[Federal Register Volume 66, Number 107 (Monday, June 4, 2001)]
[Rules and Regulations]
[Pages 29911-29920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13618]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 24

[GEN Docket No. 90-314, ET Docket No. 92-100 and PP Docket No. 93-253; 
FCC 01-135]


Amendment of the Commission's Rules To Establish New Personal 
Communications Services, Narrowband PCS; Implementation of Section 
309(j) of the Communications Act---Competitive Bidding, Narrowband PCS

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commissions (FCC) 
modifies existing narrowband Personal Communications Services (PCS) 
rules in three ways. With this document, the FCC channelizes and 
licenses the one megahertz of narrowband PCS spectrum heretofore held 
in reserve, re-channelizes 712.5 kilohertz of previously channelized 
spectrum for which licenses have not been auctioned, and adopts a 
narrowband PCS channel band plan that includes both nationwide and 
Major Trading Areas (MTA) licenses. The document also addresses the 
petitions for reconsideration filed responding to the Narrowband PCS 
Second Report and Order/Second Further Notice. These actions resolve 
remaining issues to prepare for future license auctions, of the 
remaining narrowband PCS spectrum.

DATES: Effective August 3, 2001.

FOR FURTHER INFORMATION CONTACT: Wilbert E. Nixon, Jr., Wireless 
Telecommunications Bureau, at (202) 418-7240.

SUPPLEMENTARY INFORMATION: This is a summary of the Federal 
Communications Commission's Third Report and Order and Order On 
Reconsideration, FCC 01-135, in GEN Docket No. 90-314, ET Docket No. 
92-100 and PP Docket No. 93-253, adopted on April 19, 2001 and released 
on May 3, 2001. The full text of this Third Report and Order and Order 
On Reconsideration is available for inspection and copying during 
normal business hours in the FCC Reference Center, Room CY-A257, 445 
12th Street, SW., Washington, DC 20554. The complete text may be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc., 1231 20th Street, NW., Washington, DC 
20037. The full text may also be downloaded at: www.fcc.gov. 
Alternative formats are available to persons with disabilities by 
contacting Martha Contee at (202) 418-0260 or TTY (202) 418-2555.

Synopsis of Third Report and Order on Reconsideration

I. Introduction

    1. In this order, we adopt further modifications to our existing 
narrowband Personal Communications Services (PCS) rules, in three major 
respects. First, we will channelize and license the one megahertz of 
narrowband PCS spectrum that has heretofore been held in reserve. 
Second, we will re-channelize 712.5 kilohertz of previously channelized 
spectrum for which licenses have not been auctioned. Third, we adopt a 
narrowband PCS channel band plan that includes both nationwide and 
Major Trading Areas (MTA) licenses. In adopting these new rules, we 
also address the petitions for reconsideration filed in response to the 
Narrowband PCS Second R&O/Second Further Notice, (65 FR 35843-35901, 
June 6, 2000). The action we take today resolves the remaining issues 
concerning narrowband PCS in preparation for auctioning licenses for 
the remaining narrowband PCS spectrum in the near future

II. Discussion

    2. In this order, we address in turn (1) the licensing of the 
reserve spectrum, (2) the band plan for the reserve and other remaining 
spectrum for which licenses have not been auctioned, including channel 
size and services area size for all licenses and (3) eligibility 
restrictions for response channels and

[[Page 29912]]

the PSMI petition. Because there is some overlap of issues raised in 
the petitions for reconsideration and the responses to the Second 
Further Notice of Proposed Rulemaking, we will dispose of each petition 
as we address the pertinent issue. For the reasons explained below, we 
grant the PCIA petition in part, deny the PSMI petition, and adopt the 
proposals of the Narrowband PCS Second R&O/Second Further Notice, (65 
FR 35875-35902, June 6, 2000) with consideration given to both the PCIA 
and WebLink band plan proposals.

A. Licensing of the Reserve Spectrum

    3. In the Narrowband PCS R&O/Further Notice, the Commission 
tentatively concluded that the one megahertz of spectrum that it had 
reserved in the PCS First Report and Order should be channelized and 
licensed. The Commission believed that licensing this spectrum would 
serve the public interest by facilitating competition, opening the 
market to new entrants, and allowing existing narrowband PCS licensees 
to expand their systems through access to additional spectrum.
    4. Despite opposition found in the earlier record, the Commission 
tentatively concluded, in the Narrowband PCS Second R&O/Second Further 
Notice, that it was in the public interest to proceed with licensing 
the one megahertz of narrowband PCS spectrum that has been held in 
reserve. The Commission believed that the unencumbered spectrum should 
be made available to those interested in bringing new and innovative 
services to the public, and that the Commission should not limit 
service options by limiting the spectrum available. In that order, the 
Commission also tentatively concluded that licenses for the reserve 
spectrum should be auctioned along with licenses for all of the other 
remaining narrowband PCS spectrum.
    5. All commenters now support licensing the reserve spectrum. We 
agree that licensing the reserve spectrum will help narrowband PCS 
licensees remain competitive with other CMRS providers and will also 
help promote new and innovative services and the opening of the market 
to new entrants. Consequently, we will proceed with the licensing of 
the reserve spectrum.

B. Band Plan for the Reserve Spectrum and Other Remaining Unauctioned 
Spectrum

    6. In the Narrowband PCS Second R&O/Second Further Notice, the 
Commission sought comment on how to channelize the reserve spectrum and 
whether to rechannelize the narrowband PCS spectrum that had been 
channelized previously but not yet licensed. The Commission was 
primarily concerned with whether to create larger spectrum blocks for 
potential bidders and service providers. We received comments from a 
variety of service providers, large and small. The views of the 
overwhelming majority of commenters on this issue are represented by 
the PCIA band plan and WebLink's proposed modification of the PCIA band 
plan.
1. Channel Size
    7. PCIA proposes a ``consensus'' band plan that channelizes the 
reserve spectrum, and re-channelizes the other remaining spectrum for 
which licenses have not been auctioned. This available spectrum 
includes nine frequencies currently available for assignment on an MTA 
basis (two 50 kHz/50 kHz paired channels, five 50 kHz/12.5 kHz paired 
channels, and two 50 kHz unpaired channels), paging response channels 
to be licensed on an MTA basis (eight 12.5 kHz unpaired channels), the 
spectrum of five regional licenses that were auctioned but subsequently 
cancelled (Channel 13, a 50 kHz/50 kHz paired channel), the spectrum of 
one nationwide license that was auctioned but subsequently cancelled (a 
50 kHz unpaired channel), and the one megahertz of reserve spectrum 
that the Commission had proposed to divide into three channels (two 300 
kHz unpaired channels and one 400 kHz unpaired channel.) Specifically, 
PCIA urges the Commission to rechannelize the remaining spectrum for 
which licenses have not been auctioned into larger blocks that could be 
aggregated or disaggregated to suit the carrier's needs. Its band plan, 
which proposes a 50 kHz bandwidth as the standard building block, 
accommodates ReFLEX, a new protocol created by Motorola to enable two-
way paging and messaging. The PCIA band plan proposes MTA-based 
licenses for one 12.5 kHz unpaired channel and one 50 kHz/50 kHz paired 
channel. It proposes nationwide or regional licenses for six 50 kHz 
unpaired channels, five 100 kHz unpaired channels, one 100 kHz/50 kHz 
paired channel, and four 150 kHz/50 kHz paired channels.
    8. PCIA asserts that its band plan provides incumbent licensees and 
potential market entrants--both small and large businesses alike--with 
maximum flexibility to construct optimal licensed areas. Further, PCIA 
states that for those entities that require paired spectrum, there are 
several paired licenses of varying sizes. PCIA argues that there are a 
number of unpaired licenses that can be accumulated by auction 
participants who might desire unpaired spectrum and that the unpaired 
spectrum can also be aggregated during an auction to permit pairing by 
those applicants who desire such pairing. PCIA argues that the use of 
channel blocks larger than 50 kHz would limit participation by smaller 
players that cannot rely on large spectrum holders to partition or 
disaggregate their spectrum. Companies that require larger blocks of 
spectrum may aggregate 50 kHz blocks to suit their needs. PCIA claims 
that its proposed band plan would allow for a single auction of 
licenses for the reserve and other remaining spectrum but that this 
might not be true of a different plan.
    9. We agree with PCIA that its channelization plan will serve the 
public interest in that new market entrants and existing licensees may 
utilize the additional spectrum offered in the most efficient manner 
possible. PCIA's proposed bandplan is consistent with our original 
bandplan in that both plans rely on a 50 kHz bandwidth as the standard 
building block. PCIA's consensus proposal, however, includes wider 
bandwidth channels of 100 kHz up to 300 kHz compared with the current 
rules that vary from 12.5 kHz up to 100 kHz. Most commenters support 
the PCIA band plan or some variation and there is no significant 
industry dispute regarding the channel size and pairings aspects of the 
PCIA band plan. We agree with PCIA and Motorola that the band plan 
using the 50 kHz REFLEX technology represents a reasonable compromise 
between large and small carriers because (a) the channel size is 
consistent with base station and end user equipment already in use 
today; (b) it takes advantage of the current large installed base of 
equipment and infrastructure; (c) it allows incumbents to utilize 
existing advanced messaging technologies or develop new ones; and (d) 
it allows new entrants and/or small businesses who don't have research 
and development capital or market share/power to quickly get a 
competitive system up and running. We conclude that the PCIA 
channelization plan represents a reasonable compromise among its 
industry members that optimizes existing technology and 
telecommunications infrastructure to enhance the competitiveness and 
efficiency of current narrowband PCS communications.
2. Service Area Size
    10. In the Narrowband PCS Second R&O/Second Further Notice, the

[[Page 29913]]

Commission eliminated Basic Trading Areas (BTAs) as a geographic 
licensing unit for narrowband PCS. The Commission found BTAs to be too 
small to provide viable narrowband service. Instead, the Commission 
adopted MTAs as the appropriate service area size for future licensing 
of narrowband PCS. The Commission concluded that narrowband PCS could 
be licensed using MTAs without compromising the goal of ensuring entry 
for small businesses.
    11. PCIA urges the Commission to reconsider its decision to license 
all remaining spectrum on the basis of MTAs. PCIA proposes that the 
Commission license the majority of the remaining spectrum on a 
nationwide basis, with the rest licensed based upon regional and MTA 
service areas. Although PCIA supported MTA-based licensing in its 
comments filed in 1997, it now contends that the paging/messaging 
market has matured and changed such that the ability to provide coast-
to-coast coverage is of paramount importance to many, if not most, 
licensees. PCIA argues that licensing of all remaining spectrum on an 
MTA basis will impede the ability of narrowband PCS licensees to 
compete with other CMRS providers, further that the marketplace demands 
that wireless Internet/data providers be capable of providing 
nationwide service, and that nationwide licenses would reduce the cost 
of auction participation and would minimize interference coordination 
requirements.
    12. WebLink opposes this aspect of PCIA's petition, arguing that 
the Commission should license the remaining spectrum on an MTA basis. 
WebLink claims that MTA-based licensing is superior to nationwide and 
regional licensing because it can promote viable, competitive 
narrowband PCS businesses by serving the needs of a wide range of 
carriers. WebLink also claims that it and other carriers have relied on 
the future availability of licenses based on small, manageable 
geographic areas, and that granting the PCIA petition would thus cause 
great harm to such carriers. According to WebLink, on the issue of 
service areas, the PCIA band plan does not represent the consensus of 
the paging industry and ``merely represents the views of the larger 
paging companies and conglomerates that voted for the plan.'' WebLink 
argues that the current Commission proposal to implement an MTA-based 
licensing scheme will promote viable, competitive narrowband PCS 
businesses by serving the needs of both large and smaller carriers. 
WebLink also requests that, if the Commission decides to create 
additional regional or nationwide licenses, it do so by using a small 
portion of the one megahertz of reserve narrowband PCS spectrum, 
instead of revisiting its MTA licensing decision in the Narrowband PCS 
Second R&O/Second Further Notice.
    13. Our primary concern in this proceeding is to establish a 
channel band plan that is likely to attract a wide variety of service 
providers to narrowband PCS spectrum so as to lead to the rapid 
provision of services to the public. In the Narrowband PCS Second R&O/
Second Further Notice, the Commission noted that the record, at that 
time, contained little support for, and considerable opposition to, the 
establishment of additional nationwide licenses. Consequently, the 
Commission concluded that MTA-based service areas, coupled with the 
ability to aggregate licenses, would offer licensees substantial 
flexibility to provide wide-area local service as well as service on a 
larger scale. It is clear from the PCIA petition, the WebLink 
opposition, and the related comments filed by PCIA and others that now, 
at least some form of nationwide or regional licensing is desirable or, 
at least, tolerable to all parties, even apparently to WebLink. 
Although the Commission's initial rationale for replacing BTAs with the 
larger MTAs is still valid (i.e., that MTAs represent a basic 
geographic building block that can serve the needs of small and large 
carriers alike, especially coupled with the ability to aggregate 
licenses), we are persuaded by the comments of PCIA that some level of 
licensing is warranted that includes service areas larger than MTAs.
    14. Further, we note the benefits to the public of nationwide 
licenses. Consumers of wireless services depend upon the portability of 
their services and many expect continuous coverage, regardless of where 
they travel across the country. Narrowband PCS providers currently face 
competition from nationwide, broadband wireless carriers who are 
providing seamless, nationwide service including short messaging. It 
appears possible that many narrowband PCS licensees will require 
similar geographic coverage and scope in order to be competitive in the 
wireless marketplace. The question presented to the Commission, 
therefore concerns the proper balance of nationwide, regional, and MTA 
licensing in the reserve and other remaining spectrum. PCIA and a 
majority of its members believe that more nationwide licenses are 
desirable. WebLink and possibly other smaller carriers believe more MTA 
licenses are necessary. We resolve this issue by determining what 
combination of national, regional, and MTA licenses will ensure the 
rapid provision of services to the public without compromising the goal 
of ensuring entry for small businesses.
3. Revised Band Plan
    15. After careful consideration of all pleadings in this 
proceeding, we have developed a new channel band plan for the 
narrowband PCS reserve spectrum and the other remaining spectrum. The 
new channel band plan includes elements of the PCIA band plan, with its 
emphasis on nationwide licensing, and WebLink's proposed modification, 
with its emphasis on MTA licensing. We conclude that this revised plan 
strikes a proper balance between competing interests in a manner that 
will promote competition and stimulate development of new and 
innovative narrowband services. We will channelize the remaining 
narrowband PCS spectrum and will auction licenses as described in the 
table below and the chart in Appendix A-C. This 1.8625 megahertz of 
spectrum includes: the 1 megahertz of reserve spectrum, 712.5 kilohertz 
of previously channelized spectrum, 100 kilohertz from the cancellation 
of five regional licenses, and 50 kilohertz from the cancellation of a 
nationwide license.

[[Page 29914]]



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                                                                                                        Total
              Channel number                   Channel description            Frequency bands          spectrum
                                                                                                        (kHz)
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18.......................................  One 100 kHz unpaired         940.65-940.75 MHz..........          100
                                            channel.
19-20....................................  Two 50 kHz paired channels.  901.3-901.35, 930.5-930.55           200
                                                                         MHz.
                                                                        901.9-901.95, 930.75-930.8
                                                                         MHz.
21-22....................................  Two 50 kHz/150 kHz paired    901.5-901.55, 930-930.15             400
                                            channels.                    MHz.
                                                                        901.6-901.65, 930.15-930.3
                                                                         MHz.
23-25....................................  Three 50 kHz/100 kHz paired  901.45-901.5, 940.55-940.65          450
                                            channels.                    MHz.
                                                                        901.55-901.6, 940.3-940.4
                                                                         MHz.
                                                                        901.85-901.9, 940.45-940.55
                                                                         MHz.
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    Nationwide Subtotal..................                                                                  1,150
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                                                  MTA CHANNELS
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26-27....................................  Two 50 kHz unpaired          901.35-901.4 MHz...........          100
                                            channels.                   901.4-901.45 MHz...........
28.......................................  One 50 kHz unpaired channel  940.4-940.45 MHz...........           50
29.......................................  One 50 kHz/50 kHz paired     901.95-902.0, 930.8-930.85           100
                                            channel.                     MHz.
30.......................................  One 50 kHz/100 kHz paired    901.65-901.7, 930.3-930.4            150
                                            channel.                     MHz.
31.......................................  One 50 kHz/150 kHz paired    901.7-901.75, 930.85-931             200
                                            channel.                     MHz.
32.......................................  One 12.5 kHz/100 kHz paired  901.8375-901.85, 940.9-941         112.5
                                            channel.                     MHz.
----------------------------------------------------------------------------------------------------------------
    MTA Subtotal.........................                                                                  712.5
================================================================================================================
        Grand Total......................                                                                1,862.5
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    16. We have decided not to create additional regional narrowband 
PCS licenses because of the demonstrated demand for nationwide and MTA 
licenses. PCIA's plan is composed of mostly nationwide licenses, and as 
we described above, WebLink has emphasized the importance of providing 
a sufficient amount of spectrum to be licensed on an MTA basis. 
Further, in reviewing the results of the first auction of narrowband 
PCS regional licenses, we find that four entities purchased groups of 
co-channel regional licenses, effectively creating four additional 
nationwide licenses. These aggregated licenses comprised two-thirds of 
the available regional licenses. In fact, only two of the thirty 
available regional licenses were purchased as single licenses. By 
licensing the remaining narrowband PCS spectrum on a nationwide and MTA 
basis, we respond to the industry's demonstrated demand for nationwide 
licenses and MTA licenses. Furthermore, we provide the flexibility for 
licensees to aggregate MTA licenses to create regional or national 
service areas with boundaries of their choosing, as dictated by market 
forces and consumer demand, rather than set by the Commission.
    17. We find our new channel band plan strikes a balance for the 
narrowband PCS band as a whole (i.e., including channels we've already 
licensed). Through this approach we achieve parity between the spectrum 
in MTA licenses and the spectrum in regional licenses (i.e., 
approximately equal) and we create twice as many nationwide licenses. 
This should result in an approximate distribution of narrowband PCS 
spectrum of 66% nationwide, 17% regional, and 17% MTA. With respect to 
the number of licenses issued, the revised channel band plan will yield 
18 nationwide (5%), 25 regional (6%), and 357 MTA (89%) licenses. We 
believe that the revised channel plan represents an appropriate 
compromise for all narrowband PCS carriers, large and small, and fairly 
balances their interests by offering a range of bidding opportunities 
that allow them to pursue local, regional, or nationwide strategies.

C. Eligibility Restrictions

    18. In 1993, in order to provide an opportunity for incumbent 
paging licensees to upgrade their operations, the Commission set aside 
100 kHz (8 unpaired 12.5 kHz frequencies) of the 3 MHz allocated for 
narrowband PCS to be used for paging response channels, i.e., channels 
used in paired communications with existing one-way paging frequencies 
to provide mobile-to-base station communications. The Commission's 
intent in establishing these channels was to provide a means for one-
way (single frequency) paging licensees to obtain a second frequency 
for the purpose of delivering signals back from their customers' mobile 
devices. Prior to the Narrowband PCS Second R&O/Second Further Notice, 
the Commission's rules limited eligibility for acquiring narrowband PCS 
response channels to existing paging licensees, i.e., those licensed to 
operate conventional one-way paging base stations under Part 22 or Part 
90.
    19. In the Narrowband PCS Second R&O/Second Further Notice, the 
Commission lifted all eligibility restrictions on applying for paging 
response channels, finding that the rules unnecessarily excluded other 
potential users of the response channels. The Commission concluded that 
lifting the eligibility restrictions would encourage entry of new 
narrowband PCS providers by providing greater flexibility to new 
licensees to use the channels in conjunction with other spectrum to 
provide new services.
    20. PSMI urges the Commission to reconsider its decision and 
reinstate the paging eligibility restriction for the eight 12.5 kHz 
paging response channels. PSMI argues that the Commission's action to 
eliminate the paging eligibility restriction is contrary to the public 
interest because: (1) elimination of the paging response channel set-
aside creates an impermissible retroactive effect, (2) lifting the 
restriction exceeded the Commission's statutory authority, and (3) the 
public interest would be served by retention of the eligibility 
restriction.
    21. We decline to reinstate the eligibility restrictions that 
originally applied to the paging response channels. The narrowband PCS 
industry has changed dramatically since the Commission set aside these 
channels for the exclusive use of the paging carriers. Other narrowband 
PCS entities and even broadband carriers have expressed interest in 
using the response channels

[[Page 29915]]

to provide new and innovative services for their own customers and for 
traditional paging customers as well. The Commission disagrees with 
PSMI's assertion that retaining the restriction represents a 
retroactive effect precluding paging carriers from ever using the 
response channels. There is no retroactive effect in the Commission 
eliminating the eligibility restrictions because it has not prevented 
PSMI or any such similarly situated carrier from acquiring the response 
channels to expand their one-way systems. Nor has the Commission 
affected the status of any pending application to use those response 
channels. The Commission is entitled to change its eligibility criteria 
in rulemaking proceedings as long as we provide an adequate explanation 
for the change. With regard to PSMI's statutory authority and public 
interest claims, we conclude the Commission acted well within its 
statutory authority when it lifted the restrictions because it did so 
to increase competition for the response channels, not to enrich the 
Federal treasury, as is alleged by PSMI. PSMI incorrectly concludes 
that the Commission's sole motivation to award licenses is to maximize 
revenue to the Federal treasury. On the contrary, the removal of the 
eligibility restrictions will increase competition for the response 
channels and thereby increase the likelihood that licenses for these 
channels will be awarded to those, including paging licensees, that 
value them most highly and consequently may provide service to the 
public most rapidly. Further, lifting the eligibility restrictions will 
encourage entry of new narrowband PCS providers by providing greater 
flexibility to licensees to use these channels, either on a stand-alone 
basis or in conjunction with other spectrum, to provide new services.

Final Regulatory Flexibility Analysis (Third Report and Order)

    22. As required by the Regulatory Flexibility Act (RFA),\1\ an 
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in 
Appendix D of the Narrowband PCS Second R&O/Second Further Notice in 
this proceeding.\2\ The Commission sought written public comment on the 
proposals in the Second Further Notice, including comment on the IRFA. 
As described below, no commenter raised an issue concerning the IRFA. 
The Commission's Final Regulatory Flexibility Analysis (FRFA) in this 
Third Report and Order conforms to the RFA.\3\
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    \1\ 5 U.S.C. 603. Congress amended the RFA, id. Sec. 601 et 
seq., by the Contract with America Advancement Act of 1996, Pub. L. 
No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is 
the Small Business Regulatory Enforcement Fairness Act of 1996.
    \2\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, GEN Docket No. 90-
314, ET Docket No. 92-100, Implementation of Section 309(j) of the 
Communications Act--Competitive Bidding, Narrowband PCS, PP Docket 
No. 93-253, Second Report and Order and Second Further Notice of 
Proposed Rulemaking, 15 FCC Rcd 10456 (2000) (Narrowband PCS Second 
R&O/Second Further Notice).
    \3\ See 5 U.S.C. 604.
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A. Need for and Purpose of This Action

    23. This Third Report and Order amends the Commission's rules for 
narrowband PCS frequencies. The amendments adopted promote efficient 
licensing of narrowband PCS and enhance the service's competitive 
potential in the Commercial Mobile Radio Service marketplace. The Third 
Report and Order also channelizes the reserve narrowband PCS spectrum 
and re-channelizes the other remaining unauctioned spectrum, thus 
offering more spectrum to incumbent and new market entrants so that 
they may provide new and innovative services.

B. Summary of Significance of Issues Raised by Public Comments in 
Response to the IRFA

    24. No party filed comments responding to the IRFA.

C. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply

    25. Under the RFA, small entities may include small organizations, 
small businesses, and small governmental jurisdictions, or entities. 5 
U.S.C. 601(6). The RFA directs agencies to provide a description of 
and, where feasible, an estimate of the number of small entities that 
may be affected by the proposed rules, if adopted. The RFA generally 
defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' 5 U.S.C. 601(3). In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. A small business concern is one 
that: (1) Is independently owned and operated; (2) is not dominant in 
its field of operation; and (3) satisfies any additional criteria 
established by the Small Business Administration (SBA).\4\ Pursuant to 
5 U.S.C. 601(3), the statutory definition of a small business applies 
``unless an agency after consultation with the Office of Advocacy of 
the SBA, and after opportunity for public comment, establishes one or 
more definitions of such term which are appropriate to the activities 
of the agency and publishes such definition(s) in the Federal 
Register.''
---------------------------------------------------------------------------

    \4\ 5 U.S.C. 632.
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    26. The rules adopted in the Third Report and Order will affect 
small businesses that hold or seek to acquire narrowband Personal 
Communications Services (PCS) licenses. These entities include small 
businesses that obtain nationwide, regional or Major Trading Areas 
(MTA) geographic area licenses through auction, assignment, or transfer 
and small businesses that acquire partitioned and/or disaggregated MTA, 
regional, or nationwide geographic area licenses.
    27. In the future, the Commission will auction 1.8625 megahertz of 
spectrum which includes the 1 megahertz of reserve spectrum, 712.5 
kilohertz of previously channelized (but unauctioned) spectrum, 100 
kilohertz from the cancellation of five regional licenses, and 50 
kilohertz from the cancellation of a nationwide license.
    28. The new channel band plan strikes a balance for the narrowband 
PCS band as a whole (i.e., including channels the Commission has 
already auctioned). Through this approach the Commission will achieve 
parity between the spectrum in MTA licenses and the spectrum in 
regional licenses (i.e., approximately equal) and will create twice as 
many nationwide licenses. This should result in an approximate 
distribution of narrowband PCS spectrum of 66% nationwide, 17% 
regional, and 17% MTA. With respect to the number of licenses issued, 
the revised channel band plan will yield 18 nationwide (5%), 25 
regional (6%), and 357 MTA (89%) licenses.
    29. To ensure meaningful participation of small business entities 
in the auctions, the Commission adopted a two-tiered definition of 
small businesses in the Narrowband PCS Second R&O/Second Further 
Notice.\5\ A small business is an entity that, together with affiliates 
and controlling interests, has average gross revenues for the three 
preceding years of not more than $40 million. A very small business is 
an entity that, together with affiliates and controlling interests, has 
average gross revenues for the three preceding years of

[[Page 29916]]

not more than $15 million. The SBA has approved these definitions.
---------------------------------------------------------------------------

    \5\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, GEN Docket No. 90-
314, ET Docket No. 92-100, Implementation of Section 309(j) of the 
Communications Act--Competitive Bidding, Narrowband PCS, PP Docket 
No. 93-253, Second Report and Order and Second Further Notice of 
Proposed Rulemaking, 15 FCC Rcd 10456 (2000) (Narrowband PCS Second 
R&O/Second Further Notice).
---------------------------------------------------------------------------

    30. The Commission cannot predict accurately the number of licenses 
that will be awarded to small entities in future auctions. However, 4 
of the 16 winning bidders in the two previous narrowband PCS auctions 
were small businesses, as that term was defined under the Commission's 
rules. The Commission assumes, for purposes of the evaluations and 
conclusions in this FRFA that a large portion of the remaining 
narrowband PCS licenses will be awarded to small entities. The 
Commission also assumes that at least some small businesses will 
acquire narrowband PCS licenses by means of the Commission's 
partitioning and disaggregation rules.

D. Summary of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    31. The rules adopted in the Third Report and Order impose no 
additional reporting and recordkeeping requirements on large or small 
businesses.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    32. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives: (1) the 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.\6\
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    \6\ 5 U.S.C. 603.
---------------------------------------------------------------------------

    33. The rules adopted in this Third Report and Order 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. The rules are also 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. See generally 47 U.S.C. 257, 
309(j).
    34. The Commission finds that establishing a reasonable balance of 
MTA and nationwide licensing will serve the needs of a wide range of 
entities, including both large and small service providers. The 
commenting parties support this conclusion. The Commission finds that 
consumers of wireless services depend upon the portability of their 
services and expect continuous coverage, regardless of where they 
travel across the country. Narrowband PCS providers currently compete 
with nationwide, broadband wireless carriers who are providing 
seamless, nationwide service. The Commission concludes that all 
narrowband PCS licensees, especially small entities, must have similar 
geographic coverage and scope in order to be competitive in the 
wireless marketplace.
    35. The Commission considered and adopted a compromise proposal 
between PCIA and WebLink. PCIA and a majority of its members believe 
that more nationwide licenses are desirable. WebLink and possibly other 
smaller carriers believe more MTA licenses are necessary. The question 
presented to the Commission, therefore concerns the proper balance of 
nationwide, regional, and MTA licensing in the reserve and remaining 
unauctioned spectrum. The Commission resolves the issue by determining 
a proper combination of national, regional, and MTA licenses overall 
that will ensure the rapid provision of services to the public without 
compromising the goal of ensuring entry for small businesses.

F. Report to Congress

    The Commission will send a copy of this Third Report and Order and 
Order on Reconsideration, including this FRFA, in a report to be sent 
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 this Third Report and Order and Order on 
Reconsideration, including FRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration. A copy of the Third Report and Order 
and Order on Reconsideration and FRFA (or summaries thereof) will also 
be published in the Federal Register. See 5 U.S.C. 604(b).

III. Conclusion

    36. The action we take today resolves the remaining issues in 
preparation for a narrowband PCS spectrum auction. We believe that the 
new channel band plan we adopt today represents a proper balance of the 
interests and concerns of industry, both large and small carriers, and 
will provide the public with the greatest variety of service choices at 
competitive rates.

IV. Procedural Matters

    37. A Final Regulatory Flexibility Analysis, pursuant to the 
Regulatory Flexibility Act, 5 U.S.C. 604, is contained in Paragraph 22.

V. Ordering Clauses

    38. Authority for issuance of this Third Report and Order and Order 
on Reconsideration 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).
    39. Part 24 of the Commission's Rules IS AMENDED as specified in 
Rule Changes effective August 3, 2001.
    40. The Commission's Consumer Information Bureau, Reference 
Information Center, SHALL SEND a copy of this Third Report and Order 
and Order on Reconsideration, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 24

    Administrative practice and procedure, Communications common 
carriers, Communications equipment, Radio, Reporting and recordkeeping 
requirements, Telecommunications.

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

Appendixes to Preamble

    Note: The following Appendixes A, B, and C will not appear in 
the Code of Federal Regulations.

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Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communication Commisssion amends 47 CFR Part 24 as follows:

PART 24--PERSONAL COMMUNICATIONS SERVICES

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

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

    2. Section 24.129 is revised to read as follows:


Sec. 24.129  Frequencies.

    The following frequencies are available for narrowband PCS:
    (a) Eighteen frequencies are available for assignment on a 
nationwide basis as follows:
    (1) Seven 50 kHz channels paired with 50 kHz channels:

Channel 1: 940.00-940.05 and 901.00-901.05 MHz;
Channel 2: 940.05-940.10 and 901.05-901.10 MHz;
Channel 3: 940.10-940.15 and 901.10-901.15 MHz;
Channel 4: 940.15-940.20 and 901.15-901.20 MHz;
Channel 5: 940.20-940.25 and 901.20-901.25 MHz;
Channel 19: 930.50-930.55 and 901.30-901.35 MHz; and
Channel 20: 930.75-930.80 and 901.90-901.95 MHz.

    (2) Three 50 kHz channels paired with 12.5 kHz channels:

Channel 6: 930.40-930.45 and 901.7500-901.7625 MHz;
Channel 7: 930.45-930.50 and 901.7625-901.7750 MHz; and
Channel 8: 940.75-940.80 and 901.7750-901.7875 MHz;

    (3) Two 50 kHz unpaired channels:

Channel 9: RESERVED;
Channel 10: 940.80-940.85 MHz; and
Channel 11: 940.85-940.90 MHz.

    (4) One 100 kHz unpaired channel:

Channel 18: 940.65-940.75 MHz.

    (5) Two 150 kHz channels paired with 50 kHz channels:

Channel 21: 930.00-930.15 and 901.50-901.55 MHz; and
Channel 22: 930.15-930.30 and 901.60-901.65 MHz.

    (6) Three 100 kHz channels paired with 50 kHz channels:

Channel 23: 940.55-940.65 and 901.45-901.50 MHz;
Channel 24: 940.30-940.40 and 901.55-901.60 MHz; and
Channel 25: 940.45-940.55 and 901.85-901.90 MHz.

    (b) Five frequencies are available for assignment on a regional 
basis as follows:
    (1) One 50 kHz channel paired with 50 kHz channel:

Channel 12: 940.25-940.30 and 901.25-901.30 MHz.
Channel 13: RESERVED.

    (2) Four 50 kHz channels paired with 12.5 kHz channels:

Channel 14: 930.55-930.60 and 901.7875-901.8000 MHz;
Channel 15: 930.60-930.65 and 901.8000-901.8125 MHz;
Channel 16: 930.65-930.70 and 901.8125-901.8250 MHz; and
Channel 17: 930.70-930.75 and 901.8250-901.8375 MHz.

    (c) Seven frequencies are available for assignment on an MTA basis 
as follows:
    (1) Three 50 kHz unpaired channels:

Channel 26: 901.35-901.40 MHz;
Channel 27: 901.40-901.45 MHz; and
Channel 28: 940.40-940.45 MHz.

    (2) One 50 kHz channel paired with 50 kHz channel:

Channel 29: 930.80-930.85 and 901.95-902.00 MHz.

    (3) One 100 kHz channel paired with 50 kHz channel:

Channel 30: 930.30-930.40 and 901.65-901.70 MHz.

    (4) One 150 kHz channel paired with 50 kHz channel:

Channel 31: 930.85-931.00 and 901.7-901.75 MHz.

    (5) One 100 kHz channel paired with 12.5 kHz channel:

Channel 32: 940.90-941 and 901.8375-901.85 MHz.

    Note to Sec. 24.129: Operations in markets or portions of 
markets which border other countries, such as Canada and Mexico, 
will be subject to on-going coordination arrangements with 
neighboring countries.

Sec. 24.130  [Removed and Reserved]

    3. Section 24.130 is removed and reserved.
[FR Doc. 01-13618 Filed 6-1-01; 8:45 am]
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