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* * * * *

[FR Doc. 98–20409 Filed 7-29-98; 8:45 am]

BILLING CODE 6560–50–F

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 90

[PR Docket No. 93–61; FCC 98–157]

Vehicle Monitoring Systems

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: In the Second Report and

Order, the Commission adopts the

general competitive bidding rules and

procedures for the auction of

multilateration Location and Monitoring
40660 Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations

Service (LMS) licenses, provides small

business definitions and adopts bidding

credits for eligible small businesses. The

effect will be to promote and facilitate

the participation of small businesses in

the Commission’s auctions and in the

provision of spectrum-based services.

The Second Report and Order also adds

rules to allow LMS licensees to partition

their geographic licenses and

disaggregate portions of their spectrum.

DATES: Effective September 28, 1998,

except for § 90.365(d) which will

become effective January 19, 1999.

Public and agency comments

concerning the information collections

contained in the Second Report and

Order are due September 28, 1998.

ADDRESSES: Federal Communications

Commission, 1919 M Street, N.W.,

Room 222, Washington, D.C. 20554. For

comments or inquiries regarding

information collections, direct all

correspondence to Les Smith, Federal

Communications Commissions, Room

234, 1919 M St., N.W., Washington, DC

20554 or via the Internet at

lessmith@fcc.gov.

FOR FURTHER INFORMATION CONTACT: Ken

Burnley or Mark Bollinger, Auctions

and Industry Analysis Division,

Wireless Telecommunications Bureau,

at (202) 418–0660.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Second Report and

Order in PR Docket No. 93–61, FCC 98–

157, which was adopted on July 9, 1998

and released on July 14, 1998. A copy

of the complete item 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. 20554. The complete

text may be purchased from the

Commission’s copy contractor,

International Transcription Service,

Inc., 1231 20th Street, N.W.,

Washington, D.C. 20036, (202) 857–

3800. The complete Second Report and

Order is available on the Commission’s

Internet home page (http://

www.fcc.gov).

SUMMARY OF ACTION:

I. Introduction

1. The Federal Communications

Commission (Commission) has adopted

a Second Report and Order stating rules

and procedures governing competitive

bidding for multilateration Location and

Monitoring Service (LMS) frequencies.

A. Competitive Bidding Design and

Procedures

2. In Amendment of Part 90 of the

Commission’s Rules to Adopt

Regulations for Automatic Vehicle

Monitoring Systems, Memorandum

Opinion and Order and Further Notice

of Proposed Rule Making, PR Docket No.

93–61, 62 FR 52078, October 6, 1997

(‘‘LMS Further Notice’’), the

Commission proposed to use the general

competitive bidding rules found in

subpart Q of part 1 of the Commission’s

rules as the auction rules for LMS.

3. The Commission adopts the

proposal to follow the competitive

bidding procedures contained in

Subpart Q of Part 1 of the Commission’s

Rules, including those adopted in

Amendment of Part 1 of the

Commission’s Rules—Competitive

Bidding Procedures, WT Docket No. 97–

82, Allocation of Spectrum Below 5 GHz

Transferred from Federal Government

Use, ET Docket No. 94–32, Third Report

and Order and Second Further Notice of

Proposed Rule Making, 63 FR 2315,

January 15, 1998 (‘‘Part 1 Third Report

and Order’’). Consistent with this,

matters such as the appropriate

competitive bidding design for the

auction of LMS licenses, as well as

minimum opening bids and reserve

prices, will be determined by the

Wireless Telecommunications Bureau

(‘‘Bureau’’) pursuant to its delegated

authority.

B. Treatment of Designated Entities

4. In the LMS Further Notice, the

Commission acknowledged that it has

consistently established ‘‘small

business’’ definitions on a service-byservice basis, and proposed to establish

definitions for the multilateration LMS.

For purposes of LMS, the Commission

defines a ‘‘small business’’ as an entity

with average annual gross revenues for

the preceding three years not to exceed

$15 million, and a ‘‘very small

business’’ is an entity with average

annual gross revenues for the preceding

three years not to exceed $3 million.

The bidding credits for these small

business definitions will be consistent

with levels adopted in the Part 1

proceeding. Accordingly, small

businesses will receive a 25 percent

bidding credit, and very small

businesses will receive a 35 percent

bidding credit. Bidding credits for small

businesses are not cumulative.

5. The Commission adopts, with a

slight modification, our tentative

conclusion to attribute the gross

revenues of the applicant, its controlling

principals and their affiliates.

Specifically, the rule refers to

‘‘controlling interests’’ rather than

‘‘controlling principals,’’ and provides a

definition of ‘‘controlling interest’’ to

clarify the application of the attribution

rule in determining whether an entity

qualifies to bid as a small business. In

calculating gross revenues for purposes

of small business eligibility, applicants

will be required to count the gross

revenues of the controlling interests of

the applicant and their affiliates. A

‘‘controlling interest’’ includes

individuals or entities with de jure and

de facto control of the applicant. De jure

control is 50.1% of the voting stock of

a corporation or, in the case of a

partnership, the general partners. De

facto control is determined on a case-bycase basis. The ‘‘controlling interest’’

definition also provides specific

guidance on calculation of various types

of ownership interests.

6. When an applicant cannot identify

controlling interests under the

definition, the revenues of all interest

holders in the applicant and their

affiliates will be counted. For example,

if a company is owned by four entities,

each of which has twenty-five percent

voting equity and no shareholders’

agreement or voting trust gives any one

of them control of the company, the

revenues of all four entities must be

counted. This approach is consistent

with our treatment of a general

partnership—all general partners are

considered to have a controlling

interest. This rule looks to substance

over form in assessing eligibility for

small business status and will provide

flexibility that will enable legitimate

small businesses to attract passive

financing in a highly competitive and

evolving telecommunications

marketplace. The Commission

emphasizes that bidders will be subject

to the ownership disclosure

requirements set forth in 47 CFR 1.2112.

7. The Commission extends the

amount of time for all LMS auction

winners to satisfy their construction

requirements. Multilateration LMS

Economic Area (EA) licensees will be

required to construct and place in

operation a sufficient number of base

stations that utilize multilateration

technology to provide multilateration

service to one-third of the EA’s

population within five years of initial

license grant, and two thirds of the

population within ten years. In

demonstrating compliance with the

construction and coverage requirements,

licensees may individually determine

an appropriate field strength for reliable

service, taking into account the

technologies employed in their system

design and other relevant technical

factors. At the five- and ten-year

benchmarks, licensees will be required

to file with the Commission a map and

other supporting documentation

showing compliance with the coverage

requirements.
Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations 40661

C. Partitioning and Disaggregation and

Unjust Enrichment Provisions

8. The Commission has previously

adopted or proposed to adopt

partitioning and disaggregation rules for

many of the Commercial Mobile Radio

Services (CMRS), and now adopts rules

to allow multilateration LMS licensees

to partition their geographic license

areas and disaggregate portions of their

spectrum in the same general manner as

in other CMRS services. Multilateration

LMS licensees may partition or

disaggregate to any party eligible to be

a multilateration LMS licensee. Further,

licensees may partition along any

service area defined by the parties.

These decisions will permit marketplace

forces to determine the most suitable

service areas, and will further the goal

of regulatory parity among CMRS

services. Partitioning and disaggregation

will allow auction winners to customize

their LMS systems in a manner that will

best address their business plans and

will help remove entry barriers for small

businesses.

9. To ensure that partitioning and

disaggregation do not result in

circumvention of our LMS construction

requirements, the Commission adopts

the dual construction requirements for

partitioning and the construction

certification procedure for

disaggregation used in the broadband

Personal Communications Service

(PCS). Under the first option for

partitioning, the partitionee must certify

that it will meet the same coverage

requirements as the original licensee for

its partitioned market. If the partitionee

fails to meet its coverage requirement,

the license for the partitioned area will

automatically cancel without further

Commission action. Under the second

option, the original licensee must certify

that it has already met or will meet its

coverage requirement. Further, parties

seeking Commission approval of an

LMS disaggregation agreement must

include a certification as to which party

will be responsible for meeting the

construction requirements.

10. In cases of partitioning, the

Commission requires sufficient

information to maintain our licensing

records. Therefore, consistent with our

treatment of the Wireless

Communication Service (WCS) and the

800 MHz and 900 MHz Specialized

Mobile Radio (SMR) services,

partitioning applicants will be required

to submit, as separate attachments to the

partial assignment application, a

description of the partitioned service

area and a calculation of the population

of the partitioned service area and

licensed market. The partitioned service

area must be defined by coordinate

points at every three degrees along the

partitioned service area agreed to by

both parties, unless county lines are

followed. These geographical

coordinates must be specified in

degrees, minutes and seconds to the

nearest second of latitude and

longitude, and must be based upon the

1927 North American Datum (NAD27).

Applicants also may supply

geographical coordinates based on 1983

North American Datum (NAD83) in

addition to those required based on

NAD27. This coordinate data should be

supplied as an attachment to the partial

assignment application, and maps need

not be supplied. In cases where county

lines are being utilized, applicants need

only list the counties that make up the

newly partitioned area.

11. Consistent with our rules for

broadband PCS, WCS and the 800 MHz

and 900 MHz SMR services,

disaggregating parties may negotiate

channelization plans among themselves

as a part of their disaggregation

agreements. In addition, LMS licensees

shall be permitted to disaggregate

spectrum without limitation on the

overall size of the disaggregation as long

as such disaggregation is otherwise

consistent with our rules.

12. Also consistent with the rules for

broadband PCS, WCS and the 800 MHz

and 900 MHz SMR services, LMS

licensees may use combined

partitioning and disaggregation. This

will allow LMS licensees the flexibility

to design the types of agreements they

desire, encourage new market entrants

and ensure quality service to the public.

In the event that there is a conflict in the

application of the partitioning and

disaggregation rules, the partitioning

rules shall prevail.

13. The Commission adopts its

proposal to prevent possible unjust

enrichment through partitioning or

disaggregation. Accordingly, the Part 1

unjust enrichment provisions will apply

for LMS. These rules are similar to

unjust enrichment rules adopted for the

800 MHz SMR auction for determining

the actual proportion of bidding credit

to be refunded and reduce the amount

of unjust enrichment payments due on

transfer based upon the amount of time

the initial license has been held. In

addition, when a combination of

partitioning and disaggregation is

proposed, these pro rata calculations

will be based on both the population of

the partitioned area and the amount of

spectrum disaggregated.

II. Regulatory Flexibility Act

14. As required by the Regulatory

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

Initial Regulatory Flexibility Analysis

(IRFA) was incorporated in the

Memorandum Opinion and Order and

Further Notice of Proposed Rule

Making. See Amendment of Part 90 of

the Commission’s Rules to Adopt

Regulations for Automatic Vehicle

Monitoring Systems, PR Docket No. 93–

61, Memorandum Opinion and Order

and Further Notice of Proposed Rule

Making, 62 FR 52078, October 6 , 1997

(‘‘Further Notice’’). The Commission

sought written public comment on the

proposals in the Further Notice,

including comment on the IRFA. The

present Final Regulatory Flexibility

Analysis (FRFA) conforms to the RFA.

See 5 U.S.C. 604.

A. Need for, and Objectives of, the

Second Report and Order in PR Docket

93–61

15. The adopted provisions are based

on the competitive bidding authority of

Section 309(j) of the Communications

Act of 1934, as amended, 47 U.S.C.

309(j), which authorized the

Commission to use auctions to select

from among mutually exclusive initial

applications in certain services,

including multilateration LMS.

B. Summary of Significant Issues Raised

by Public Comments in Response to the

IRFA

16. There were no comments filed

directly in response to the IRFA;

however, the Commission received 2

comments in response to the Further

Notice.

C. Description and Estimate of the

Number of Small Entities to Which

Rules Will Apply

17. The applicable definition under

SBA rules of a small entity is the

definition under the rules applicable to

radiotelephone (wireless) companies.

This provides that a small entity is a

radiotelephone company employing no

more than 1,500 persons. According to

the Bureau of the Census, only twelve

radiotelephone firms out of a total of

1,178 such firms which operated during

1992 had 1,000 or more employees.

1992 Census, Series UC92–S–1, at Table

5, SIC code 4812. Therefore, using such

data, even if all twelve of these firms

were LMS companies, nearly all such

carriers were small businesses under the

SBA’s definition.

18. In the Second Report and Order,

the Commission has adopted more

refined definitions for small business

categories. The definition of a ‘‘small

business’’ is an entity with average

annual gross revenues for the preceding

three years not to exceed $15 million.

The definition of a ‘‘very small
40662 Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations

business’’ is an entity with average

annual gross revenues for the preceding

three years not to exceed $3 million.

The Commission is seeking SBA

approval for these new LMS size

standards. See also Second Report and

Order, n. 47.

19. As noted in the Second Report

and Order, there are 528 licenses to be

awarded in the upcoming auction. New

entrants could obtain multilateration

LMS licenses through the competitive

bidding procedure, and take the

opportunity to partition and/or

disaggregate a license or obtain an

additional license through partitioning

or disaggregation. Additionally, entities

that are neither incumbent licensees nor

geographic area licensees could enter

the market by obtaining a

multilateration LMS license through

partitioning or disaggregation.

20. The Commission cannot estimate

how many licensees or potential

licensees could take the opportunity to

partition and/or disaggregate a license

or obtain a license through partitioning

and/or disaggregation, because it has not

yet determined the size or number of

multilateration LMS licenses that will

be granted in the future. Therefore, the

number of small entities that will be

affected is unknown. Given the fact that

no reliable estimate of the total number

of future multilateration LMS licensees

can be made, the Commission assumes

for purposes of this FRFA that all of the

licenses will be awarded to small

businesses.

D. Summary of the Projected Reporting,

Recordkeeping, and Other Compliance

Requirements.

21. The rules and provisions adopted

in the Second Report and Order include

the possibility of new reporting and

recordkeeping requirements for a

number of small business entities:

22. Competitive Bidding Applications.

LMS license applicants will be subject

to reporting and recordkeeping

requirements to comply with the

competitive bidding rules. Specifically,

applicants will apply for LMS licenses

by filing a short-form application (FCC

Form 175), and will file a long-form

application (FCC Form 601) at the

conclusion of the auction. Additionally,

entities seeking treatment as small

businesses will need to submit

information pertaining to the gross

revenues of the small business applicant

and its affiliates and certain investors in

the applicant.

23. Construction Requirements. The

proposals in the Second Report and

Order include reporting and

recordkeeping requirements for new

LMS licensees to establish compliance

with the coverage requirements. See

Second Report and Order, ¶ 30.

24. Geographic Partitioning and

Spectrum Disaggregation. The proposals

in the Second Report and Order include

reporting and recordkeeping

requirements for small businesses

seeking licenses through the proposed

partitioning and disaggregation rules.

The information requirements would be

used to determine whether the licensee

is a qualifying entity to obtain

partitioned or disaggregated spectrum.

This information will be a one-time

filing by any applicant requesting such

a license.

E. Steps Taken To Minimize Significant

Economic Impact on Small Entities, and

Significant Alternatives Considered

25. The Second Report and Order

adopts certain provisions for smaller

entities designed to ensure that such

entities have the opportunity to

participate in the competitive bidding

process and in the provision of

multilateration LMS services. The

Commission anticipates that most LMS

licensees will fit the definition of small

business or very small business.

26. Small Business Definitions and

Bidding Credits. The Commission

adopts two small business categories for

the LMS auction: (1) a ‘‘small business’’

category, for businesses with average

gross revenues of over $3 million but

not to exceed $10 million; and (2) a

‘‘very small business’’ category, for

businesses with average gross revenues

not to exceed $3 million. These adopted

categories will be based on the gross

revenues of the business for the three

years preceding the filing of the entity’s

application. The Commission will rely

solely on gross revenues, and not the

number of employees, for the purpose of

determining an entity’s eligibility for

small incentives.

27. Attribution of Gross Revenues and

Affiliates. The Commission adopted a

‘‘controlling interest’’ standard as the

general attribution rule for all future

auctions. The Commission believes that

these definitions are consistent with its

proposals in the Part 1 Third Report and

Order. 63 FR at 2315.

28. Partitioning and Disaggregation.

With respect to partitioning and

disaggregation, the Commission

concludes that unjust enrichment

provisions should apply when a

licensee has benefitted from the small

business provisions in the auction rules

and applies to partition or disaggregate

a portion of the geographic license area

to another entity that would not qualify

for such benefits.

F. Report to Congress

29. The Commission shall send a copy

of the Second Report and Order,

including the FRFA, in a report to

Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of

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

addition, the Commission will send a

copy of the Second Report and Order,

including FRFA, to the Chief Counsel

for advocacy of the Small Business

Administration.

III. Ordering Clauses

30. Accordingly, it is ordered that part

90 of the Commission’s Rules is

amended and will become effective

September 28, 1998. It is further ordered

that 47 CFR 90.365(d) of the

Commission’s Rules is amended and

will become effective January 19, 1999.

31. Authority for issuance of this

Second Report and Order is contained

in Sections 4(i), 257, 303(r), and 309(j)

of the Communications Act of 1934, as

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

and 309(j).

32. It is further ordered that the

Commission’s Office of Public Affairs,

Reference Operations Division, shall

send a copy of this Second Report and

Order, including the Final Regulatory

Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small

Business Administration.

Paperwork Reduction Act Analysis

33. The Second Report and Order

contains an information collection. The

Federal Communications Commissions,

as part of its continuing effort to reduce

paperwork burden invites the general

public and other Federal agencies to

take this opportunity to comment on the

following information collection, as

required by the Paperwork Reduction

Act of 1995, Public Law 104–13. An

agency may not conduct or sponsor a

collection of information unless it

displays a currently valid control

number. No person shall be subject to

any penalty for failing to comply with

a collection of information subject to the

Paperwork Reduction Act (PRA) that

does not display a valid control number.

Comments are requested concerning (a)

whether the 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 estimate; (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.
Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations 40663

Supplementary information:

OMB Approval Number: 3060–XXXX.

Title: Construction requirements.

Form No.: N/A

Type of Review: New collection for

construction period buildout

requirements.

Respondents: Business and other forprofit entities, individuals or

households, State, Federal or Tribal

Governments, Not-for-profit entities.

Number of Respondents: 528.

Estimated Time for Response:

Estimated total time for response would

be 52 hours per respondent for analysis

of license records, conducting the

appropriate engineering surveys and

studies, and preparation of maps

displaying the service area contour of

the licensee.

Frequency of Response: On occasion.

Total Annual Burden: 27,456 hours.

52 hours by 528 respondents.

Needs and Uses: Engineering surveys

and prepared maps displaying the

service area contour of the licensee.

Surveys and maps will be used to

evaluate licensee’s service area

boundary and coverage. Licensee’s

boundary and coverage will then be

compared against the construction

buildout requirements for the service.

DATES: Persons wishing to comment on

this information collection should

submit comments by September 28,

1998.

ADDRESSES: Direct all comments to Les

Smith, Federal Communications

Commissions, Room 234, 1919 M St.,

N.W., Washington, DC 20554 or via the

Internet at lessmith@fcc.gov.

FOR FURTHER INFORMATION CONTACT: For

additional information or copies of the

information collections contact Les

Smith at (202) 418–0217 or via the

Internet at lessmith@fcc.gov. For all

other questions contact Ken Burnley,

Auctions and Industry Analysis

Division, Wireless Telecommunications

Bureau, at (202) 418–0660.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Chapter I of Title 47 of the Code of

Federal Regulations, part 90, is

amended as follows:

PART 90—PRIVATE LAND MOBILE

RADIO SERVICES

1. The authority citation for part 90

continues to read as follows:

Authority: Secs. 4, 251–2, 303, 309, and

332, 48 Stat. 1066, 1082, as amended; 47

U.S.C. 154, 251–2, 303, 309 and 332, unless

otherwise noted.

2. Section 90.155 is amended by

revising paragraph (d) to read as

follows:

§ 90.155 Time in which station must be

placed in operation.

* * * * *

(d) Multilateration LMS EA-licensees,

authorized in accordance with § 90.353,

must construct and place in operation a

sufficient number of base stations that

utilize multilateration technology (see

paragraph (e) of this section) to provide

multilateration location service to onethird of the EA’s population within five

years of initial license grant, and twothirds of the population within ten

years. In demonstrating compliance

with the construction and coverage

requirements, the Commission will

allow licensees to individually

determine an appropriate field strength

for reliable service, taking into account

the technologies employed in their

system design and other relevant

technical factors. At the five and ten

year benchmarks, licensees will be

required to file a map and other

supporting documentation showing

compliance with the coverage

requirements.

* * * * *

3. Section 90.365 is added to subpart

M to read as follows:

§ 90.365 Partitioned licenses and

disaggregated spectrum.

(a) Eligibility—(1) Parties seeking

approval for partitioning and

disaggregation shall request an

authorization for partial assignment of a

license pursuant to § 90.153.

(2) Multilateration LMS licensees may

apply to partition their licensed

geographic service area or disaggregate

their licensed spectrum at any time

following the grant of their licenses.

Multilateration LMS licensees may

partition or disaggregate to any party

that is also eligible to be a

multilateration LMS licensee.

Partitioning is permitted along any

service area defined by the parties, and

spectrum may be disaggregated in any

amount. The Commission will also

consider requests for partial assignment

of licenses that propose combinations of

partitioning and disaggregation.

(b) Technical Requirements—In the

case of partitioning, requests for

authorization for partial assignment of a

license must include, as attachments, a

description of the partitioned service

area, and a calculation of the population

of the partitioned service area and the

licensed geographic service area. The

partitioned service area shall be defined

by coordinate points at every three

degrees along the partitioned service

area unless 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 1927 North American Datum

(NAD27). Applicants may supply

geographical coordinates based on 1983

North American Datum (NAD83) in

addition to those required based on

NAD27. In the case where county lines

are utilized, applicants need only list

the specific area(s) (through use of

county names) that constitute the

partitioned area.

(c) 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.

(d) Construction requirements—(1)

Requirements for partitioning.

(i) Parties seeking authority to

partition must meet one of the following

construction requirements:

(A) The partitionee may certify that it

will satisfy the applicable construction

requirements for the partitioned license

area; or

(B) The original licensee may certify

that it has or will meet the construction

requirement for the entire license area.

(ii) Applications requesting authority

to partition must include a certification

by each party as to which of the above

construction options they select.

(iii) Failure by any partitionee to meet

its respective construction requirements

will result in the automatic cancellation

of the partitioned or disaggregated

license without further Commission

action.

(2) Requirements for disaggregation.

Parties seeking authority to disaggregate

must submit with their partial

assignment application a certification

signed by both parties stating which of

the parties will be responsible for

meeting the construction requirement

for the licensed market. Parties may

agree to share responsibility for meeting

the construction requirements. Parties

that accept responsibility for meeting

the construction requirements and later

fail to do so will be subject to license

forfeiture without further Commission

action.

4. Add a new subpart X to read as

follows:

Subpart X—Competitive Bidding

Procedures for Location and

Monitoring Service

Sec.

90.1101 Location and Monitoring Service

subject to competitive bidding.

90.1103 Designated entities.
40664 Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations

Subpart X—Competitive Bidding

Procedures for Location and

Monitoring Service

§ 90.1101 Location and Monitoring Service

subject to competitive bidding.

Mutually exclusive initial

applications for multilateration Location

and Monitoring Service 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.

§ 90.1103 Designated entities.

(a) This section addresses certain

issues concerning designated entities in

the Location and Monitoring Service

(LMS) subject to competitive bidding.

Issues that are not addressed in this

section are governed by the designated

entity provisions in part 1, subpart Q of

this chapter.

(b) Eligibility for small business

provisions.

(1) A small business is an entity that,

together with its affiliates and

controlling interests, has average gross

revenues not to exceed $15 million for

the preceding three years.

(2) A very small business is an entity

that, together with its affiliates and

controlling interests, has average gross

revenues not to exceed $3 million for

the preceding three years.

(3) For purposes of determining

whether an entity meets either of the

definitions set forth in paragraph (b)(1)

or (b)(2) of this section, the gross

revenues of the entity, its affiliates, and

controlling interests shall be considered

on a cumulative basis and aggregated.

(4) Where an applicant (or licensee)

cannot identify controlling interests

under the standards set forth in this

section, the gross revenues of all interest

holders in the applicant, and their

affiliates, will be attributable.

(5) A consortium of small businesses

(or a consortium of very small

businesses) is a conglomerate

organization formed as a joint venture

between or among mutually

independent business firms, each of

which individually satisfies the

definition in paragraph (b)(1) of this

section (or each of which individually

satisfies the definition in paragraph

(b)(2) of this section). Where an

applicant or licensee is a consortium of

small businesses (or very small

businesses), the gross revenues of each

small business (or very small business)

shall not be aggregated.

(c) Controlling interest. (1) For

purposes of this section, controlling

interest includes individuals or entities

with de jure and de facto control of the

applicant. De jure control is greater than

50 percent of the voting stock of a

corporation, or in the case of a

partnership, the general partner. De

facto control is determined on a case-bycase basis. An entity must disclose its

equity interest and demonstrate at least

the following indicia of control to

establish that it retains de facto control

of the applicant:

(i) the entity constitutes or appoints

more than 50 percent of the board of

directors or management committee;

(ii) the entity has authority to appoint,

promote, demote, and fire senior

executives that control the day-to-day

activities of the licensee; and

(iii) the entity plays an integral role in

management decisions.

(2) Calculation of certain interests.

(i) Ownership interests shall be

calculated on a fully diluted basis; all

agreements such as warrants, stock

options and convertible debentures will

generally be treated as if the rights

thereunder already have been fully

exercised.

(ii) Partnership and other ownership

interests and any stock interest equity,

or outstanding stock, or outstanding

voting stock shall be attributed as

specified below.

(iii) Stock interests held in trust shall

be attributed to 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. If

the trustee has a familial, personal, or

extra-trust business relationship to the

grantor or the beneficiary, the grantor or

beneficiary, as appropriate, will be

attributed with the stock interests held

in trust.

(iv) Non-voting stock shall be

attributed as an interest in the issuing

entity.

(v) Limited partnership interests shall

be attributed to limited partners and

shall be calculated according to both the

percentage of equity paid in and the

percentage of distribution of profits and

losses.

(vi) Officers and directors of an entity

shall be considered to have an

attributable interest in the entity. The

officers and directors of an entity that

controls a licensee or applicant shall be

considered to have an attributable

interest in the licensee or applicant.

(vii) Ownership interests that are held

indirectly by any party through one or

more intervening corporations will 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 percentage

for an 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.

(viii) Any person who manages the

operations of an applicant or licensee

pursuant to a management agreement

shall be considered to have an

attributable interest in such applicant or

licensee if such person, or its affiliate

pursuant to § 1.2110(b)(4) of this

chapter, has authority to make decisions

or otherwise engage in practices or

activities that determine, or significantly

influence,

(A) The nature or types of services

offered by such an applicant or licensee;

(B) The terms upon which such

services are offered; or

(C) The prices charged for such

services.

(ix) Any licensee or its affiliate who

enters into a joint marketing

arrangement with an applicant or

licensee, or its affiliate, shall be

considered to have an attributable

interest, if such applicant or licensee, or

its affiliate, has authority to make

decisions or otherwise engage in

practices or activities that determine, or

significantly influence,

(A) The nature or types of services

offered by such an applicant or licensee;

(B) The terms upon which such

services are offered; or

(C) The prices charged for such

services.

(d) A winning bidder that qualifies as

a small business or a consortium of

small businesses as defined in

paragraph (b)(1) or (b)(5) of this section

may use the bidding credit specified in

§ 1.2110(e)(2)(ii) of this chapter. A

winning bidder that qualifies as a very

small business or a consortium of very

small businesses as defined in

paragraph (b)(2) or (b)(5) of this section

may use the bidding credit specified in

§ 1.2110(e)(2)(i) of this chapter.

[FR Doc. 98–20460 Filed 7–29–98; 8:45 am]

BILLING CODE 6712–01–P