Assessment and Collection of Regulatory Fees For Fiscal Year 2011

Federal RegisterMay 26, 2011

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 11-76; FCC 11-68]

Assessment and Collection of Regulatory Fees For Fiscal Year 2011

AGENCY:

Federal Communications Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Commission will revise its Schedule of Regulatory Fees in order to recover an amount of $335,794,000 that Congress has required the Commission to collect for fiscal year 2011. The Communications Act of 1934, as amended, provides for the annual assessment and collection of regulatory fees for annual “Mandatory Adjustments” and “Permitted Amendments” to the Schedule of Regulatory Fees.

DATES:

Submit comments on or before June 2, 2011, and reply comments on or before June 9, 2011.

ADDRESSES:

You may submit comments, identified by MD Docket No. 11-76, by any of the following methods:

•

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

•

Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs.

Follow the instructions for submitting comments.

•

People with Disabilities:

Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART,

etc.

) by e-mail:

FCC504@fcc.gov

or phone: 202-418-0530 or TTY: 202-418-0432.

•

E-mail: ecfs@fcc.gov.

Include MD Docket No. 11-76 in the subject line of the message.

•

Mail:

Commercial overnight mail (other than U.S. Postal Service Express Mail, and Priority Mail, must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW., Washington DC 20554.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the

SUPPLEMENTARY INFORMATION

section of this document.

FOR FURTHER INFORMATION CONTACT:

Roland Helvajian, Office of Managing Director at (202) 418-0444.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM), FCC 11-68, MD Docket No. 11-76, adopted and released May 3, 2011. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 Twelfth Street, SW., Room CY-A257, Portals II, Washington, DC 20554, and may also be purchased from the Commission's copy contractor, BCPI, Inc., Portals II, 445 Twelfth Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact BCPI, Inc. via their Web site,

http://www.bcpi.com,

or call 1-800-378-3160. This document is available in alternative formats (computer diskette, large print, audio record, and braille). Persons with disabilities who need documents in these formats may contact the FCC by e-mail:

FCC504@fcc.gov

or phone: 202-418-0530 or TTY: 202-418-0432.

I. Procedural Matters

A. Ex Parte Rules-Permit-But Disclose Proceeding

1. This is a “permit-but-disclose” proceeding subject to the requirements under section 1.1206(b) of the Commission's rules.

Ex parte

presentations are permissible if disclosed in accordance with Commission rules, except during the Sunshine Agenda period when presentations,

ex parte

or otherwise, are generally prohibited. Persons making oral

ex parte

presentations are reminded that a memorandum summarizing a

presentation must contain a summary of the substance of the presentation and not merely a listing of the subjects discussed. More than a one- or two-sentence description of the views and arguments presented is generally required.

Additional rules pertaining to oral and written presentations are set forth in Section 1.1206(b).

See

47 CFR 1.1206(b);

see also

47 CFR 1.1202, 1.1203.

See

47 CFR 1.1206(b)(2).

B. Comment Filing Procedures

2. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies.

See Electronic Filing of Documents in Rulemaking Proceedings,

63 FR 24121 (1998).

•

Electronic Filers:

Comments may be filed electronically using the Internet by accessing the ECFS:

http://fjallfoss.fcc.gov/ecfs2/

or the Federal eRulemaking Portal:

http://www.regulations.gov.

•

Paper Filers:

Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of

before

entering the building.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington DC 20554.

People with Disabilities:

To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to

fcc504@fcc.gov

or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

3. Documents in MD Docket No. 11-76 will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., CY-A257, Washington, DC 20554. These documents will also be available free online, via ECFS. Documents will be available electronically in ASCII, Word, and/or Adobe Acrobat.

4. To request information in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to

fcc504@fcc.gov

or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document can also be downloaded in Word and Portable Document Format (“PDF”) at:

http://www.fcc.gov.

C. Paperwork Reduction Act

5. This

NPRM

does not contain proposed or modified information collection burden (s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,

see

44 U.S.C. 3506(c)(4).

D. Congressional Review Act Analysis

6. The Commission will send a copy of this

NPRM

to Congress and the Government Accountability Office pursuant to the Congressional Review Act.

See

5 U.S.C. 801(a)(1)(A). The Congressional Review Act is contained in Title II, 251, of the CWAAA;

see

Public Law 104-121, Title II, 251, 110 Stat. 868.

E. Initial Regulatory Flexibility Analysis

7. An initial regulatory flexibility analysis (“IRFA”) is contained herein. Comments to the IRFA must be identified as responses to the IRFA and filed by the deadlines for comments on the

Notice.

The Commission will send a copy of the Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

II. Notice of Proposed Rulemaking

Introduction

8. In this

NPRM,

we propose to collect $335,794,000 in regulatory fees for Fiscal Year (“FY”) 2011, pursuant to Section 9 of the Communications Act of 1934, as amended (the “Act”). Section 9 regulatory fees are mandated by Congress and are collected to recover the regulatory costs associated with the Commission's enforcement, policy and rulemaking, user information, and international activities.

The annual regulatory fee amount to be collected is established each year in the Commission's Annual Appropriations Act which is adopted by Congress and signed by the President and which funds the Commission.

In this annual regulatory fee proceeding, we retain many of the established methods, policies, and procedures for collecting Section 9 regulatory fees adopted by the Commission in prior years. Consistent with our established practice, we intend to collect these regulatory fees during a September 2011 filing window in order to collect the required amount by the end of our fiscal year.

47 U.S.C. 159(a).

See

Consolidated Appropriations Act, 2010, Public Law 111-117 for the FY 2010 appropriations act language for the Commission establishing the amount of $335,794,000 of offsetting collections to be assessed and collected by the Commission pursuant to Section 9 of the Communications Act.

III. Discussion

A. FY 2011 Regulatory Fee Assessment Methodology

9. In our FY 2011 regulatory fee assessment, we will use the same Section 9 regulatory fee assessment methodology adopted in FY 2010 and in prior years. Each fiscal year, the Commission proportionally allocates the total amount that must be collected via Section 9 regulatory fees. The results of our FY 2011 regulatory fee assessment methodology (including a comparison to the prior year's results) are contained in the table below. To collect the $335,794,000 required by Congress, we adjusted the FY 2010 amount upward by 4.7 percent and allocated this amount across the various fee categories. Consistent with past practice, we then divided the FY 2011 amount by the number of estimated payment units in each fee category to determine the unit fee.

As in prior

years, for cases involving small fees,

e.g.,

licenses that are renewed over a multiyear term, we divided the resulting unit fee by the term of the license and then rounded these unit fees consistent with the requirements of Section 9(b)(2) of the Act.

In many instances, the regulatory fee amount is a flat fee per licensee or regulatee. In some instances, the fee amount represents a per-unit fee (such as for International Bearer Circuits), a per-unit subscriber fee (such as for Cable, Commercial Mobile Radio Service (“CMRS”) Cellular/Mobile and CMRS Messaging), or a fee factor per revenue dollar (Interstate Telecommunications Service

Provider (“ITSP”) fee). The payment unit is the measure upon which the fee is based, such as a licensee, regulatee, or subscriber fee.

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10. In calculating the FY 2011 regulatory fees listed in (

see

Table—FY 2011 Schedule of Regulatory Fees below), we adjusted the FY 2011 list of payment units (

see

Table—Sources of Payment Unit Estimates for FY 2011 below) based upon licensee databases, industry and trade group projections, as well as prior year payment information. In some instances, Commission licensee databases are used; in other instances, actual prior year payment records and/or industry and trade association projections are used in determining the payment units.

Where appropriate, we adjusted and rounded our final estimates to take into consideration events that may impact the number of units for which regulatees submit payment, such as waivers and exemptions that may be filed in FY 2011, and fluctuations in the number of licenses or station operators due to economic, technical, or other reasons. Our estimated FY 2011 payment units, therefore, are based on several variable factors that are relevant to each fee category. The fee rate may also be rounded or adjusted slightly to account for these variables.

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The databases we consulted are the following: the Commission's Universal Licensing System (“ULS”), International Bureau Filing System (“IBFS”), Consolidated Database System (“CDBS”) and Cable Operations and Licensing System (“COALS”). We also consulted reports generated within the Commission such as the Wireline Competition Bureau's

Trends in Telephone Service

and the Wireless Telecommunications Bureau's

Numbering Resource Utilization Forecast and Annual CMRS Competition Report,

as well as industry sources including, but not limited to,

Television & Cable Factbook

by Warren Publishing, Inc. and the

Broadcasting and Cable Yearbook

by Reed Elsevier, Inc.

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TABLE—FY 2011 Schedule of Regulatory Fees (Continued)

FY 2011 Radio Station Regulatory Fees

Population

served

AM Class A

AM Class B

AM Class C

AM Class D

FM Classes

A, B1 & C3

FM Classes

B, C, C0, C1 & C2

≤25,000

$700

$575

$525

$600

$675

$850

25,001-75,000

1,400

1,150

800

900

1,350

1,500

75,001-150,000

2,100

1,450

1,050

1,500

1,850

2,750

150,001-500,000

3,150

2,450

1,575

1,800

2,875

3,600

500,001-1,200,000

4,550

3,750

2,625

3,000

4,550

5,300

1,200,001-3,000,00

7,000

5,750

3,950

4,800

7,425

8,500

>3,000,000

8,400

6,900

5,000

6,000

9,450

11,050

FY 2011 Schedule of Regulatory Fees (Continued)

International Bearer Circuits—Submarine Cable

Submarine cable systems

(capacity as of December 31, 2010)

Fee amount

Address

<2.5 Gbps

$12,825

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

2.5 Gbps or greater, but less than 5 Gbps

25,650

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

5 Gbps or greater, but less than 10 Gbps

51,275

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

10 Gbps or greater, but less than 20 Gbps

102,575

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

20 Gbps or greater

205,125

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

Table—Sources of Payment Unit Estimates for FY 2011

In order to calculate individual service fees for FY 2011, we adjusted FY 2010 payment units for each service to more accurately reflect expected FY 2011 payment liabilities. We obtained our updated estimates through a variety of means. For example, we used Commission licensee data bases, actual prior year payment records and industry and trade association projections when available. The databases we consulted include our Universal Licensing System (“ULS”), International Bureau Filing System (“IBFS”), Consolidated Database System (“CDBS”) and Cable Operations and Licensing System (“COALS”), as well as reports generated within the Commission such as the Wireline Competition Bureau's

Trends in Telephone Service

and the Wireless Telecommunications Bureau's

Numbering Resource Utilization Forecast.

We sought verification for these estimates from multiple sources and, in all cases; we compared FY 2011 estimates with actual FY 2010 payment units to ensure that our revised estimates were reasonable. Where appropriate, we adjusted and/or rounded our final estimates to take into consideration the fact that certain variables that impact on the number of payment units cannot yet be estimated with sufficient accuracy. These include an unknown number of waivers and/or exemptions that may occur in FY 2011 and the fact that, in many services, the number of actual licensees or station operators fluctuates from time to time due to economic, technical, or other reasons. When we note, for example, that our estimated FY 2011 payment units are based on FY 2010 actual payment units, it does not necessarily mean that our FY 2011 projection is exactly the same number as in FY 2010. We have either rounded the FY 2011 number or adjusted it slightly to account for these variables.

Table—Sources of Payment Unit Estimates for FY 2011 (Continued)

Fee Category

Sources of payment unit estimates

Land Mobile (All), Microwave, 218-219 MHz, Marine (Ship & Coast), Aviation (Aircraft & Ground), GMRS, Amateur Vanity Call Signs, Domestic Public Fixed

Based on Wireless Telecommunications Bureau (“WTB”) projections of new applications and renewals taking into consideration existing Commission licensee data bases. Aviation (Aircraft) and Marine (Ship) estimates have been adjusted to take into consideration the licensing of portions of these services on a voluntary basis.

CMRS Cellular/Mobile Services

Based on WTB projection reports, and FY 10 payment data.

CMRS Messaging Services

Based on WTB reports, and FY 10 payment data.

AM/FM Radio Stations

Based on CDBS data, adjusted for exemptions, and actual FY 2010 payment units.

UHF/VHF Television Stations

Based on CDBS data, adjusted for exemptions, and actual FY 2010 payment units.

AM/FM/TV Construction Permits

Based on CDBS data, adjusted for exemptions, and actual FY 2010 payment units.

LPTV, Translators and Boosters, Class A Television

Based on CDBS data, adjusted for exemptions, and actual FY 2010 payment units.

Broadcast Auxiliaries

Based on actual FY 2010 payment units.

BRS (formerly MDS/MMDS)

LMDS

Based on WTB reports and actual FY 2010 payment units.

Cable Television Relay Service (“CARS”) Stations

Based on data from Media Bureau's COALS database and actual FY 2010 payment units.

Cable Television System Subscribers

Based on publicly available data sources for estimated subscriber counts and actual FY 2010 payment units.

Interstate Telecommunication Service Providers

Based on FCC Form 499-Q data for the four quarters of calendar year 2010, the Wireline Competition Bureau projected the amount of calendar year 2009 revenue that will be reported on 2011 FCC Form 499-A worksheets in April, 2011.

Earth Stations

Based on International Bureau (“IB”) licensing data and actual FY 2010 payment units.

Space Stations (GSOs & NGSOs)

Based on IB data reports and actual FY 2010 payment units.

International Bearer Circuits

Based on IB reports and submissions by licensees.

Submarine Cable Licenses

Based on IB license information.

11. When calculating the fee methodology for AM and FM radio stations, we consider many factors, such as facility attributes and the population served by each station. The calculation of the population served is determined by coupling current United States Census Bureau data with technical and engineering data, as detailed in the table below. In FY 2011, we will begin to incorporate new Census data that was taken in 2010, and this could have an impact in altering the fees of some radio stations. Hence, the population served, as well as the class and type of service (AM or FM), will continue to be the

principal variables in determining the amount of regulatory fees to be paid.

In addition, beginning in FY 2005, we established a procedure by which we set regulatory fees for AM and FM radio and VHF and UHF television Construction Permits each year at an amount no higher than the lowest regulatory fee for a licensed station in that respective service category. For example, in FY 2010 the regulatory fee for an AM radio station Construction Permit was no higher than the regulatory fee for an AM Class C radio station serving a population of less than 25,000.

Table—Factors, Measurements, and Calculations That Go Into Determining Station Signal Contours and Associated Population Coverages

AM Stations

For stations with nondirectional daytime antennas, the theoretical radiation was used at all azimuths. For stations with directional daytime antennas, specific information on each day tower, including field ratio, phasing, spacing and orientation was retrieved, as well as the theoretical pattern root-mean-square of the radiation in all directions in the horizontal plane (“RMS”) figure milliVolt per meter (mV/m) @ 1 km) for the antenna system. The standard, or modified standard if pertinent, horizontal plane radiation pattern was calculated using techniques and methods specified in Sections 73.150 and 73.152 of the Commission's rules (

see

47 CFR 73.150 and 73.152). Radiation values were calculated for each of 360 radials around the transmitter site. Next, estimated soil conductivity data was retrieved from a database representing the information in FCC Figure R3 (

see

Map of Estimated Effective Ground Conductivity in the United States, 47 CFR 73.190 Figure R3). Using the calculated horizontal radiation values, and the retrieved soil conductivity data, the distance to the principal community (5 mV/m) contour was predicted for each of the 360 radials. The resulting distance to principal community contours were used to form a geographical polygon. Population counting was accomplished by determining which 2000 block centroids were contained in the polygon. (A block centroid is the center point of a small area containing population as computed by the U.S. Census Bureau.) The sum of the population figures for all enclosed blocks represents the total population for the predicted principal community coverage area.

FM Stations

The greater of the horizontal or vertical effective radiated power (“ERP”) (kW) and respective height above average terrain (“HAAT”) (m) combination was used. Where the antenna height above mean sea level (“HAMSL”) was available, it was used in lieu of the average HAAT figure to calculate specific HAAT figures for each of 360 radials under study. Any available directional pattern information was applied as well, to produce a radial-specific ERP figure. The HAAT and ERP figures were used in conjunction with the Field Strength (50-50) propagation curves specified in 47 CFR 73.313 of the Commission's rules to predict the distance to the principal community (70 dBu (decibel above 1 microVolt per meter) or 3.17 mV/m) contour for each of the 360 radials (47 CFR 73.313). The resulting distance to principal community contours were used to form a geographical polygon. Population counting was accomplished by determining which 2000 block centroids were contained in the polygon. The sum of the population figures for all enclosed blocks represents the total population for the predicted principal community coverage area.

B. Regulatory Fee Obligations for Digital Low Power, Class A, and TV Translators/Boosters

12. The digital transition to full-service television stations was completed on June 12, 2009, but the digital transition for Low Power, Class A, and TV Translators/Boosters remains voluntary, and there is presently no set date for the completion of this transition. Historically, the discussion of digital transition conversion with respect to regulatory fees has applied only to full-service television stations. As a result, the “digital only” exemption does not impact this class of regulatees. Because the digital transition in the Low Power, Class A, and TV Translators/Booster facilities is still voluntary and the transition will occur over a period time, some facilities may still be in the process of converting from an analog to a digital service. During this transition period, licensees of Low Power, Class A, and TV Translator/Booster facilities may be operating in analog mode, in digital mode, or in an analog and digital simulcast mode. For regulatory fee purposes, a fee will be assessed for each facility operating either in an analog or digital mode. In instances in which a licensee is operating in both an analog and digital mode as a simulcast, a single regulatory fee will be assessed for this analog facility that has a digital companion channel. As greater numbers of facilities convert to digital mode, the Commission will provide revised instructions on how regulatory fees will be assessed.

C. Commercial Mobile Radio Service Messaging Service

13. Commercial Mobile Radio Service (“CMRS”) Messaging Service, which replaced the CMRS One-Way Paging fee category in 1997, includes all narrowband services.

Since 1997, the number of subscribers has declined from 40.8 million to 4.9 million, and there does not appear to be any sign of recovery to the subscriber levels of 1997-1999.

Maintaining the fee at the existing level of $.08 per subscriber is the minimum reasonable and appropriate action to take under the prevailing circumstances in the paging industry. We propose in FY 2011 to continue maintaining the regulatory fee rate at $0.08 per subscriber due to the declining subscriber base in this industry. We seek comment on this proposal.

See Assessment and Collection of Regulatory Fees for Fiscal Year 1997,

MD Docket No. 96-186, Report and Order, 12 FCC Rcd 17161, 17184-85, para. 60 (1997) (“

FY 1997 Report and Order”

Between FY 1997 and FY 2010, the subscriber base in the paging industry declined 89 percent from 40.8 million to 4.9 million subscribers, according to FY 2010 collections data as of September 30, 2010.

D. Interstate Telecommunications Service Provider (ITSP)

14. In our FY 2010 Regulatory Fee

Report and Order,

we acknowledged that the revenue base upon which the ITSP fee is calculated has been decreasing for several years.

Because of this continued decline, we limited the increase in the FY 2010 ITSP fee rate from $.00342 to $.00349, and assessed a slightly higher fee across all other fee categories. In FY 2011, the ITSP revenue base has experienced an even more significant decline. Over the past six months, we note an additional decline of nine percent (9%) in the ITSP base revenue, which would increase the ITSP

fee rate for FY 2011 to $.00402,

an increase of 15% from the fee rate adopted in FY 2010.

This increase in the FY 2011 ITSP fee rate from $.00349 to $.00402 will be detrimental to the operations of many small and medium ITSP providers, and will further burden a regulatory fee category already bearing the majority of the agency's overall regulatory fee burden. Therefore, as we did in FY 2010, we propose to limit the increase of the FY 2011 ITSP fee rate to $.00361 per revenue dollar, and assess a slightly higher fee across all other regulatory fee categories. We seek comment on this proposal.

See Assessment and Collection of Regulatory Fees for Fiscal Year 2010,

MD Docket No. 10-87, Report and Order, 25 FCC Rcd 9278 at para. 31 (2010) (“

FY 2010 Report and Order”

In FY 2010 ITSP, the fee factor in the FY 2010 NPRM of $.00351 was based on December 2009 ITSP revenue data. April 2010 ITSP revenue data, however, reflected revenues 3.4 percent lower than projections. This revenue decrease would have resulted in an increase in the resulting fee factor from the projected $.00351 to a fee factor of $.00364. Thus, based on the proposed methodology of the FY 2010 NPRM and the revised revenue numbers, the ITSP fee factor would have increased from $.00342 (FY 2009 ITSP fee rate) to $.00364. The concerns of these providers, which collectively represent 46.82 percent of all regulatory fees paid in any given year, resulted in the adoption, as an interim measure, an ITSP fee rate at $.00349, which is a 2.1% increase from FY 2009. We find this to be a reasonable interim measure pending our review of whether part of that 46.82 percent of the regulatory fee burden might be moved from ITSP in the context of fundamental reform.

If the Commission did not provide any relief or consider changes in the ITSP revenue stream, the fee factor rate would be $0.00402 per revenue dollar.

See FY 2010 Report and Order

at Appendix C, Page 28.

15. Each year, the Commission downloads 499-A revenue data

onto a FCC Form 159-W to establish an ITSP regulatory fee bill. These bills are then loaded into the Commission's electronic payment and filing system (“Fee Filer”) so that providers can view and pay their annual regulatory fee bill. Historically, in creating ITSP regulatory fee bills, the Commission separated 499-A filers into two categories: (1) Those whose primary revenue stream categorized them as interstate telecommunications service providers (ITSP), and (2) those whose primary revenue stream was considered to be non-ITSP, such as wireless, satellite, and other service providers. Simply stated, the logic here was to categorize 499-A filers into two regulatory fee paying categories—those that pay ITSP regulatory fees on the basis of a fee factor per revenue dollar, and those whose primary revenue stream would place them in a category other than ITSP (“non-ITSP providers”), such as wireless or satellite carriers, that pay regulatory fees on some other basis (

e.g.

wireless carriers pay regulatory fees on a per subscriber basis). By separating 499-A filers into these two categories (ITSP providers and non-ITSP providers), the Commission was not assessing the ITSP revenues of certain particular entities (non-ITSP providers) simply because these entities were paying another form of regulatory fee (

e.g.

wireless or satellite fees). After more careful consideration, we realize that this treatment resulted in predominantly ITSP providers paying fees on both ITSP revenues and, if they also provided other services, a per unit subscriber fee on other services (

e.g.

wireless services), while non-ITSP paid on a per unit basis only (

e.g.

for wireless services), and were not assessed fees on their ITSP revenues. There is no basis for this disparate treatment; it is only logical that these wireless providers and other non-ITSP providers be subject to ITSP fees based on their ITSP revenues, similar to the fees that are currently paid by wireline carriers. Therefore, instead of separating 499-A filers into these two categories of regulatory fee payers, we propose to assess ITSP regulatory fees on all ITSP revenues, regardless of the predominant classification of the payor. More specifically, we find that a more equitable way of assessing ITSP regulatory fees is to assess an ITSP fee on 499-A reported ITSP revenue items regardless of whether the payor is predominantly an ITSP or a non-ITSP provider. If FCC Form 499-A has revenues identified on lines 412(e), 420(d), and/or 420(e), the provider would be subject to ITSP regulatory fees.

FCC Form 499-A is filed annually with USAC on April 1st, but it can be revised many times for up to a year of the April 1st filing.

See

FCC Form 159-W on page 7 of the Commission's Interstate Telecommunications Service Provider (ITSP) Fact Sheet, August 2010. 499-A Form Line 412(e) corresponds with Line 1 of FCC Form 159-W; 499-A Form Line 420(d) corresponds with Line 2 of FCC Form 159-W; and 499-A Form Line 420(e) corresponds with Line 3 of FCC Form 159-W. However, from FCC Form 159-W revenue Lines 1 through 3, a provider can also subtract Lines 5 through 12, resulting in a net revenue amount upon which regulatory fees would be due.

16. FCC Form 159-W was established in FY 2001 to assist providers in transposing revenue information from their FCC Form 499-A to a worksheet that would assist them in computing their regulatory fee obligation. Initially, the Form 159-W worksheet was left blank for the provider to complete and mail it in along with their check. In later years, the Commission provided a pre-completed Form 159-W based on revenue information directly from FCC Form 499-A. In this

Notice of Proposed Rulemaking

, the Commission proposes to assess a regulatory fee on all providers that have subject revenues on Line 14 of Form 159-W, which after the fee factor is applied, results in a regulatory fee obligation of $10 or greater. By assessing regulatory fees on all providers ($10 or greater), we believe we can achieve a more equitable assessment of ITSP regulatory fees across all providers, and reduce the subjective factor involved in identifying some providers as non-ITSP because their primary business is cellular or a satellite provider. If ITSP revenues are derived from the service and identified on the appropriate lines of Form 499-A (and subsequently transposed to Form 159-W), then a regulatory fee would be assessed on those revenues. In FY 2011, we believe our proposal will add $2.0 billion to the unit base estimate, which will help to support maintaining the FY 2011 ITSP fee factor rate at $0.00361, reducing the impact of this limitation on all other regulatory fee categories. We seek comment on this proposal of assessing regulatory fees on ITSP revenues from all providers.

E. Fee Waiver Policies

17. As our rules expressly provide, petitions for waiver of a regulatory fee must be accompanied by the required fee “unless accompanied by a petition to defer payment due to financial hardship, supported by documentation of the financial hardship.”

Similarly, petitions for reduction of fees filed with less than the full fee due must be accompanied by a request for deferral “supported by documentation of financial hardship.”

However, citing section 1.1166(b) of the rules, which states that “Deferrals of fees will be granted for a period of six months following the date that the fee is initially due,” some have argued that, even where supporting documentation of financial hardship is not provided, a regulatee can delay its payment of the fees owed for up to six months simply by requesting the deferral. That argument is inconsistent with sections 1.1166(c) and (d) of our rules, which provide that petitions for waivers or reductions will be dismissed if they are not accompanied by the full fee owed, unless the regulatee requests a deferral of payment supported by documentation of financial hardship.

A regulatee's mere allegation of financial hardship thus does not automatically entitle it to a deferral of its obligation to pay regulatory fees; only a properly supported claim of financial hardship will entitle the regulatee to a deferral. Accordingly, if a request for deferral is not supported by documentation of financial hardship, it will be denied, and an associated petition for waiver or reduction will be dismissed. A regulatee cannot delay payment on the theory that its deferral request triggered an automatic six-month extension of its obligation to pay. We thus propose to amend section 1.1166(b) of the Rules

to read, “Deferrals of fees, if granted, will be for

a designated period of time not to exceed six months.” We seek comment on this rule clarification.

47 CFR 1.1166(c).

47 CFR 1.1166(d).

47 CFR 1.1166(c) and (d) (requests for waivers and reductions of fees “that do not include the required fees or forms will be dismissed unless accompanied by a petition to defer payment due to financial hardship,

supported by documentation of the financial hardship.”

47 CFR 1.1166(b).

F. Administrative and Operational Issues

18. In FY 2009, the Commission implemented several changes in procedures which simplified the payment and reconciliation processes of FY 2009 regulatory fees. These changes proved to be very helpful to both licensees and to the Commission, and we propose in the following paragraphs to expand upon these improvements. In FY 2011, the Commission will promote greater use of technology (and less use of paper) to improve the regulatory fee notification and collection process. In addition to seeking comment on the specific initiatives discussed in the paragraphs below, we ask whether there are other steps we could take to promote greater use of technology in collecting regulatory fees.

1. Mandatory Use of Fee Filer

19. In

FY 2009,

we instituted a mandatory filing requirement using the Commission's electronic filing and payment system (also known as “Fee Filer”).

Licensees filing their annual regulatory fee payments were required to begin the process by entering the Commission's Fee Filer system with a valid FRN and password.

This change was beneficial to both licensees and to the Commission. For licensees, the mandatory use of Fee Filer eliminates the need to manually complete and submit a hardcopy Form 159, and for the Commission, the data in electronic format made it much easier to process payments more efficiently and effectively. We propose to continue to make the use of Fee Filer for filing annual regulatory fees mandatory. We seek comment on this proposal. We also request comment on ways we might improve the mandatory use of Fee Filer. The mandatory use of Fee Filer does not mean that licensees are expected to pay only through Fee Filer—it is only mandatory for licensees to begin the process of filing their annual regulatory fees using Fee Filer.

FY 2009 Report and Order

at paras. 20 and 21.

Therefore, it is very important for licensees to have a current and valid FRN address on file in the Commission's Registration System (CORES).

2. Notification and Collection of Regulatory Fees

a. Pre-Bills

20. In prior years, the Commission mailed pre-bills via surface mail to licensees in select regulatory fee categories: Interstate telecommunications service providers (“ITSPs”), Geostationary (“GSO”) and Non-Geostationary (“NGSO”) satellite space station licensees,

holders of Cable Television Relay Service (“CARS”) licenses, and Earth Station licensees.

The remaining regulatees did not receive pre-bills. In our

FY 2009 Report and Order,

the Commission decided to have the attributes of these pre-bills viewed in Fee Filer, rather than mailing pre-bills out to licensees via surface mail.

In FY 2011, the Commission will continue to reduce its use of hardcopy documents by not mailing out annual regulatory fee pre-bills, and instead place the pre-bill information on the Commission's Web site for licensees to access through the Commission's electronic filing and payment system (“Fee Filer”). Regulatees can also look to the Commission's Web site for information on upcoming events and deadlines relating to regulatory fees. We ask whether further changes to our system of electronic notification would serve to more efficiently and effectively inform regulatees of information and procedures pertaining to regulatory fees.

Geostationary orbit space station (“GSO”) licensees received regulatory fee pre-bills for satellites that (1) were licensed by the Commission and operational on or before October 1 of the respective fiscal year; and (2) were not co-located with and technically identical to another operational satellite on that date (

i.e.,

were not functioning as a spare satellite). Non-geostationary orbit space station (“NGSO”) licensees received regulatory fee pre-bills for systems that were licensed by the Commission and operational on or before October 1 of the respective fiscal year.

A pre-bill is considered an account receivable in the Commission's accounting system. Pre-bills reflect the amount owed and have a payment due date of the last day of the regulatory fee payment window. Consequently, if a pre-bill is not paid by the due date, it becomes delinquent and is subject to our debt collection procedures.

See also

47 CFR 1.1161(c), 1.1164(f)(5), and 1.1910.

See FY 2009 Report and Order

at paras. 24, 26.

IV. Procedural Matters

21. Included below are procedural items as well as our current payment and collection methods which we have revised over the past several years to expedite the processing of regulatory fee payments. We do not propose changes to these procedures. Rather, we include them here as a useful way of reminding regulatory fee payers and the public about these aspects of the annual regulatory fee collection process.

A. Public Notices and Fact Sheets

22. Each year we post public notices and fact sheets pertaining to regulatory fees on our Web site. These documents contain information about the payment due date and relevant regulatory fee payment procedures. We will continue to post this information on

http://www.fcc.gov/fees/regfees.html

, but as in previous years, we will not send out public notices and fact sheets to regulatees

en masse.

B. Assessment Notifications

1. Media Services Licensees

23. Beginning in FY 2003, we sent fee assessment notifications via surface mail to media services entities on a per-facility basis.

These notifications provided the assessed fee amount for the facility in question, as well as the data attributes that determined the fee amount. We have since refined this initiative to be more electronic and paperless.

In our FY 2010

NPRM,

we proposed to discontinue mailing the media notifications beginning in FY 2011, relying instead on information on the Commission's Web site and the use of the Commission-authorized Web site at

http://www.fccfees.com.

We kept the comment and reply comment period open until September 30, 2010 to be receptive to the needs of media licensees. We received no comments or reply comments on this particular issue. Therefore, beginning in FY 2011, we will discontinue mailing hardcopy notification assessment letters to media licensees.

As stated previously in a footnote, a pre-bill is considered an account receivable in the Commission's accounting system. Pre-bills include an amount owed and have a payment due date of the last day of the regulatory fee payment window. If a pre-bill is not paid by the due date, it becomes delinquent and is subject to our debt collection procedures. On the other hand, an assessment is a proposed statement of the amount of regulatory fees owed by an entity to the Commission (or proposed subscriber count to be ascribed for purposes of setting the entity's regulatory fee), but it is not entered into the Commission's accounting system as a current debt.

Some of those refinements have been to provide licensees with a Commission-authorized Web site to update or correct any information concerning their facilities, and to amend their fee-exempt status, if need be. The notifications also provide licensees with a telephone number to call in the event that they need customer assistance.

See Assessment and Collection of Regulatory Fees for Fiscal Year 2010,

Report and Order, 25 FCC Rcd 9278 at para. 42 (2010) (“

FY 2010 Report and Order”

24. Every ten years, when the United States Census data is released, this data is incorporated into the population counts of AM & FM radio stations on a county basis. These population counts, along with the station's class and type of service, are the basis for determining regulatory fees. Although the 2010 Census data has been completed, the data is still subject to revisions. In addition, because FY 2011 regulatory fees are determined on the basis of the station's attributes as of October 1, 2010, it would be inappropriate to apply incomplete 2010 Census data in

determining FY 2011 regulatory fees for radio stations. Therefore, we will apply 2010 Census data in determining the population counts of radio stations as of October 1, 2011, as part of our calculations of FY 2012 regulatory fees.

2. CMRS Cellular and Mobile Services Assessments

25. As we have done in prior years, our procedures for conveying CMRS subscriber counts to providers are as follows. We will mail an initial assessment letter to Commercial Mobile Radio Service (CMRS) providers using data from the Numbering Resource Utilization Forecast (“NRUF”) report that is based on “assigned” number counts that have been adjusted for porting to net Type 0 ports (“in” and “out”).

The letter will include a listing of the carrier's Operating Company Numbers (“OCNs”) upon which the assessment is based.

The letters will not include OCNs with their respective assigned number counts, but rather, an aggregate total of assigned numbers for each carrier.

See Assessment and Collection of Regulatory Fees for Fiscal Year 2005

and

Assessment

and

Collection of Regulatory Fees for Fiscal Year 2004,

MD Docket Nos. 05-59 and 04-73, Report and Order and Order on Reconsideration, 20 FCC Rcd 12259, 12264, paras. 38-44 (2005).

Id.

26. A carrier wishing to revise their subscriber count can access Fee Filer within a designated time frame to revise their count. Providers should follow the prompts in Fee Filer to record their subscriber revisions, along with any supporting documentation.

The Commission will then review the revised count and supporting documentation and either approve or disapprove the submission in Fee Filer. If the submission is disapproved, the Commission will attempt to contact the provider so that the provider will have an opportunity to discuss its revised subscriber count and/or provide additional supporting documentation. If we receive no response or correction to the initial assessment letter, or we do not reverse the disapproval of the provider's revised count submission, we will expect the fee payment to be based on the number of subscribers listed on the initial assessment letter. Once the timeframe for revision has passed, the subscriber counts will be finalized. These subscriber counts will then be the basis upon which CMRS regulatory fees will be expected. Providers will be able to view their final subscriber counts online in Fee Filer. A final CMRS assessment letter will not be mailed out.

In the supporting documentation, the provider will need to state a reason for the change, such as a purchase or sale of a subsidiary, the date of the transaction, and any other pertinent information that will help to justify a reason for the change.

27. Because some carriers do not file the NRUF report, they may not receive an initial letter of assessment. In these instances, the carriers should compute their fee payment using the standard methodology

that is currently in place for CMRS Wireless services (

e.g.,

compute their subscriber counts as of December 31, 2010), and submit their fee payment accordingly. Whether a carrier receives an assessment letter or not, the Commission reserves the right to audit the number of subscribers for which regulatory fees are paid. In the event that the Commission determines that the number of subscribers paid is inaccurate, the Commission will bill the carrier for the difference between what was paid and what should have been paid.

See, e.g.,

Federal Communications Commission,

Regulatory Fees Fact Sheet: What You Owe—Commercial Wireless Services for FY 2010

at 1 (released September 2010).

3. Submarine Cable Allocation

28. The Commission collects a revenue amount each year based on a Congressional mandate. Because the dollar amount differs each year, a revenue apportionment is required each year to determine the projected regulatory fee revenue to be collected from submarine cable providers and from terrestrial/satellite facilities.

Since FY 2009, the Commission has used the 87.4/12.6 percent allocation proposed in the Consensus Proposal as the percentage upon which to determine the regulatory fee revenue amounts for submarine cable providers and terrestrial/satellite facilities, respectively.

Each year, the Commission reserves the right to revise this 87.4/12.6 allocation. Although we will continue to review this allocation as part of our annual regulatory fee proceeding, we do not at this time find any basis to alter the 87.4/12.6 percent revenue allocation for 2011 regulatory fees.

See Assessment and Collection of Regulatory Fees for Fiscal Year 2008,

Second Report and Order, 24 FCC Rcd 4208 at n. 35 (2009) (“

Submarine Cable Order

”).

See Assessment and Collection of Regulatory Fees for Fiscal Year 2009,

Report and Order, 24 FCC Rcd 10301 at para. 8 (2009) (“

FY 2009 Report and Order

”).

4. Re-Assessment of Regulatory Fee Issues in a

Further Notice of Proposed Rulemaking

29. Since 1994 when the first regulatory fees were collected, the communications industry has undergone a rapid transformation. The current basis of how regulatory fees are assessed, however, has changed only slightly since its inception in 1994.

In FY 2008, the Commission released a

FNPRM

which identified some of the issues raised by commenters with regard to the need for fundamental reform of our regulatory fee assessment methodology

From this rulemaking, the Commission has already acted on three of the issues: 1) a change in the bearer circuit methodology for calculating regulatory fees, 2) the elimination of two regulatory fee categories, the

International Public Fixed Radio

and

International High Frequency Broadcast Stations,

and 3) the conversion of UHF and VHF Television stations from analog to digital television. In our FY 2010 Regulatory Fees Report & Order, we stated that in a future proceeding, we will “further examine the nature and extent of all changes that need to be made to our regulatory fee schedule and calculations. In a separate and forthcoming action, we will call for comment on issues including, but not limited to, how changes in the telecommunications marketplace may warrant rebalancing of regulatory fees among existing service providers * * *”

As our commitment to this “forthcoming action”, the Commission will by the end of 2011, initiate a further rulemaking that will update the record on regulatory fee rebalancing, as well as expand this inquiry to include new issues and services not covered by the 2008

FNPRM,

such as whether and how to re-assess the regulatory fee burden of all fee categories, whether to incorporate 499-A wireless revenue in the calculation of ITSP regulatory fees, and whether to eliminate the regulatory fee portion (but not the application fee portion) of General Mobile Radio Service (GMRS).

47 U.S.C. 159(a) and 159(b).

Assessment and Collection of Regulatory Fees for Fiscal Year 2008,

MD Docket No. 08-65, RM-11312, Report and Order and Further Notice of Proposed Rulemaking, 73 FR 50201 (August 26, 2008) at paras. 38-41.

See Assessment and Collection of Regulatory Fees for Fiscal Year 2010,

MD Docket No. 10-87, Report and Order, 25 FCC Rcd 9278 para. 31 (2010).

C. Streamlined Regulatory Fee Payment Process

1. Cable Television Subscribers

30. We will continue to permit cable television operators to base their regulatory fee payment on their company's aggregate year-end subscriber count, rather than requiring them to report cable subscriber counts on a per community unit identifier (“CUID”) basis.

2. CMRS Cellular and Mobile Providers

31. In FY 2006, we streamlined the CMRS payment process by eliminating the requirement for CMRS providers to identify their individual call signs when making their regulatory fee payment, instead allowing CMRS providers to pay their regulatory fees only at the aggregate subscriber level without having to identify their various call signs.

We will continue this practice in FY 2011. In FY 2007, we consolidated the CMRS cellular and CMRS mobile fee categories into one fee category with a single fee code, thereby eliminating the requirement for CMRS providers to separate their subscriber counts into CMRS cellular and CMRS mobile fee categories during the regulatory fee payment process. This consolidation of fee categories enabled the Commission to process payments more quickly and accurately. For FY 2011, we will continue this practice of combining the CMRS cellular and CMRS mobile fee categories into one regulatory fee category.

See Assessment and Collection of Regulatory Fees for Fiscal Year 2006,

MD Docket No. 06-68, Report and Order, 21 FCC Rcd 8092, 8105, para. 48 (2006).

3. Interstate Telecommunications Service Providers (“ITSP”)

32. In FY 2007, we adopted a proposal to round lines 14 (total subject revenues) and 16 (total regulatory fee owed) on FCC Form 159-W to the nearest dollar. This revision enabled the Commission to process the ITSP regulatory fee payments more quickly because rounding was performed in a consistent manner and eliminated processing issues that occurred in prior years. In FY 2011, we will continue rounding lines 14 and 16 when calculating the FY 2011 ITSP fee obligation. In addition, we will continue the practice of not mailing out Form 159-W via surface mail.

D. Payment of Regulatory Fees

1. Lock Box Bank

33. All lock box payments to the Commission for FY 2011 will be processed by U.S. Bank, St. Louis, Missouri, and payable to the FCC. During the regulatory fee season, for those licensees paying by check, money order, or by credit card using Form 159-E remittance advice, the fee payment and Form 159-E remittance advice should be mailed to the following address: Federal Communications Commission, Regulatory Fees, P.O. Box 979084, St. Louis, MO 63197-9000. Additional payment options and instructions are posted at

http://www.fcc.gov/fees/regfees.html.

2. Receiving Bank for Wire Payments

34. The receiving bank for all wire payments is the Federal Reserve Bank, New York, New York (TREAS NYC). When making a wire transfer, regulatees must fax a copy of their Fee Filer generated Form 159-E to U.S. Bank, St. Louis, Missouri at (314) 418-4232 at least one hour before initiating the wire transfer (but on the same business day), so as not to delay crediting their account. Regulatees should discuss arrangements (including bank closing schedules) with their bankers several days before they plan to make the wire transfer to allow sufficient time for the transfer to be initiated and completed before the deadline. Complete instructions for making wire payments are posted at

http://www.fcc.gov/fees/wiretran.html.

3. De Minimis Regulatory Fees

35. Regulatees whose total FY 2011 regulatory fee liability, including all categories of fees for which payment is due, is less than $10 are exempted from payment of FY 2011 regulatory fees.

4. Standard Fee Calculations and Payment Dates

36. The Commission will accept fee payments made in advance of the window for the payment of regulatory fees. The responsibility for payment of fees by service category is as follows:

•

Media Services:

Regulatory fees must be paid for initial construction permits that were granted on or before October 1, 2010 for AM/FM radio stations, VHF/UHF full service television stations, and satellite television stations. Regulatory fees must be paid for all broadcast facility licenses granted on or before October 1, 2010. In instances where a permit or license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the permit or license as of the fee due date.

•

Wireline (Common Carrier) Services:

Regulatory fees must be paid for authorizations that were granted on or before October 1, 2010. In instances where a permit or license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the permit or license as of the fee due date. We note that audio bridging service providers are included in this category.

Audio bridging services are toll teleconferencing services, and audio bridging service providers are required to contribute directly to the universal service fund based on revenues from these services. On June 30, 2008, the Commission released the

InterCall Order,

in which the Commission stated that InterCall, Inc. and all similarly situated audio bridging service providers are required to contribute directly to the universal service fund.

See Request for Review by InterCall, Inc. of Decision of Universal Service Administrator,

CC Docket No. 96-45, Order, 23 FCC Rcd 10731 (2008) (“

InterCall Order

”).

•

Wireless Services:

CMRS cellular, mobile, and messaging services (fees based on number of subscribers or telephone number count): Regulatory fees must be paid for authorizations that were granted on or before October 1, 2010. The number of subscribers, units, or telephone numbers on December 31, 2010 will be used as the basis from which to calculate the fee payment. In instances where a permit or license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the permit or license as of the fee due date.

• The first eleven regulatory fee categories in our Schedule of Regulatory Fees (

see

Table—Schedule of Regulatory Fees) pay “small multi-year wireless regulatory fees.” Entities pay these regulatory fees in advance for the entire amount of their five-year or ten-year term of initial license, and only pay regulatory fees again when the license is renewed or a new license is obtained. We include these fee categories in our Schedule of Regulatory Fees to publicize our estimates of the number of “small multi-year wireless” licenses that will be renewed or newly obtained in FY 2011.

•

Multichannel Video Programming Distributor Services (cable television operators and CARS licensees):

Regulatory fees must be paid for the number of basic cable television subscribers as of December 31, 2010.

Regulatory fees also must be paid for CARS licenses that were granted on or before October 1, 2010. In instances where a permit or license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the permit or license as of the fee due date.

Cable television system operators should compute their basic subscribers as follows: Number of single family dwellings + number of individual households in multiple dwelling unit (apartments, condominiums, mobile home parks,

etc.

) paying at the basic subscriber rate + bulk rate customers + courtesy and free service. Note: Bulk-Rate Customers = Total annual bulk-rate charge divided by basic annual subscription rate for individual households. Operators may base their count on “a typical day in the last full week” of December 2010, rather than on a count as of December 31, 2010.

•

International Services:

Regulatory fees must be paid for earth stations, geostationary orbit space stations and non-geostationary orbit satellite systems that were licensed and operational on or before October 1, 2010. In instances

where a permit or license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the permit or license as of the fee due date.

•

International Services: Submarine Cable Systems:

Regulatory fees for submarine cable systems are to be paid on a per cable landing license basis based on circuit capacity as of December 31, 2010. In instances where a license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the license as of the fee due date. For regulatory fee purposes, the allocation in FY 2011 will remain at 87.6 percent for submarine cable and 12.4 percent for satellite/terrestrial facilities.

•

International Services: Terestrial and Satellite Services:

Finally, regulatory fees for International Bearer Circuits are to be paid by facilities-based common carriers that have active (used or leased) international bearer circuits as of December 31, 2010 in any terrestrial or satellite transmission facility for the provision of service to an end user or resale carrier, which includes active circuits to themselves or to their affiliates. In addition, non-common carrier satellite operators must pay a fee for each circuit sold or leased to any customer, including themselves or their affiliates, other than an international common carrier authorized by the Commission to provide U.S. international common carrier services. “Active circuits” for these purposes include backup and redundant circuits as of December 31, 2010. Whether circuits are used specifically for voice or data is not relevant for these purposes in determining that they are active circuits. In instances where a permit or license is transferred or assigned after October 1, 2010, responsibility for payment rests with the holder of the permit or license as of the fee due date. For regulatory fee purposes, the allocation in FY 2011 will remain at 87.6 percent for submarine cable and 12.4 percent for satellite/terrestrial facilities.

E. Enforcement

37. To be considered timely, regulatory fee payments must be received and stamped at the lockbox bank by the last day of the regulatory fee filing window. Section 9(c) of the Act requires us to impose a late payment penalty of 25 percent of the unpaid amount to be assessed on the first day following the deadline date for filing of these fees.

Failure to pay regulatory fees and/or any late penalty will subject regulatees to sanctions, including those set forth in section 1.1910 of the Commission's rules

and in the Debt Collection Improvement Act of 1996 (“DCIA”).

We also assess administrative processing charges on delinquent debts to recover additional costs incurred in processing and handling the related debt pursuant to the DCIA and section 1.1940(d) of the Commission's rules.

These administrative processing charges will be assessed on any delinquent regulatory fee, in addition to the 25 percent late charge penalty. In case of partial payments (underpayments) of regulatory fees, the licensee will be given credit for the amount paid, but if it is later determined that the fee paid is incorrect or not timely paid, then the 25 percent late charge penalty (and other charges and/or sanctions, as appropriate) will be assessed on the portion that is not paid in a timely manner.

47 U.S.C. 159(c).

See

47 CFR 1.1910.

Delinquent debt owed to the Commission triggers application of the “red light rule” which requires offsets or holds on pending disbursements. 47 CFR 1.1910. In 2004, the Commission adopted rules implementing the requirements of the DCIA.

See Amendment of Parts 0 and 1 of the Commission's Rules,

MD Docket No. 02-339, Report and Order, 19 FCC Rcd 6540 (2004); 47 CFR Part 1, Subpart O, Collection of Claims Owed the United States.

47 CFR 1.1940(d).

38. We will withhold action on any applications or other requests for benefits filed by anyone who is delinquent in any non-tax debts owed to the Commission (including regulatory fees) and will ultimately dismiss those applications or other requests if payment of the delinquent debt or other satisfactory arrangement for payment is not made.

Failure to pay regulatory fees can also result in the initiation of a proceeding to revoke any and all authorizations held by the entity responsible for paying the delinquent fee(s).

See

47 CFR 1.1161(c), 1.1164(f)(5), and 1.1910.

BILLING CODE 6712-01-P

EP26MY11.012

EP26MY11.013

BILLING CODE 6712-01-C

Table—Reference to FY 2010 Schedule of Regulatory Fees

FY 2010 radio station regulatory fees

Population served

AM Class A

AM Class B

AM Class C

AM Class D

FM Classes A, B1 & C3

FM Classes B, C, C0, C1 & C2

≤25,000

$675

$550

$500

$575

$650

$825

25,001-75,000

1,350

1,075

750

875

1,325

1,450

75,001-150,000

2,025

1,350

1,000

1,450

1,825

2,725

150,001-500,000

3,050

2,300

1,500

1,725

2,800

3,550

500,001-1,200,000

4,400

3,500

2,500

2,875

4,450

5,225

1,200,001-3,000,000

6,750

5,400

3,750

4,600

7,250

8,350

>3,000,000

8,100

6,475

4,750

5,750

9,250

10,850

Table—Reference to FY 2010 Schedule of Regulatory Fees

[International Bearer Circuits—Submarine Cable]

Submarine cable systems (capacity as of December 31, 2009)

Fee amount

Address

< 2.5 Gbps

$14,625

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

2.5 Gbps or greater, but less than 5 Gbps

29,250

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

5 Gbps or greater, but less than 10 Gbps

58,500

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

10 Gbps or greater, but less than 20 Gbps

116,975

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

20 Gbps or greater

233,950

FCC, International, P.O. Box 979084, St. Louis, MO 63197-9000.

Initial Regulatory Flexibility Analysis

39. As required by the Regulatory Flexibility Act (“RFA”),

the Commission prepared this Initial Regulatory Flexibility Analysis (“IRFA”) of the possible significant economic impact on small entities by the policies and rules proposed in this

NPRM.

Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed on or before the dates indicated on the first page of this

NPRM.

The Commission will send a copy of the Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

In addition, the Notice and IRFA (or summaries thereof) will be published in the

Federal Register

5 U.S.C. 603. The RFA, 5 U.S.C. 601-612 has been amended by the Contract With America Advancement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996) (“CWAAA”). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”).

5 U.S.C. 603(a).

Id.

A. Need for, and Objectives of, the Notice

40. This rulemaking proceeding was initiated for the Commission to obtain comments regarding its proposed amendment to its Schedule of Regulatory Fees in the amount of $335,794,000, which is the amount that Congress has required the Commission to recover. The Commission seeks to collect the necessary amount through its revised Schedule of Regulatory Fees in the most efficient manner possible and without undue public burden.

B. Legal Basis

41. This action, including publication of proposed rules, is authorized under Sections (4)(i) and (j), 9, and 303(r) of the Communications Act of 1934, as amended.

47 U.S.C. 154(i) and (j), 159, and 303(r).

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

42. 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 and policies, 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.”

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 which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

5 U.S.C. 603(b)(3).

5 U.S.C. 601(6).

5 U.S.C. 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business Act, 15 U.S.C. 632). 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 Small Business Administration 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.”

15 U.S.C. 632.

43.

Small Businesses.

Nationwide, there are a total of approximately 29.6 million small businesses, according to the SBA.

See

SBA, Office of Advocacy, “Frequently Asked Questions,”

http://web.sba.gov/faqs

(accessed Jan. 2009).

44.

Small Organizations.

Nationwide, as of 2002, there are approximately 1.6 million small organizations.

A “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.”

Independent Sector, The New Nonprofit Almanac & Desk Reference (2002).

5 U.S.C. 601(4).

45.

Small Governmental Jurisdictions.

The term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.”

Census Bureau data for 2002 indicate that there were 87,525 local governmental jurisdictions in the United States.

We estimate that, of this total, 84,377 entities were “small governmental jurisdictions.”

Thus, we estimate that most governmental jurisdictions are small.

5 U.S.C. 601(5).

U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, p. 272, Table 415.

We assume that the villages, school districts, and special districts are small, and total 48,558.

See

U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, p. 273, Table 417. For 2002, Census Bureau data indicate that the total number of county, municipal, and township governments nationwide was 38,967, of which 35,819 were small.

Id.

46. We have included small incumbent local exchange carriers in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (

e.g.,

a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.”

The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field of operation because any such dominance is not “national” in scope.

We have therefore included small incumbent local exchange carriers in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

15 U.S.C. 632.

Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small Business Act contains a definition of “small-business concern,” which the RFA incorporates into its own definition of “small business.”

See

15 U.S.C. 632(a) (“Small Business Act”); 5 U.S.C. 601(3) (“RFA”). SBA regulations interpret “small business concern” to include the concept of dominance on a national basis.

See

13 CFR 121.102(b).

47.

Incumbent Local Exchange Carriers (“ILECs”).

Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local

exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

1,311 carriers have reported that they are engaged in the provision of incumbent local exchange services. Of these 1,311 carriers, an estimated 1,024 have 1,500 or fewer employees and 287 have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by our action.

13 CFR 121.201, North American Industry Classification System (NAICS) code 517110.

FCC, Wireline Competition Bureau, Industry Analysis and Technology Division, “

Trends in Telephone Service”

at Table 5.3, Page 5-5 (Aug. 2008) (“

Trends in Telephone Service”

). This source uses data that are current as of November 1, 2006.

48. Competitive Local Exchange Carriers (“CLECs”), Competitive Access Providers (“CAPs”), “Shared-Tenant Service Providers,” and “Other Local Service Providers.” Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

1,005 carriers have reported that they are engaged in the provision of either competitive access provider services or competitive local exchange carrier services. Of these 1,005 carriers, an estimated 918 have 1,500 or fewer employees and 87 have more than 1,500 employees. In addition, 16 carriers have reported that they are “Shared-Tenant Service Providers,” and all 16 are estimated to have 1,500 or fewer employees. In addition, 89 carriers have reported that they are “Other Local Service Providers.” Of the 89, all have 1,500 or fewer employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, “Shared-Tenant Service Providers,” and “Other Local Service Providers” are small entities that may be affected by our action.

13 CFR 121.201, NAICS code 517110.

“Trends in Telephone Service” at Table 5.3.

49.

Local Resellers.

The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

151 carriers have reported that they are engaged in the provision of local resale services. Of these, an estimated 149 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of local resellers are small entities that may be affected by our action.

13 CFR 121.201, NAICS code 517310.

“Trends in Telephone Service” at Table 5.3.

50.

Toll Resellers.

The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

815 carriers have reported that they are engaged in the provision of toll resale services. Of these, an estimated 787 have 1,500 or fewer employees and 28 have more than 1,500 employees. Consequently, the Commission estimates that the majority of toll resellers are small entities that may be affected by our action.

13 CFR 121.201, NAICS code 517310.

“Trends in Telephone Service” at Table 5.3.

51.

Payphone Service Providers (“PSPs”).

Neither the Commission nor the SBA has developed a small business size standard specifically for payphone services providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

526 carriers have reported that they are engaged in the provision of payphone services. Of these, an estimated 524 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of payphone service providers are small entities that may be affected by our action.

3 CFR 121.201, NAICS code 517110.

“Trends in Telephone Service” at Table 5.3.

52.

Interexchange Carriers (“IXCs”).

Neither the Commission nor the SBA has developed a small business size standard specifically for providers of interexchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

300 carriers have reported that they are engaged in the provision of interexchange service. Of these, an estimated 268 have 1,500 or fewer employees and 32 have more than 1,500 employees. Consequently, the Commission estimates that the majority of IXCs are small entities that may be affected by our action.

13 CFR 121.201, NAICS code 517110.

“Trends in Telephone Service” at Table 5.3.

53.

Operator Service Providers (“OSPs”).

Neither the Commission nor the SBA has developed a small business size standard specifically for operator service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

28 carriers have reported that they are engaged in the provision of operator services. Of these, an estimated 27 have 1,500 or fewer employees and one has more than 1,500 employees. Consequently, the Commission estimates that the majority of OSPs are small entities that may be affected by our action.

13 CFR 121.201, NAICS code 517110.

“Trends in Telephone Service” at Table 5.3.

54.

Prepaid Calling Card Providers.

Neither the Commission nor the SBA has developed a small business size standard specifically for prepaid calling card providers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

According to Commission data,

88 carriers have reported that they are engaged in the provision of prepaid calling cards. Of these, an estimated 85 have 1,500 or fewer employees and three have more than 1,500 employees. Consequently, the Commission estimates that the majority of prepaid calling card providers are small entities that may be affected by our action.

13 CFR 121.201, NAICS code 517310.

“Trends in Telephone Service” at Table 5.3.

55.

800 and 800-Like Service Subscribers.

Neither the Commission nor the SBA has developed a small business size standard specifically for 800 and 800-like service (“toll free”) subscribers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.

The most reliable source of information regarding the number of these service subscribers appears to be data the Commission receives from Database Service Management on the 800, 866, 877, and 888 numbers in

use.

According to our data, at the end of December 2007, the number of 800 numbers assigned was 7,860,000; the number of 888 numbers assigned was 5,210,184; the number of 877 numbers assigned was 4,388,682; and the number of 866 numbers assigned was 7,029,116. We do not have data specifying the number of these subscribers that are independently owned and operated or have 1,500 or fewer employees, and thus are unable at this time to estimate with greater precision the number of toll free subscribers that would qualify as small businesses under the SBA size standard. Consequently, we estimate that there are 7,860,000 or fewer small entity 800 subscribers; 5,210,184 or fewer small entity 888 subscribers; 4,388,682 or fewer small entity 877 subscribers, and 7,029,116 or fewer entity 866 subscribers.

We include all toll-free number subscribers in this category.

13 CFR 121.201, NAICS code 517310.

“Trends in Telephone Service” at Tables 18.4, 18.5, 18.6, and 18.7.

56.

Satellite Telecommunications and All Other Telecommunications.

These two economic census categories address the satellite industry. The first category has a small business size standard of $15 million or less in average annual receipts, under SBA rules.

The second has a size standard of $25 million or less in annual receipts.

The most current Census Bureau data in this context, however, are from the (last) economic census of 2002, and we will use those figures to gauge the prevalence of small businesses in these categories.

13 CFR 121.201, NAICS code 517410.

13 CFR 121.201, NAICS code 517919.

13 CFR 121.201, NAICS codes 517410 and 517910 (2002).

57. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.”

For this category, Census Bureau data for 2002 show that there were a total of 371 firms that operated for the entire year.

Of this total, 307 firms had annual receipts of under $10 million, and 26 firms had receipts of $10 million to $24,999,999.

Consequently, we estimate that the majority of Satellite Telecommunications firms are small entities that might be affected by our action.

U.S. Census Bureau, 2007 NAICS Definitions, “517410 Satellite Telecommunications”;

http://www.census.gov/naics/2007/def/ND517410.HTM.

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization),” Table 4, NAICS code 517410 (issued Nov. 2005).

Id.

An additional 38 firms had annual receipts of $25 million or more.

58. The second category of All Other Telecommunications comprises,

inter alia,

“establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems.”

For this category, Census Bureau data for 2002 show that there were a total of 332 firms that operated for the entire year.

Of this total, 303 firms had annual receipts of under $10 million and 15 firms had annual receipts of $10 million to $24,999,999.

Consequently, we estimate that the majority of All Other Telecommunications firms are small entities that might be affected by our action.

U.S. Census Bureau, 2007 NAICS Definitions, “517919 All Other Telecommunications”;

http://www.census.gov/naics/2007/def/ND517919.HTM#N517919.

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization),” Table 4, NAICS code 517910 (issued Nov. 2005).

Id.

An additional 14 firms had annual receipts of $25 million or more.

59.

Wireless Telecommunications Carriers (except Satellite).

Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category.

Prior to that time, such firms were within the now-superseded categories of “Paging” and “Cellular and Other Wireless Telecommunications.”

Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees.

Because Census Bureau data are not yet available for the new category, we will estimate small business prevalence using the prior categories and associated data. For the category of Paging, data for 2002 show that there were 807 firms that operated for the entire year.

Of this total, 804 firms had employment of 999 or fewer employees, and three firms had employment of 1,000 employees or more.

For the category of Cellular and Other Wireless Telecommunications, data for 2002 show that there were 1,397 firms that operated for the entire year.

Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 1,000 employees or more.

Thus, we estimate that the majority of wireless firms are small.

U.S. Census Bureau, 2007 NAICS Definitions, “517210 Wireless Telecommunications Categories (Except Satellite)”;

http://www.census.gov/naics/2007/def/ND517210.HTM#N517210.

U.S. Census Bureau, 2002 NAICS Definitions, “517211 Paging”;

http://www.census.gov/epcd/naics02/def/NDEF517.HTM.;

U.S. Census Bureau, 2002 NAICS Definitions, “517212 Cellular and Other Wireless Telecommunications”;

http://www.census.gov/epcd/naics02/def/NDEF517.HTM

13 CFR 121.201, NAICS code 517210 (2007 NAICS). The now-superseded, pre-2007 CFR citations were 13 CFR 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization,” Table 5, NAICS code 517211 (issued Nov. 2005).

Id.

The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization,” Table 5, NAICS code 517212 (issued Nov. 2005).

Id.

60.

Auctions.

Initially, we note that, as a general matter, the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily represent the number of small businesses currently in service. Also, the Commission does not generally track subsequent business size unless, in the context of assignments or transfers, unjust enrichment issues are implicated.

61.

Common Carrier Paging.

As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite) firms within the broad economic census categories of “Cellular and Other Wireless Telecommunications.”

Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category.

Prior to that time, such firms were within the now-superseded categories of “Paging” and “Cellular and Other Wireless Telecommunications.”

Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer

employees.

100

101

Of this total, 804 firms had employment of 999 or fewer employees, and three firms had employment of 1,000 employees or more.

102

For the category of Cellular and Other Wireless Telecommunications, data for 2002 show that there were 1,397 firms that operated for the entire year.

103

Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 1,000 employees or more.

104

Thus, we estimate that the majority of wireless firms are small.

13 CFR 121.201, NAICS code 517212.

U.S. Census Bureau, 2007 NAICS Definitions, “517210 Wireless Telecommunications Categories (Except Satellite)”;

http://www.census.gov/naics/2007/def/ND517210.HTM#N517210.

U.S. Census Bureau, 2002 NAICS Definitions, “517211 Paging”;

http://www.census.gov/epcd/naics02/def/NDEF517.HTM.;

U.S. Census Bureau, 2002 NAICS Definitions, “517212 Cellular and Other Wireless Telecommunications”;

http://www.census.gov/epcd/naics02/def/NDEF517.HTM.

100

13 CFR 121.201, NAICS code 517210 (2007 NAICS). The now-superseded, pre-2007 CFR citations were 13 CFR 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).

101

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization,” Table 5, NAICS code 517211 (issued Nov. 2005).

102

Id.

103

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization,” Table 5, NAICS code 517212 (issued Nov. 2005).

104

Id.

62. In addition, in the

Paging Second Report and Order,

the Commission adopted a size standard for “small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments.

105

A small business is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years.

106

The SBA has approved this definition.

107

An initial auction of Metropolitan Economic Area (“MEA”) licenses was conducted in the year 2000. Of the 2,499 licenses auctioned, 985 were sold.

108

Fifty-seven companies claiming small business status won 440 licenses.

109

A subsequent auction of MEA and Economic Area (“EA”) licenses was held in the year 2001. Of the 15,514 licenses auctioned, 5,323 were sold.

110

One hundred thirty-two companies claiming small business status purchased 3,724 licenses. A third auction, consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in all but three of the 51 MEAs, was held in 2003. Seventy-seven bidders claiming small or very small business status won 2,093 licenses.

111

105

Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems,

Second Report and Order, 12 FCC Rcd 2732, 2811-2812, paras. 178-181 (“

Paging Second Report and Order”

);

see also Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems,

Memorandum Opinion and Order on Reconsideration, 14 FCC Rcd 10030, 10085-10088, paras. 98-107 (1999).

106

Paging Second Report and Order,

12 FCC Rcd at 2811, para. 179.

107

See

Letter from Aida Alvarez, Administrator, SBA, to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau (“WTB”), FCC (Dec. 2, 1998) (“

Alvarez Letter 1998”

108

See

“

929 and 931 MHz Paging Auction Closes,”

Public Notice, 15 FCC Rcd 4858 (WTB 2000).

109

See id.

110

See

“

Lower and Upper Paging Band Auction Closes,”

Public Notice, 16 FCC Rcd 21821 (WTB 2002).

111

See

“

Lower and Upper Paging Bands Auction Closes,”

Public Notice, 18 FCC Rcd 11154 (WTB 2003). The current number of small or very small business entities that hold wireless licenses may differ significantly from the number of such entities that won in spectrum auctions due to assignments and transfers of licenses in the secondary market over time. In addition, some of the same small business entities may have won licenses in more than one auction.

63. Currently, there are approximately 74,000 Common Carrier Paging licenses. According to the most recent

Trends in Telephone Service,

281 carriers reported that they were engaged in the provision of “paging and messaging” services.

112

Of these, an estimated 279 have 1,500 or fewer employees and two have more than 1,500 employees.

113

We estimate that the majority of common carrier paging providers would qualify as small entities under the SBA definition.

112

“Trends in Telephone Service” at Table 5.3.

113

Id.

64.

2.3 GHz Wireless Communications Services.

This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (“WCS”) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years.

114

The SBA has approved these definitions.

115

The Commission auctioned geographic area licenses in the WCS service. In the auction, which was conducted in 1997, there were seven bidders that won 31 licenses that qualified as very small business entities, and one bidder that won one license that qualified as a small business entity.

114

Amendment of the Commission's Rules to Establish Part 27, the Wireless Communications Service (WCS),

Report and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).

115

See Alvarez Letter 1998.

65.

1670-1675 MHz Services.

An auction for one license in the 1670-1675 MHz band was conducted in 2003. One license was awarded. The winning bidder was not a small entity.

66.

Wireless Telephony.

Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite).

116

Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees.

117

According to

Trends in Telephone Service

data, 434 carriers reported that they were engaged in wireless telephony.

118

Of these, an estimated 222 have 1,500 or fewer employees and 212 have more than 1,500 employees.

119

We have estimated that 222 of these are small under the SBA small business size standard.

116

13 CFR 121.201, NAICS code 517210.

117

Id.

118

“Trends in Telephone Service” at Table 5.3.

119

“Trends in Telephone Service” at Table 5.3.

67.

Broadband Personal Communications Service.

The broadband personal communications services (“PCS”) spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission has created a small business size standard for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years.

120

For Block F, an additional small business size standard for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years.

121

These small business size standards, in the context of broadband PCS auctions, have been approved by the SBA.

122

No small businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 “small” and “very small” business bidders won approximately 40 percent of the 1,479

licenses for Blocks D, E, and F.

123

In 1999, the Commission reauctioned 155 C, D, E, and F Block licenses; there were 113 small business winning bidders.

124

120

See Amendment of Parts 20 and 24 of the Commission's Rules—Broadband PCS Competitive Bidding and the Commercial Mobile Radio Service Spectrum Cap,

Report and Order, 11 FCC Rcd 7824, 7850-7852, paras. 57-60 (1996) (“

PCS Report and Order”

);

see also

47 CFR 24.720(b).

121

See PCS Report and Order,

11 FCC Rcd at 7852, para. 60.

122

See Alvarez Letter 1998.

123

FCC News, “Broadband PCS, D, E and F Block Auction Closes,” No. 71744 (rel. Jan. 14, 1997).

124

See

“C, D, E, and F Block Broadband PCS Auction Closes,”

Public Notice,

14 FCC Rcd 6688 (WTB 1999).

68. In 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses in Auction 35. Of the 35 winning bidders in this auction, 29 qualified as “small” or “very small” businesses.

125

Subsequent events, concerning Auction 35, including judicial and agency determinations, resulted in a total of 163 C and F Block licenses being available for grant. In 2005, the Commission completed an auction of 188 C block licenses and 21 F block licenses in Auction 58. There were 24 winning bidders for 217 licenses.

126

Of the 24 winning bidders, 16 claimed small business status and won 156 licenses. In 2007, the Commission completed an auction of 33 licenses in the A, C, and F Blocks in Auction 71.

127

Of the 14 winning bidders, six were designated entities.

128

In 2008, the Commission completed an auction of 20 Broadband PCS licenses in the C, D, E and F block licenses in Auction 78.

129

125

See

“C and F Block Broadband PCS Auction Closes; Winning Bidders Announced,”

Public Notice,

16 FCC Rcd 2339 (2001).

126

See

“Broadband PCS Spectrum Auction Closes; Winning Bidders Announced for Auction No. 58,”

Public Notice,

20 FCC Rcd 3703 (2005).

127

See

“Auction of Broadband PCS Spectrum Licenses Closes; Winning Bidders Announced for Auction No. 71,”

Public Notice,

22 FCC Rcd 9247 (2007).

128

Id.

129

See

Auction of AWS-1 and Broadband PCS Licenses Rescheduled For August 13, 2008, Notice of Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures For Auction 78,

Public Notice,

23 FCC Rcd 7496 (2008) (“

AWS-1 and Broadband PCS Procedures Public Notice”

69.

Advanced Wireless Services.

In 2006, the Commission conducted its first auction of Advanced Wireless Services licenses in the 1710-1755 MHz and 2110-2155 MHz bands (“AWS-1”), designated as Auction 66.

130

The Commission defined “small business” as an entity with attributed average annual gross revenues that exceeded $15 million and did not exceed $40 million for the preceding three years.

131

A small business received a 15 percent discount on its winning bid.

132

A “very small business” is defined as an entity with attributed average annual gross revenues that did not exceed $15 million for the preceding three years.

133

A very small business received a 25 percent discount on its winning bid.

134

In Auction 66, thirty-one winning bidders identified themselves as very small businesses and won 142 licenses.

135

Twenty-six of the winning bidders identified themselves as small businesses and won 73 licenses.

136

In 2008, the Commission conducted an auction of AWS-1 licenses, designated as Auction 78, which offered 35 licenses for which there were no winning bids in Auction 66.

137

Four winning bidders that identified themselves as very small businesses won 17 AWS-1 licenses.

138

Three of the winning bidders that identified themselves as a small business won five AWS-1 licenses.

130

See

Auction of Advanced Wireless Services Licenses Scheduled for June 29, 2006; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 66, AU Docket No. 06-30,

Public Notice,

21 FCC Rcd 4562 (2006) (“

Auction 66 Procedures Public Notice”

);

131

47 CFR 27.1102(a)(1).

132

See

47 CFR 1.2110(f)(2).

133

47 CFR 27.1102(a)(2)

134

See

47 CFR 1.2110(f)(2).

135

See

Auction of Advanced Wireless Services Licenses Closes; Winning Bidders Announced for Auction No. 66,

Public Notice,

21 FCC Rcd 10,521 (2006) (“

Auction 66 Closing Public Notice”

)

136

See id.

137

See

AWS-1 and Broadband PCS Procedures Public Notice, 23 FCC Rcd 7496. Auction 78 also included an auction of Broadband PCS licenses.

138

See

“Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders Announced for Auction 78, Down Payments Due September 9, 2008, FCC Forms 601 and 602 Due September 9, 2008, Final Payments Due September 23, 2008, Ten-Day Petition to Deny Period”,

Public Notice,

23 FCC Rcd 12749-65 (2008).

70.

Narrowband Personal Communications Services.

In 1994, the Commission conducted an auction for Narrowband PCS licenses. A second auction was also conducted later in 1994. For purposes of the first two Narrowband PCS auctions, “small businesses” were entities with average gross revenues for the prior three calendar years of $40 million or less.

139

Through these auctions, the Commission awarded a total of 41 licenses, 11 of which were obtained by four small businesses.

140

To ensure meaningful participation by small business entities in future auctions, the Commission adopted a two-tiered small business size standard in the Narrowband PCS Second Report and Order.

141

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.

142

A “very 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 $15 million.

143

The SBA has approved these small business size standards.

144

A third auction was conducted in 2001. Here, five bidders won 317 (Metropolitan Trading Areas and nationwide) licenses.

145

Three of these claimed status as a small or very small entity and won 311 licenses.

139

Implementation of Section 309(j) of the Communications Act—Competitive Bidding Narrowband PCS,

Third Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, 10 FCC Rcd 175, 196, para. 46 (1994).

140

See

“Announcing the High Bidders in the Auction of ten Nationwide Narrowband PCS Licenses, Winning Bids Total $617,006,674,”

Public Notice,

PNWL 94-004 (released Aug. 2, 1994); “Announcing the High Bidders in the Auction of 30 Regional Narrowband PCS Licenses; Winning Bids Total $490,901,787,”

Public Notice,

PNWL 94-27 (released Nov. 9, 1994).

141

Amendment of the Commission's Rules to Establish New Personal Communications Services,

Narrowband PCS, Second Report and Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd 10456, 10476, para. 40 (2000) (“

Narrowband PCS Second Report and Order”

142

Narrowband PCS Second Report and Order,

15 FCC Rcd at 10476, para. 40.

143

Id.

144

See Alvarez Letter 1998.

145

See

“Narrowband PCS Auction Closes,”

Public Notice,

16 FCC Rcd 18663 (WTB 2001).

71.

700 MHz Band Licenses.

The Commission previously adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits.

146

The Commission defined a “small business” as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years.

147

A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years.

148

Additionally, the lower 700 MHz Service had a third category of small business status for Metropolitan/Rural Service Area (“MSA/RSA”) licenses. The third category is “entrepreneur,” which is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years.

149

The SBA approved these small size standards.

150

The Commission conducted an auction in 2002 of 740 licenses (one license in each of the 734 MSAs/RSAs and one license in each of

the six Economic Area Groupings (EAGs)). Of the 740 licenses available for auction, 484 licenses were sold to 102 winning bidders. Seventy-two of the winning bidders claimed small business, very small business or entrepreneur status and won a total of 329 licenses.

151

The Commission conducted a second auction in 2003 that included 256 licenses: 5 EAG licenses and 476 Cellular Market Area licenses.

152

Seventeen winning bidders claimed small or very small business status and won 60 licenses, and nine winning bidders claimed entrepreneur status and won 154 licenses.

153

In 2005, the Commission completed an auction of 5 licenses in the lower 700 MHz band (Auction 60). There were three winning bidders for five licenses. All three winning bidders claimed small business status.

146

See Reallocation and Service Rules for the 698-746 MHz Spectrum Band (Television Channels 52-59),

Report and Order, 17 FCC Rcd 1022 (2002) (“

Channels 52-59 Report and Order”

147

See Channels 52-59 Report and Order,

17 FCC Rcd at 1087-88, para. 172.

148

See id.

149

See id,

17 FCC Rcd at 1088, para. 173.

150

See

Letter from Aida Alvarez, Administrator, SBA, to Thomas Sugrue, Chief, WTB, FCC (Aug. 10, 1999) (“

Alvarez Letter 1999”

151

See

“Lower 700 MHz Band Auction Closes,”

Public Notice,

17 FCC Rcd 17272 (WTB 2002).

152

See

“Lower 700 MHz Band Auction Closes,”

Public Notice,

18 FCC Rcd 11873 (WTB 2003).

153

See id.

72. In 2007, the Commission adopted the

700 MHz Second Report and Order.

154

The

Order

revised the band plan for the commercial (including Guard Band) and public safety spectrum, adopted services rules, including stringent build-out requirements, an open platform requirement on the C Block, and a requirement on the D Block licensee to construct and operate a nationwide, interoperable wireless broadband network for public safety users. In 2008, the Commission conducted Auction 73 which offered all available, commercial 700 MHz Band licenses (1,099 licenses) for bidding using the Commission's standard simultaneous multiple-round (“SMR”) auction format for the A, B, D, and E block licenses and an SMR auction design with hierarchical package bidding (“HPB”) for the C Block licenses. A bidder with attributed average annual gross revenues that did not exceed $15 million for the preceding three years (very small business) qualified for a 25 percent discount on its winning bids. A bidder with attributed average annual gross revenues that exceeded $15 million, but did not exceed $40 million for the preceding three years, qualified for a 15 percent discount on its winning bids. At the conclusion of Auction 73, there were 36 winning bidders (who won 330 of the 1,090 licenses won) that identified themselves as very small businesses.

155

There were 20 winning bidders that identified themselves as a small business that won 49 of the 1,090 licenses won.

156

The provisionally winning bids for the A, B, C, and E Block licenses exceeded the aggregate reserve prices for those blocks. However, the provisionally winning bid for the D Block license did not meet the applicable reserve price and thus did not become a winning bid.

157

154

Service Rules for the 698-746, 747-762 and 777-792 MHz Band, WT Docket No. 06-150,

Revision of the Commission's Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems,

CC Docket No. 94-102,

Section 68.4(a) of the Commission's Rules Governing Hearing Aid-Compatible Telephone,

WT Docket No. 01-309,

Biennial Regulatory Review—Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various Rules Affecting Wireless Radio Services,

WT Docket No. 03-264,

Former Nextel Communications, Inc. Upper 700 MHz Guard Band Licenses and Revisions to Part 27 of the Commission's Rules,

WT Docket No. 06-169,

Implementing a Nationwide, Broadband Interoperable Public Safety Network in the 700 MHz Band,

PS Docket No. 06-229,

Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State, and Local Public Safety Communications Requirements Through the Year 2010,

WT Docket No. 96-86, Second Report and Order, FCC 07-132 (2007) (“

700 MHz Second Report and Order”

), 22 FCC Rcd 15289 (2007).

155

See

Auction of 700 MHz Band Licenses Closes, Winning Bidders Announced for Auction 73, Down Payments Due April 3, 2008, FCC Forms 601 and 602 April 3, 2008, Final Payment Due April 17, 2008, Ten-Day Petition to Deny Period,

Public Notice,

23 FCC Rcd 4572 (2008).

156

Id.

23 FCC Rcd at 4572-73.

157

Id.

73.

700 MHz Guard Band Licenses.

In the 700 MHz Guard Band Order, the Commission adopted size standards for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments.

158

A small business in this service is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years.

159

Additionally, a very small business is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years.

160

SBA approval of these definitions is not required.

161

In 2000, the Commission conducted an auction of 52 Major Economic Area (“MEA”) licenses.

162

Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of eight 700 MHz Guard Band licenses commenced and closed in 2001. Of the three winning bidders, one was a small business that won two of the eight licenses.

163

158

See Service Rules for the 746-764 MHz Bands, and Revisions to Part 27 of the Commission's Rules,

Second Report and Order, 15 FCC Rcd 5299 (2000) (“

746-764 MHz Band Second Report and Order”

159

See 746-764 MHz Band Second Report and Order,

15 FCC Rcd at 5343, para. 108.

160

See id.

161

See id.,

15 FCC Rcd 5299, 5343, para. 108 n.246 (for the 746-764 MHz and 776-794 MHz bands, the Commission is exempt from 15 U.S.C. § 632, which requires Federal agencies to obtain SBA approval before adopting small business size standards).

162

See

“700 MHz Guard Bands Auction Closes: Winning Bidders Announced,”

Public Notice,

15 FCC Rcd 18026 (2000).

163

See

“700 MHz Guard Bands Auction Closes: Winning Bidders Announced,”

Public Notice,

16 FCC Rcd 4590 (WTB 2001).

74.

Specialized Mobile Radio.

The Commission awards small business bidding credits in auctions for Specialized Mobile Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands to entities that had revenues of no more than $15 million in each of the three previous calendar years.

164

The Commission awards very small business bidding credits to entities that had revenues of no more than $3 million in each of the three previous calendar years.

165

The SBA has approved these small business size standards for the 800 MHz and 900 MHz SMR Service.

166

The Commission has held auctions for geographic area licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR auction was completed in 1996. Sixty bidders claiming that they qualified as small businesses under the $15 million size standard won 263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper 200 channels was conducted in 1997. Ten bidders claiming that they qualified as small businesses under the $15 million size standard won 38 geographic area licenses for the upper 200 channels in the 800 MHz SMR band.

167

A second auction for the 800 MHz band was conducted in 2002 and included 23 BEA licenses. One bidder claiming small business status won five licenses.

168

164

47 CFR 90.810, 90.814(b), 90.912.

165

47 CFR 90.810, 90.814(b), 90.912.

166

See Alvarez Letter 1999.

167

See

“Correction to Public Notice DA 96-586 `FCC Announces Winning Bidders in the Auction of 1020 Licenses to Provide 900 MHz SMR in Major Trading Areas,'”

Public Notice,

18 FCC Rcd 18367 (WTB 1996).

168

See

“Multi-Radio Service Auction Closes,”

Public Notice,

17 FCC Rcd 1446 (WTB 2002).

75. The auction of the 1,053 800 MHz SMR geographic area licenses for the General Category channels was conducted in 2000. Eleven bidders won 108 geographic area licenses for the General Category channels in the 800 MHz SMR band qualified as small businesses under the $15 million size standard.

169

In an auction completed in

2000, a total of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were awarded.

170

Of the 22 winning bidders, 19 claimed small business status and won 129 licenses. Thus, combining all three auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR band claimed status as small business.

169

See

“800 MHz Specialized Mobile Radio (SMR) Service General Category (851-854 MHz) and Upper Band (861-865 MHz) Auction Closes; Winning Bidders Announced,”

Public Notice,

15 FCC Rcd 17162 (2000).

170

See,

“800 MHz SMR Service Lower 80 Channels Auction Closes; Winning Bidders Announced,”

Public Notice,

16 FCC Rcd 1736 (2000).

76. In addition, there are numerous incumbent site-by-site SMR licensees and licensees with extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. In addition, we do not know how many of these firms have 1500 or fewer employees.

171

We assume, for purposes of this analysis, that all of the remaining existing extended implementation authorizations are held by small entities, as that small business size standard is approved by the SBA.

171

See generally

13 CFR 121.201, NAICS code 517210.

77.

220 MHz Radio Service—Phase I Licensees.

The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a definition of small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, we apply the small business size standard under the SBA rules applicable to Wireless Telecommunications Carriers (except Satellite).

172

This category provides that a small business is a wireless company employing no more than 1,500 persons.

173

The Commission estimates that most such licensees are small businesses under the SBA's small business standard.

172

Id.

173

Id.

78.

220 MHz Radio Service—Phase II Licensees.

The 220 MHz service has both Phase I and Phase II licenses. The Phase II 220 MHz service licenses are assigned by auction, where mutually exclusive applications are accepted. In the 220 MHz Third Report and Order, the Commission adopted a small business size standard for defining “small” and “very small” businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments.

174

This small business standard indicates that a “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years.

175

A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years.

176

The SBA has approved these small size standards.

177

A small business is eligible for a 25 percent discount on its winning bid. A very small business is eligible for a 35 percent discount on its winning bid. The first auction of Phase II licenses was conducted in 1998.

178

In the first auction, 908 licenses were offered in three different-sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (“EAG”) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold.

179

Thirty-nine small businesses won 373 licenses in the first 220 MHz auction. A second auction in 1999 included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses.

180

A third auction included four licenses: 2 BEA licenses and 2 EAG licenses in the 220 MHz Service. No small or very small business won any of these licenses.

181

In 2007, the Commission conducted a fourth auction of the 220 MHz licenses, designated as Auction 72.

182

Auction 72 offered 94 Phase II 220 MHz Service licenses.

183

In this auction, five winning bidders won a total of 76 licenses.

184

Two winning bidders identified themselves as very small businesses won 56 of the 76 licenses. One of the winning bidders that identified itself as a small business won 5 of the 76 licenses won.

174

Amendment of Part 90 of the Commission's Rules to Provide For the Use of the 220-222 MHz Band by the Private Land Mobile Radio Service,

Third Report and Order, 12 FCC Rcd 10943, 11068-70, paras. 291-295 (1997).

175

Id.

at 11068, para. 291.

176

Id.

177

See

Letter from Aida Alvarez, Administrator, SBA, to Daniel Phythyon, Chief, WTB, FCC (Jan. 6, 1998) (“

Alvarez to Phythyon Letter 1998”

178

See generally

“220 MHz Service Auction Closes,”

Public Notice,

14 FCC Rcd 605 (1998).

179

See

“FCC Announces It is Prepared to Grant 654 Phase II 220 MHz Licenses After Final Payment is Made,”

Public Notice,

14 FCC Rcd 1085 (1999).

180

See

“Phase II 220 MHz Service Spectrum Auction Closes,”

Public Notice,

14 FCC Rcd 11218 (1999).

181

See

“Multi-Radio Service Auction Closes,”

Public Notice,

17 FCC Rcd 1446 (2002).

182

See

“Auction of Phase II 220 MHz Service Spectrum Scheduled for June 20, 2007, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction 72,”

Public Notice,

22 FCC Rcd 3404 (2007).

183

Id.

184

See

“Auction of Phase II 220 MHz Service Spectrum Licenses Closes, Winning Bidders Announced for Auction 72, Down Payments due July 18, 2007, FCC Forms 601 and 602 due July 18, 2007, Final Payments due August 1, 2007, Ten-Day Petition to Deny Period,”

Public Notice,

22 FCC Rcd 11573 (2007).

79.

Cellular Radiotelephone Service.

Auction 77 was held to resolve one group of mutually exclusive applications for Cellular Radiotelephone Service licenses for unserved areas in New Mexico.

185

Bidding credits for designated entities were not available in Auction 77.

186

In 2008, the Commission completed the closed auction of one unserved service area in the Cellular Radiotelephone Service, designated as Auction 77. Auction 77 concluded with one provisionally winning bid for the unserved area totaling $25,002.

187

185

See

Closed Auction of Licenses for Cellular Unserved Service Area Scheduled for June 17, 2008, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 77,

Public Notice,

23 FCC Rcd 6670 (2008).

186

Id.

at 6685.

187

See

Auction of Cellular Unserved Service Area License Closes, Winning Bidder Announced for Auction 77, Down Payment due July 2, 2008, Final Payment due July 17, 2008,

Public Notice,

23 FCC Rcd 9501 (2008).

80.

Private Land Mobile Radio (“PLMR”).

PLMR systems serve an essential role in a range of industrial, business, land transportation, and public safety activities. These radios are used by companies of all sizes operating in all U.S. business categories, and are often used in support of the licensee's primary (non-telecommunications) business operations. For the purpose of determining whether a licensee of a PLMR system is a small business as defined by the SBA, we use the broad census category, Wireless Telecommunications Carriers (except Satellite). This definition provides that a small entity is any such entity employing no more than 1,500 persons.

188

The Commission does not require PLMR licensees to disclose information about number of employees, so the Commission does not have information that could be used to determine how many PLMR licensees constitute small entities under this definition. We note that PLMR licensees generally use the licensed facilities in support of other business activities, and therefore, it would also be helpful to

assess PLMR licensees under the standards applied to the particular industry subsector to which the licensee belongs.

189

188

See

13 CFR 121.201, NAICS code 517210.

189

See generally

13 CFR 121.201.

81. As of March 2010, there were 424,162 PLMR licensees operating 921,909 transmitters in the PLMR bands below 512 MHz. We note that any entity engaged in a commercial activity is eligible to hold a PLMR license, and that any revised rules in this context could therefore potentially impact small entities covering a great variety of industries.

82.

Fixed Microwave Services.

Fixed microwave services include common carrier,

190

private operational-fixed,

191

and broadcast auxiliary radio services.

192

At present, there are approximately 22,015 common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services. The Commission has not created a size standard for a small business specifically with respect to fixed microwave services. For purposes of this analysis, the Commission uses the SBA small business size standard for the category Wireless Telecommunications Carriers (except Satellite), which is 1,500 or fewer employees.

193

The Commission does not have data specifying the number of these licensees that have no more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of fixed microwave service licensees that would qualify as small business concerns under the SBA's small business size standard. Consequently, the Commission estimates that there are 22,015 or fewer common carrier fixed licensees and 61,670 or fewer private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services that may be small and may be affected by the rules and policies proposed herein. We note, however, that the common carrier microwave fixed licensee category includes some large entities.

190

See

47 CFR 101

et seq.

for common carrier fixed microwave services (except Multipoint Distribution Service).

191

Persons eligible under parts 80 and 90 of the Commission's Rules can use Private Operational-Fixed Microwave services.

See

47 CFR Parts 80 and 90. Stations in this service are called operational-fixed to distinguish them from common carrier and public fixed stations. Only the licensee may use the operational-fixed station, and only for communications related to the licensee's commercial, industrial, or safety operations.

192

Auxiliary Microwave Service is governed by Part 74 of Title 47 of the Commission's Rules.

See

47 CFR Part 74. This service is available to licensees of broadcast stations and to broadcast and cable network entities. Broadcast auxiliary microwave stations are used for relaying broadcast television signals from the studio to the transmitter, or between two points such as a main studio and an auxiliary studio. The service also includes mobile television pickups, which relay signals from a remote location back to the studio.

193

13 CFR 121.201, NAICS code 517210.

83.

39 GHz Service.

The Commission created a special small business size standard for 39 GHz licenses—an entity that has average gross revenues of $40 million or less in the three previous calendar years.

194

An additional size standard for “very small business” is: an entity that, together with affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years.

195

The SBA has approved these small business size standards.

196

The auction of the 2,173, 39 GHz licenses was conducted in 2000. The 18 bidders who claimed small business status won 849 licenses.

194

See Amendment of the Commission's Rules Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands,

ET Docket No. 95-183, Report and Order, 12 FCC Rcd 18600 (1997).

195

Id.

196

See

Letter from Aida Alvarez, Administrator, SBA, to Kathleen O'Brien Ham, Chief, Auctions and Industry Analysis Division, WTB, FCC (Feb. 4, 1998);

see

Letter from Hector Barreto, Administrator, SBA, to Margaret Wiener, Chief, Auctions and Industry Analysis Division, WTB, FCC (Jan. 18, 2002).

84.

Local Multipoint Distribution Service.

Local Multipoint Distribution Service (“LMDS”) is a fixed broadband point-to-multipoint microwave service that provides for two-way video telecommunications.

197

The auction of the 986 LMDS licenses began and closed in 1998. The Commission established a small business size standard for LMDS licenses as an entity that has average gross revenues of less than $40 million in the three previous calendar years.

198

An additional small business size standard for “very small business” was added as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years.

199

The SBA has approved these small business size standards in the context of LMDS auctions.

200

There were 93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very small business bidders won approximately 277 A Block licenses and 387 B Block licenses. In 1999, the Commission re-auctioned 161 licenses; there were 32 small and very small businesses that won 119 licenses.

197

See Rulemaking to Amend Parts 1, 2, 21, 25, of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed Satellite Services,

Second Report and Order, Order on Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC Rcd 12545, 12689-90, para. 348 (1997) (“

LMDS Second Report and Order”

198

See LMDS Second Report and Order,

12 FCC Rcd at 12689-90, para. 348.

199

See id.

200

See Alvarez to Phythyon Letter 1998.

85.

218-219 MHz Service.

The first auction of 218-219 MHz (previously referred to as the Interactive and Video Data Service or IVDS) spectrum resulted in 178 entities winning licenses for 594 Metropolitan Statistical Areas (“MSAs”).

201

Of the 594 licenses, 567 were won by 167 entities qualifying as a small business. For that auction, the Commission defined a small business as an entity that, together with its affiliates, has no more than a $6 million net worth and, after Federal income taxes (excluding any carry over losses), has no more than $2 million in annual profits each year for the previous two years.

202

In the

218-219 MHz Report and Order and Memorandum Opinion and Order,

we defined a small business as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and their affiliates, has average annual gross revenues not exceeding $15 million for the preceding three years.

203

A very small business is defined as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and its affiliates, has average annual gross revenues not exceeding $3 million for the preceding three years.

204

The SBA has approved of these definitions.

205

201

See

“Interactive Video and Data Service (IVDS) Applications Accepted for Filing

,” Public Notice, 9 FCC Rcd 6227 (1994).

202

Implementation of Section 309(j) of the Communications Act—Competitive Bidding,

Fourth Report and Order, 9 FCC Rcd 2330 (1994).

203

Amendment of Part 95 of the Commission's Rules to Provide Regulatory Flexibility in the 218-219 MHz Service,

Report and Order and Memorandum Opinion and Order, 15 FCC Rcd 1497 (1999).

204

Id.

205

See Alvarez to Phythyon Letter 1998.

86.

Location and Monitoring Service (“LMS”).

Multilateration LMS systems use non-voice radio techniques to determine the location and status of mobile radio units. For purposes of auctioning LMS licenses, the Commission has defined “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $15 million.

206

A “very small business” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the

preceding three years not exceeding $3 million.

207

These definitions have been approved by the SBA.

208

An auction for LMS licenses was conducted in 1999. Of the 528 licenses auctioned, 289 licenses were sold to four small businesses.

206

Amendment of Part 90 of the Commission's Rules to Adopt Regulations for Automatic Vehicle Monitoring Systems,

Second Report and Order, 13 FCC Rcd 15182, 15192, para. 20 (1998) (“

Automatic Vehicle Monitoring Systems Second Report and Order”

);

see also

47 CFR 90.1103.

207

Automatic Vehicle Monitoring Systems Second Report and Order,

13 FCC Rcd at 15192, para. 20;

see also

47 CFR 90.1103.

208

See Alvarez Letter 1998.

87.

Rural Radiotelephone Service.

The Commission has not adopted a size standard for small businesses specific to the Rural Radiotelephone Service.

209

A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio System (“BETRS”).

210

In the present context, we will use the SBA's small business size standard applicable to Wireless Telecommunications Carriers (except Satellite),

i.e.,

an entity employing no more than 1,500 persons.

211

There are approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected by our action.

209

The service is defined in Section 22.99 of the Commission's rules, 47 CFR 22.99.

210

BETRS is defined in Sections 22.757 and 22.759 of the Commission's rules, 47 CFR 22.757 and 22.759.

211

13 CFR 121.201, NAICS code 517210.

88.

Air-Ground Radiotelephone Service.

212

The Commission has previously used the SBA's small business definition applicable to Wireless Telecommunications Carriers (except Satellite),

i.e.,

an entity employing no more than 1,500 persons.

213

There are approximately 100 licensees in the Air-Ground Radiotelephone Service, and under that definition, we estimate that almost all of them qualify as small entities under the SBA definition. For purposes of assigning Air-Ground Radiotelephone Service licenses through competitive bidding, the Commission has defined “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $40 million.

214

A “very small business” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $15 million.

215

These definitions were approved by the SBA.

216

In 2006, the Commission completed an auction of nationwide commercial Air-Ground Radiotelephone Service licenses in the 800 MHz band (Auction 65). The auction closed with two winning bidders winning two Air-Ground Radiotelephone Services licenses. Neither of the winning bidders claimed small business status.

212

The service is defined in Section 22.99 of the Commission's rules, 47 CFR 22.99.

213

13 CFR 121.201, NAICS codes 517210.

214

Amendment of Part 22 of the Commission's Rules to Benefit the Consumers of Air-Ground Telecommunications Services, Biennial Regulatory Review—Amendment of Parts 1, 22, and 90 of the Commission's Rules, Amendment of Parts 1 and 22 of the Commission's Rules to Adopt Competitive Bidding Rules for Commercial and General Aviation Air-Ground Radiotelephone Service,

WT Docket Nos. 03-103 and 05-42, Order on Reconsideration and Report and Order, 20 FCC Rcd 19663, paras. 28-42 (2005).

215

Id.

216

See

Letter from Hector V. Barreto, Administrator, SBA, to Gary D. Michaels, Deputy Chief, Auctions and Spectrum Access Division, WTB, FCC (Sept. 19, 2005).

89.

Aviation and Marine Radio Services.

There are approximately 26,162 aviation, 34,555 marine (ship), and 3,296 marine (coast) licensees.

217

The Commission has not developed a small business size standard specifically applicable to all licensees. For purposes of this analysis, we will use the SBA small business size standard for the category Wireless Telecommunications Carriers (except Satellite), which is 1,500 or fewer employees.

218

We are unable to determine how many of those licensed fall under this standard. For purposes of our evaluations in this analysis, we estimate that there are up to approximately 62,969 licensees that are small businesses under the SBA standard.

219

In 1998, the Commission held an auction of 42 VHF Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and 161.775-162.0125 MHz (coast transmit) bands. For this auction, the Commission defined a “small” business as an entity that, together with controlling interests and affiliates, has average gross revenues for the preceding three years not to exceed $15 million dollars. In addition, a “very small” business is one that, together with controlling interests and affiliates, has average gross revenues for the preceding three years not to exceed $3 million dollars.

220

Further, the Commission made available Automated Maritime Telecommunications System (“AMTS”) licenses in Auctions 57 and 61.

221

Winning bidders could claim status as a very small business or a very small business. A very small business for this service is defined as an entity with attributed average annual gross revenues that do not exceed $3 million for the preceding three years, and a small business is defined as an entity with attributed average annual gross revenues of more than $3 million but less than $15 million for the preceding three years.

222

Three of the winning bidders in Auction 57 qualified as small or very small businesses, while three winning entities in Auction 61 qualified as very small businesses.

217

Vessels that are not required by law to carry a radio and do not make international voyages or communications are not required to obtain an individual license.

See

Amendment of Parts 80 and 87 of the Commission's Rules to Permit Operation of Certain Domestic Ship and Aircraft Radio Stations Without Individual Licenses,

Report and Order,

WT Docket No. 96-82, 11 FCC Rcd 14849 (1996).

218

13 CFR 121.201, NAICS code 517210.

219

A licensee may have a license in more than one category.

220

Amendment of the Commission's Rules Concerning Maritime Communications,

PR Docket No. 92-257, Third Report and Order and Memorandum Opinion and Order, 13 FCC Rcd 19853 (1998).

221

See

“

Automated Maritime Telecommunications System Spectrum Auction Scheduled for September 15, 2004, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Auction Procedures,

” Public Notice, 19 FCC Rcd 9518 (WTB 2004); “

Auction of Automated Maritime Telecommunications System Licenses Scheduled for August 3, 2005, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Auction Procedures for Auction No. 61,

” Public Notice, 20 FCC Rcd 7811 (WTB 2005).

222

47 CFR 80.1252.

90.

Offshore Radiotelephone Service.

This service operates on several ultra high frequencies (“UHF”) television broadcast channels that are not used for television broadcasting in the coastal areas of states bordering the Gulf of Mexico.

223

There is presently 1 licensee in this service. We do not have information whether that licensee would qualify as small under the SBA's small business size standard for Wireless Telecommunications Carriers (except Satellite) services.

224

Under that SBA small business size standard, a business is small if it has 1,500 or fewer employees.

225

223

This service is governed by Subpart I of Part 22 of the Commission's rules.

See

47 CFR 22.1001-22.1037.

224

13 CFR 121.201, NAICS code 517210.

225

Id.

91.

Multiple Address Systems (“MAS”).

Entities using MAS spectrum, in general, fall into two categories: (1) Those using the spectrum for profit-based uses, and (2) those using the spectrum for private internal uses. The Commission defines a small business for MAS licenses as an entity that has average gross revenues of less than $15 million in the three previous calendar years.

226

A very small business is defined as an entity that, together with its affiliates, has average gross revenues of not more than $3 million for the preceding three calendar years.

227

The

SBA has approved these definitions.

228

The majority of these entities will most likely be licensed in bands where the Commission has implemented a geographic area licensing approach that would require the use of competitive bidding procedures to resolve mutually exclusive applications. The Commission's licensing database indicates that, as of March 5, 2010, there were over 11,500 MAS station authorizations. In addition, an auction for 5,104 MAS licenses in 176 EAs was conducted in 2001.

229

Seven winning bidders claimed status as small or very small businesses and won 611 licenses. In 2005, the Commission completed an auction (Auction 59) of 4,226 MAS licenses in the Fixed Microwave Services from the 928/959 and 932/941 MHz bands. Twenty-six winning bidders won a total of 2,323 licenses. Of the 26 winning bidders in this auction, five claimed small business status and won 1,891 licenses.

226

See Amendment of the Commission's Rules Regarding Multiple Address Systems,

Report and Order, 15 FCC Rcd 11956, 12008, para. 123 (2000).

227

Id.

228

See Alvarez Letter 1999.

229

See

“

Multiple Address Systems Spectrum Auction Closes,

” Public Notice, 16 FCC Rcd 21011 (2001).

92. With respect to entities that use, or seek to use, MAS spectrum to accommodate internal communications needs, we note that MAS serves an essential role in a range of industrial, safety, business, and land transportation activities. MAS radios are used by companies of all sizes, operating in virtually all U.S. business categories, and by all types of public safety entities. For the majority of private internal users, the small business size standard developed by the SBA would be more appropriate. The applicable size standard in this instance appears to be that of Wireless Telecommunications Carriers (except Satellite). This definition provides that a small entity is any such entity employing no more than 1,500 persons.

230

The Commission's licensing database indicates that, as of January 20, 1999, of the 8,670 total MAS station authorizations, 8,410 authorizations were for private radio service, and of these, 1,433 were for private land mobile radio service.

230

See

13 CFR 121.201, NAICS code 517210.

93.

1.4 GHz Band Licensees.

The Commission conducted an auction of 64 1.4 GHz band licenses

231

in 2007.

232

In that auction, the Commission defined “small business” as an entity that, together with its affiliates and controlling interests, had average gross revenues that exceed $15 million but do not exceed $40 million for the preceding three years, and a “very small business” as an entity that, together with its affiliates and controlling interests, has had average annual gross revenues not exceeding $15 million for the preceding three years.

233

Neither of the two winning bidders sought designated entity status.

234

231

See

“

Auction of 1.4 GHz Bands Licenses Scheduled for February 7, 2007,”

Public Notice, 21 FCC Rcd 12393 (WTB 2006).

232

See

“

Auction of 1.4 GHz Band Licenses Closes; Winning Bidders Announced for Auction No. 69,

” Public Notice, 22 FCC Rcd 4714 (2007) (“

Auction No. 69 Closing PN

”).

233

Auction No. 69 Closing PN,

Attachment C.

234

See Auction No. 69 Closing PN.

94.

Incumbent 24 GHz Licensees.

This analysis may affect incumbent licensees who were relocated to the 24 GHz band from the 18 GHz band, and applicants who wish to provide services in the 24 GHz band. The applicable SBA small business size standard is that of Wireless Telecommunications Carriers (except Satellite). This category provides that such a company is small if it employs no more than 1,500 persons.

235

The broader census data notwithstanding, we believe that there are only two licensees in the 24 GHz band that were relocated from the 18 GHz band, Teligent

236

and TRW, Inc. It is our understanding that Teligent and its related companies have fewer than 1,500 employees, though this may change in the future. TRW is not a small entity. There are approximately 122 licensees in the Rural Radiotelephone Service, and the Commission estimates that there are 122 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected by our action.

235

13 CFR 121.201, NAICS code 517210.

236

Teligent acquired the DEMS licenses of FirstMark, the only licensee other than TRW in the 24 GHz band whose license has been modified to require relocation to the 24 GHz band.

95.

Future 24 GHz Licensees.

With respect to new applicants in the 24 GHz band, we have defined “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the three preceding years not exceeding $15 million.

237

“Very small business” in the 24 GHz band is defined as an entity that, together with controlling interests and affiliates, has average gross revenues not exceeding $3 million for the preceding three years.

238

The SBA has approved these definitions.

239

In a 2004 auction of 24 GHz licenses, three winning bidders won seven licenses. Two of the winning bidders were very small businesses that won five licenses.

237

Amendments to Parts 1, 2, 87 and 101 of the Commission's Rules To License Fixed Services at 24 GHz,

Report and Order, 15 FCC Rcd 16934, 16967, para. 77 (2000) (“

24 GHz Report and Order”

);

see also

47 CFR 101.538(a)(2).

238

24 GHz Report and Order,

15 FCC Rcd at 16967, para. 77;

see also

47 CFR 101.538(a)(1).

239

See

Letter from Gary M. Jackson, Assistant Administrator, SBA, to Margaret W. Wiener, Deputy Chief, Auctions and Industry Analysis Division, WTB, FCC (July 28, 2000).

96.

Broadband Radio Service and Educational Broadband Service.

Broadband Radio Service systems, previously referred to as Multipoint Distribution Service (“MDS”) and Multichannel Multipoint Distribution Service (“MMDS”) systems, and “wireless cable,” transmit video programming to subscribers and provide two-way high speed data operations using the microwave frequencies of the Broadband Radio Service (“BRS”) and Educational Broadband Service (“EBS”) (previously referred to as the Instructional Television Fixed Service (“ITFS”)).

240

In connection with the 1996 BRS auction, the Commission established a small business size standard as an entity that had annual average gross revenues of no more than $40 million in the previous three calendar years.

241

The BRS auctions resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”). Of the 67 auction winners, 61 met the definition of a small business. BRS also includes licensees of stations authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.

242

After adding the number of small business auction licensees to the number of incumbent licensees not already counted, we find that there are currently approximately 440 BRS licensees that are defined as small businesses under either the SBA or the Commission's rules. The Commission has adopted three levels of bidding credits for BRS: (i) A bidder with attributed average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years (small business) will receive a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross revenues that exceed $3 million and do

not exceed $15 million for the preceding three years (very small business) will receive a 25 percent discount on its winning bid; and (iii) a bidder with attributed average annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur) will receive a 35 percent discount on its winning bid.

243

In 2009, the Commission conducted Auction 86, which offered 78 BRS licenses.

244

Auction 86 concluded with the sale of 61 licenses.

245

Of the ten winning bidders, three bidders that claimed small business status won 7 licenses, and two bidders that claimed entrepreneur status won six licenses.

240

Amendment of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures in the Multipoint Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the Communications Act—Competitive Bidding

, MM Docket No. 94-131 and PP Docket No. 93-253, Report and Order, 10 FCC Rcd 9589, 9593, para. 7 (1995) (“

MDS Auction R&O

”).

241

47 CFR 21.961(b)(1).

242

47 U.S.C. 309(j). Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of Section 309(j) of the Communications Act of 1934, 47 U.S.C. 309(j). For these pre-auction licenses, the applicable standard is SBA's small business size standard.

243

Id.

at 8296.

244

Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27, 2009, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 86,

Public Notice

, 24 FCC Rcd 8277 (2009).

245

Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Down Payments Due November 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to Deny Period,

Public Notice

, 24 FCC Rcd 13572 (2009).

97. In addition, the SBA's Cable Television Distribution Services small business size standard is applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are held by educational institutions. Educational institutions are included in this analysis as small entities.

246

Thus, we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television Distribution Services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.”

247

The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. To gauge small business prevalence for these cable services we must, however, use current census data that are based on the previous category of Cable and Other Program Distribution and its associated size standard; that size standard was: all such firms having $13.5 million or less in annual receipts.

248

According to Census Bureau data for 2002, there were a total of 1,191 firms in this previous category that operated for the entire year.

249

Of this total, 1,087 firms had annual receipts of under $10 million, and 43 firms had receipts of $10 million or more but less than $25 million.

250

Thus, the majority of these firms can be considered small.

246

The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of less than 50,000). 5 U.S.C. 601(4)-(6). We do not collect annual revenue data on EBS licensees.

247

U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial definition);

http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.

248

13 CFR 121.201, NAICS code 517110.

249

U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, Table 4, Receipts Size of Firms for the United States: 2002, NAICS code 517510 (issued November 2005).

250

Id.

An additional 61 firms had annual receipts of $25 million or more.

98.

Television Broadcasting.

This Economic Census category “comprises establishments primarily engaged in broadcasting images together with sound. These establishments operate television broadcasting studios and facilities for the programming and transmission of programs to the public.”

251

The SBA has created the following small business size standard for Television Broadcasting firms: those having $14 million or less in annual receipts.

252

The Commission has estimated the number of licensed commercial television stations to be 1,392.

253

In addition, according to Commission staff review of the BIA Publications, Inc., Master Access Television Analyzer Database (BIA) on March 30, 2007, about 986 of an estimated 1,395 commercial television stations (or approximately 72 percent) had revenues of $13 million or less.

254

We therefore estimate that the majority of commercial television broadcasters are small entities.

251

U.S. Census Bureau, 2007 NAICS Definitions, “515120 Television Broadcasting” (partial definition);

http://www.census.gov/naics/2007/def/ND515120.HTM#N515120.

252

13 CFR 121.201, NAICS code 515120 (updated for inflation in 2008).

253

See FCC News Release

, “Broadcast Station Totals as of September 30, 2010,” dated October 22, 2010;

http://www.fcc.gov/Daily_Releases/Daily_Business/2008/db0318/DOC-280836A1.pdf.

254

We recognize that BIA's estimate differs slightly from the FCC total given

supra.

99. We note, however, that in assessing whether a business concern qualifies as small under the above definition, business (control) affiliations

255

must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. In addition, an element of the definition of “small business” is that the entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply does not exclude any television station from the definition of a small business on this basis and is therefore possibly over-inclusive to that extent.

255

“[Business concerns] are affiliates of each other when one concern controls or has the power to control the other or a third party or parties controls or has the power to control both.” 13 CFR 21.103(a)(1).

100. In addition, the Commission has estimated the number of licensed noncommercial educational (NCE) television stations to be 391.

256

These stations are non-profit, and therefore considered to be small entities.

257

256

See FCC News Release

, “Broadcast Station Totals as of September 30, 2010,” dated October 22, 2010;

http://www.fcc.gov/Daily_Releases/Daily_Business/2008/db0318/DOC-280836A1.pdf.

257

See generally

5 U.S.C. 601(4), (6).

101. In addition, there are also 2,387 low power television stations (LPTV).

258

Given the nature of this service, we will presume that all LPTV licensees qualify as small entities under the above SBA small business size standard.

258

See FCC News Release

, “Broadcast Station Totals as of September 30, 2010,” dated October 22, 2010;

http://www.fcc.gov/Daily_Releases/Daily_Business/2008/db0318/DOC-280836A1.pdf.

102.

Radio Broadcasting.

This Economic Census category “comprises establishments primarily engaged in broadcasting aural programs by radio to the public. Programming may originate in their own studio, from an affiliated network, or from external sources.”

259

The SBA has established a small business size standard for this category, which is: such firms having $7 million or less in annual receipts.

260

According to Commission staff review of BIA Publications, Inc.'s

Master Access Radio Analyzer Database

on March 31, 2005, about 10,840 (95%) of 11,410 commercial radio stations had revenues of $6 million or less. Therefore, the majority of such entities are small entities.

259

U.S. Census Bureau, 2007 NAICS Definitions, “515112 Radio Stations”;

http://www.census.gov/naics/2007/def/ND515112.HTM#N515112.

260

13 CFR 121.201, NAICS code 515112 (updated for inflation in 2008).

103. We note, however, that in assessing whether a business concern qualifies as small under the above size standard, business affiliations must be included.

261

In addition, to be

determined to be a “small business,” the entity may not be dominant in its field of operation.

262

We note that it is difficult at times to assess these criteria in the context of media entities, and our estimate of small businesses may therefore be over-inclusive.

261

“Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power

to control exists.” 13 CFR 121.103(a)(1) (an SBA regulation).

262

13 CFR 121.102(b) (an SBA regulation).

104.

Auxiliary, Special Broadcast and Other Program Distribution Services.

This service involves a variety of transmitters, generally used to relay broadcast programming to the public (through translator and booster stations) or within the program distribution chain (from a remote news gathering unit back to the station). The Commission has not developed a definition of small entities applicable to broadcast auxiliary licensees. The applicable definitions of small entities are those, noted previously, under the SBA rules applicable to radio broadcasting stations and television broadcasting stations.

263

13 CFR 121.201, NAICS codes 515112 and 515120.

105. The Commission estimates that there are approximately 5,618 FM translators and boosters.

264

The Commission does not collect financial information on any broadcast facility, and the Department of Commerce does not collect financial information on these auxiliary broadcast facilities. We believe that most, if not all, of these auxiliary facilities could be classified as small businesses by themselves. We also recognize that most commercial translators and boosters are owned by a parent station which, in some cases, would be covered by the revenue definition of small business entity discussed above. These stations would likely have annual revenues that exceed the SBA maximum to be designated as a small business ($7.0 million for a radio station or $14.0 million for a TV station). Furthermore, they do not meet the Small Business Act's definition of a “small business concern” because they are not independently owned and operated.

265

264

See supra

note 242.

265

See

15 U.S.C. 632.

106.

Cable Television Distribution Services.

Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.”

266

The SBA has developed a small business size standard for this category, which is: all such firms having 1,50

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