is not

possible to determine how many of those

entities obtaining licenses through

partitioning and disaggregation will meet one

of the above definitions. However, it is

expected that many entities meeting one of

the above definitions will use partitioning

and disaggregation as a means to obtain

LMDS licenses at lower costs.

D. Summary of Projected Reporting,

Recordkeeping and Other Compliance

Requirements

The rules adopted in the Fourth R&O will

impose reporting and recordkeeping

requirements on small businesses seeking

licenses through partitioning and

disaggregation. The information requirements

will be used to determine whether the

licensee is a qualifying entity to obtain a

partitioned license or disaggregated

spectrum. This information will be given in

a one-time filing by any applicant requesting

such a license. The information will be

submitted on the FCC Form 702 which is

currently in use and has already received

Office of Management and Budget clearance.

The Commission estimates that the average

burden on the applicant is three hours for the

information necessary to complete these

forms. The Commission estimates that 75

percent of the respondents (which may

include small businesses) will contract out

the burden of responding. The Commission

estimates that it will take approximately 30

minutes to coordinate information with those

contractors. The remaining 25 percent of

respondents (which may include small

businesses) are estimated to employ in-house

staff to provide the information.

E. Steps Taken To Minimize Burdens on

Small Entities

The rules adopted in the Fourth R&O are

designed to implement Congress’ goal of

giving small businesses, as well as other

entities, the opportunity to participate in the

provision of spectrum-based services and are

consistent with the Communications Act’s

mandate to identify and eliminate market

entry barriers for entrepreneurs and small

businesses in the provision and ownership of

telecommunications services.

Allowing non-restricted partitioning and

disaggregation will facilitate market entry by

parties who may lack the financial resources

for participation in auctions, including small

businesses. Some small businesses may have

been unable to obtain LMDS licensees

through auction due to high bidding. By

allowing open partitioning and

disaggregation, small businesses will be able

to obtain licenses for smaller service areas

and smaller amounts of spectrum at

presumably reduced costs, thereby providing

a method for small businesses to enter the

LMDS marketplace.

Allowing geographic partitioning of LMDS

licenses by service areas defined by the

parties will provide an opportunity for small

businesses to obtain partitioned LMDS

license areas designed to serve smaller, niche

markets. This will permit small businesses to

enter the LMDS marketplace by reducing the

overall cost of acquiring a partitioned LMDS

license.

Allowing disaggregation of spectrum in

any amount will also promote participation

by small businesses who may seek to acquire

a smaller amount of LMDS spectrum tailored

to meet the needs of their proposed service.

F. Significant Alternatives Considered and

Rejected

The Commission considered and rejected

the following alternative proposals

concerning LMDS partitioning and

disaggregation.

The Commission rejected a plan set forth

by WebCel Communications, Inc. (WebCel).

Instead of requiring all partitioning and

disaggregation transactions to comply with

our existing assignment procedures, WebCel

suggested that the Commission permit parties

to enter into agreements to partition and

disaggregate without prior Commission

approval so long as notification is given to

the Commission by the original LMDS

licensee. The Commission considers

partitioning and disaggregation transactions

to be essentially partial assignments of

license, and Commission review and

approval is necessary to ensure compliance

with its rules. Thus, the Commission

concluded that WebCel’s proposed model is

not an appropriate construct for

characterizing partitioning and

disaggregation transactions.

Finally, the Commission rejected a

suggestion by CellularVision that LMDS

partitionees and disaggregatees should be

allowed to qualify for a renewal expectancy

which is based upon their reduced license

period. The Commission found that this

approach would contradict its construction

requirements for LMDS partitionees and

disaggregatees which require these entities to

meet a separate substantial service

requirement by the end of their license term.

Partitionees and disaggregatees are not

permitted to meet a scaled-down substantial

service construction requirement simply

because of the fact that they had a license

term of less than ten years. The Commission

found that, by requiring LMDS partitionees

and disaggregatees to meet the same

substantial service requirement for renewal

expectancy as all other licensees, LMDS

licensees will be encouraged to quickly

develop their markets and fully utilize their

available spectrum.

G. Report to Congress

The Commission shall include a copy of

this Final Regulatory Flexibility Analysis,

along with this Fourth R&O, in a report to be

sent to Congress pursuant to the Small

Business Regulatory Enforcement Fairness

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

[FR Doc. 98–12667 Filed 5–8–98; 5:08 pm]

BILLING CODE 6712–01–U

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

49 CFR Part 553

[NHTSA–98–3815]

RIN 2127–AG62

Rulemaking Procedures

AGENCY: National Highway Traffic

Safety Administration (NHTSA),

Department of Transportation (DOT).

ACTION: Final rule.

SUMMARY: This final rule reaffirms the

agency’s policy of focusing its

international harmonization activities

on identifying and adopting those

foreign vehicle safety standards that

clearly reflect best practices, i.e., that

require significantly higher levels of

safety performance than the counterpart

U.S. standards. This final rule also

announces the agency’s policy regarding

those instances in which the agency’s

comparison of standards indicates that

the safety performance required by a

foreign standard is not significantly

higher, but is still better than or at least

as good as that required by the

counterpart U.S. standard.

To aid in implementing these

policies, this final rule amends the

agency’s regulation concerning

rulemaking procedures to set forth the

process that the agency will use in

comparing U.S. and foreign vehicle

safety standards and in determining

what rulemaking response, if any, is

appropriate. The agency will assess

whether the safety performance of

vehicles or equipment manufactured

under the foreign standard is better than

or at least functionally equivalent to that

of vehicles or equipment manufactured

under the U.S. standard, i.e., whether

the vehicles or equipment manufactured

under the foreign standard produce

more or at least as many safety benefits