Facilitation of Future Development of SMR Systems in the 800 MHz Frequency Band; Implementation of Section 309(j) of the Communications ActCompetitive Bidding, 800 MHz SMR

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 90

[PR Docket No. 93-144, PP Docket No. 93-253; FCC 94-271]

Facilitation of Future Development of SMR Systems in the 800 MHz

Frequency Band; Implementation of Section 309(j) of the Communications

Act--Competitive Bidding, 800 MHz SMR

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission has adopted a Further Notice of Proposed Rule

Making (Further Notice) aimed at establishing a flexible regulatory

scheme for Specialized Mobile Radio (SMR) systems in the 800 MHz band.

The intended effect of this Further Notice is to solicit comment on

assignment of blocks of SMR spectrum in defined market-based service

areas that will facilitate the development of wide-area, multi-channel

SMR systems that are comparable to and compete with cellular and

broadhand Personal Communications Services (PCS) systems; how the needs

of smaller SMR systems primarily seeking to provide local service can

best be accommodated under the proposed licensing scheme; regulatory

treatment of existing SMR systems; application and licensing procedures

for both the wide-area SMR spectrum blocks and locally licensed SMR

channels; continued licensing of SMR systems on 800 MHz General

Category channels or on other non-SMR channels through inter-category

sharing; and competitive bidding procedures for resolution of mutually

exclusive 800 MHz SMR applications.

DATES: Comments must be filed on or before December 5, 1994, and reply

comments must be filed on or before December 20, 1994.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W.,

Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:

D'wana Speight, (202) 632-7125 (Private Radio Bureau, Land Mobile and

Microwave Division).

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's

Further Notice of Proposed Rule Making, PR Docket No. 93-144, PP Docket

No. 93-253, FCC 94-271, adopted October 20, 1994, and released November

4, 1994. The full text of the Further Notice is available for

inspection and copying during normal business hours in the FCC Public

Reference Center, Room 239, 1919 M Street, N.W., Washington, DC. The

complete text may be purchased from the Commission's copy contractor,

International Transcription Service, Inc., 2100 M Street, N.W., Suite

140, Washington, DC 20037, (202) 857-3800.

Summary of Further Notice of Proposed Rule Making

1. The Further Notice is intended to build upon and refine the

Commission's previous efforts to promote the development of wide-area

SMR service in the 800 MHz band, particularly its 1993 Notice of

Proposed Rule Making that initiated this docket (8 FCC Rcd 3950 (1993),

58 FR 33062 (June 15, 1993)). The proposals presented in the Further

Notice also are part of the Commission's continuing implementation of

the new regulatory framework for mobile radio services enacted by

Congress in the Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-

66, 107 Stat. 312, 392 (Budget Act).

2 . In implementing the Budget Act, the Commission previously

determined that its SMR channel assignment rules should be revised to

facilitate licensing in some portion of the 800 MHz SMR band on a Major

Trading Area (MTA) basis. In the Further Notice, the Commission

proposes to divide the existing 14 MHz of SMR spectrum into two

categories for future licensing: (a) the 10 MHz ``upper block'',

comprised of the 200 contiguous SMR channels (Channels 401 to 600),

would be licensed on an MTA basis; (b) the remaining 4 MHz, comprised

of the 80 non-contiguous SMR channels, would be licensed in groups of

five channels on a local basis. The Commission tentatively concludes

that the 10 MHz upper block of SMR spectrum is best suited for wide-

area licensing because of its contiguity.

3. The Commission also seeks comment on its tentative conclusion

that the 80 non-contiguous SMR channels should be licensed on a local

basis. The Commission seeks comment on whether dividing the 800 MHz

band spectrum in this fashion is fair and equitable and also solicits

alternative allocations that would fairly balance the interests of

wide-area and local SMR systems.

4. The Commission proposes to divide the upper 10 MHz ``MTA block''

into four blocks of 2.5 MHz, corresponding to 50 channels per block

under our existing frequency allocation rules. The Commission seeks

comment on whether the proposed allocation is a fair division of

channels within the MTA and will lead to efficient spectrum use and the

appropriateness of alternative block sizes both smaller and larger than

2.5 MHz.

5. In addition, the Commission tentatively concludes that a limit

on the aggregation of 800 MHz SMR spectrum by a single licensee within

a particular MTA is unnecessary. The Commission previously concluded

that 45 MHz cap on aggregation of broadband PCS, cellular, and SMR

spectrum, combined with existing service-specific caps for cellular and

PCS, was sufficient to maintain a competitive commercial mobile radio

service market. The Commission nonetheless seeks comment on whether

there should be such an aggregation limit for 800 MHz SMR.

6. The Commission further propose to continue licensing SMR systems

on the ``lower 80'' channels on a local basis in order to provide

opportunities for SMR operators who seek to provide local service. The

Commission solicits comment on two alternative approaches to local SMR

licensing. The first alternative would be to continue licensing these

channels under the same geographic separation and channelization

criteria that exist in the Commission's current SMR rules. The second

alternative would be to discontinue site-specific licensing and instead

offer licenses for individual channels or small channel blocks covering

defined geographic areas. The Commission also seeks comment on any

possible licensing alternatives for the ``lower 80'' channels that

might further promote the SMR operators' ability to quickly gain access

to spectrum and to provide efficient service to the public.

7. The Commission also proposes that MTA licensees will be entitled

to use any available border area channels within their spectrum blocks,

subject to the relevant rules regarding international assignment and

coordination of such channels. The Commission seeks comment on this

proposal and on how to license the channels in border areas that are

not contained in the proposed MTA block, which include both lower 80

SMR channels and channels that are allocated to non-SMR services

outside the border areas. The Commission proposes to license these

channels on a channel-by-channel basis.

8. The Commission believes that a key element in any new licensing

scheme for wide-area SMR sytems is that licensees be extended the same

flexibility, to the extent feasible, as cellular and PCS licensees in

terms of the location, design, construction, and modification of their

facilities throughout their service area. Thus, the Commission

tentatively concludes that MTA licensees in the 800 MHz band should be

authorized to construct stations at any available site and on any

available channel within their MTAs (subject to their obligation to

provide co-channel protection to incumbents as discussed infra). It

also proposes to allow MTA licensees to add, subtract, move, and

otherwise modify their base station facilities without any need for

prior Commission consent, provided they notify the Commission of the

coordinates and certify compliance with other applicable FCC technical

requirements.

9. The Commission proposes that if an incumbent fails to construct,

discontinues operations, or otherwise has its license terminated by the

Commission, the spectrum covered by that incumbent's authorization

should automatically revert to the MTA licensee who has obtained the

contingent rights to that spectrum. An additional proposal is that the

MTA license confer the right to negotiate with incumbent systems within

the MTA to purchase or relocate their facilities. In this regard, the

Commission proposes that any request for transfer or assignment of an

incumbent authorization to the MTA licensee be presumptively considered

in the public interest. The Commission seeks comment on these proposals

and other alternatives, including the costs and benefits associated

with each alternative in markets that are heavily occupied by incumbent

licensees.

10. The commission tentatively concludes that incumbent SMR systems

should not be required to relocate new frequencies, but that decisions

regarding relocation should instead be left to the parties involved and

the marketplace. Thus, it asks commenters to address: (a) whether

relying on voluntary negotiations between MTA licensees and incumbents

will continue to provide sufficient inducement for incumbents to

relocate; (b) whether the Commission should intervene if incumbents

refuse ``reasonable'' inducements to relocate; and, (c) what

constitutes a ``reasonable'' inducement and the specific form of

intervention, if any, that should be taken by the Commission in those

instances when the incumbent has refused such inducements. The

Commission also seeks further comment on mandatory relocation as an

alternative to voluntary arrangements between MTA licensees and

incumbents similar to the Commission's provisions for relocation of

microwave licensees from the 2 GHz PCS band. In addition, the

Commission solicits comment on possible mechanisms for ensuring that

all relocation costs to incumbents would be guaranteed by the MTA

licensee, descriptions of specific costs, both direct and indirect,

that would be associated with relocation (including whether they should

be fully reimbursable by the MTA licensee), and whether MTA licensees

should be required to offer some form of premium over cost (e.g.,

additional channels or improved facilities) if they seek to invoke a

mandatory relocation option.

11. Also, the Commission tentatively concludes that incumbent

systems should not be allowed to expand beyond their existing service

areas on MTA-licensed channels without the consent of the MTA licensee.

The Commission also proposes to allow incumbent licenses to freely

modify their facilities provided such modifications do not expand their

service areas. The Further Notice requests comment regarding the

advantages and disadvantages of these proposals and specific examples

of circumstances under which incumbents should be permitted to modify

their systems.

12. The Commission seeks comment on whether a fixed-radius

protected service area (e.g., 30 kilometers which approximates the 40

dBu signal strength contour of an SMR station operating with maximum

facilities) should be established for incumbent SMR systems so that

such systems may construct new base stations within the existing

station's 40 dBu signal strength contour. The Commission asks

commenters to include a technical analysis of this proposal and any

alternative proposals that permit greater flexibility for locally

licensed SMR systems.

13. The Commission has previously concluded that the co-channel

interference protection obligations of SMR MTA licensees with respect

to other MTA licensees would be similar to those imposed in the

cellular and PCS services where licensees are required to comply with

interference protection criteria between Commission-defined service

areas only at service area borders. Thus, the Commission tentatively

concludes that wide-area SMR licensees in the 800 MHz band should not

be allowed to exceed a signal level of 22 dBuV/m at their service area

boundaries (unless they negotiate a different signal strength limit

with all potentially affected adjacent licensees).

14. In addition, the Commission proposed to apply out-of-band

emission rules only to the ``outer'' channels included in a MTA license

and to spectrum adjacent to interior channels used by incumbents. The

proposed 800 MHz SMR emission mask rule is that for any frequency

outside an MTA licensee's frequency block, the power of any emission

shall be attenuated below the transmitter power (P) by at least 43 plus

10 log 10 (P) decibels or 80 decibels, whichever is the lesser

attenuation. The Further Notice seeks comment on this proposal

including a request for technical analysis of the proposal and

discussion of any alternatives.

15. The Commission previously established a uniform 12-month period

for constructing a standard base station in all CMRS services licensed

on a channel-by-channel basis. The Further Notice proposed to no longer

grant extended construction periods on non-MTA channels under

Sec. 90.629 of the Commission's rules. The Commission seeks comment on

whether strict enforcement of this construction period will be an

adequate protection against spectrum warehousing on frequencies

occupied by local SMR systems.

16. The Commission tentatively concludes that MTA licensees should

have five years to construct their systems. Because some existing wide-

area SMR licensees have already been granted extended implementation

periods of up to five years, the Commission requests comment on how

existing licensees with extended implementation periods should be

treated. It also asks commenters to address what is a reasonable

timeframe for completing such systems given the technologies presently

available in the SMR market.

17. The Commission proposes that MTA-based 800 MHz SMR licensees be

required to provide coverage to one-third of the MTA population within

three years of initial license grant and to two-thirds of the

population by the end of their five-year construction period. The

Commission further proposed that an MTA licensee must satisfy these

requirements regardless of the extent of the presence of incumbents

within its MTA block. The Commission also seeks comment on whether a

specific definition of what constitutes coverage should be adopted for

this service, e.g., should single channel coverage be sufficient or

should a mult-channel coverage requirement be imposed.

18. The Commission also tentatively concludes that an MTA

licensee's failure to meet the coverage requirements imposed either at

the third or fifth years of its construction period should result in

forfeiture of the license. This penalty for failure to comply with

coverage requirements is consistent with the penalties provided in the

Commission's broadband PCS rules and would allow the spectrum to be

made available to other qualified applicants.

19. The Commission tentatively concludes that the eligibility rules

for the General Category channels and Industrial/Land Transportation

and Business Category Channels (collectively, ``Pool Channels'') should

be revised to prohibit SMR and non-SMR applicants from applying for the

same channels in the future. The Commission seeks comment, however, on

how the spectrum should be allocated to address the relative demand for

SMR and non-SMR services. One alternative would be to eliminate SMR

eligibility for all future licensing on General Category and Pool

Channels. Another alternative would be to prohibit future inter-

category sharing by SMR applicants on Pool Channels, but to designate a

portion of the General Category for SMR-only licensing while the

remaining channels would be available only to non-SMR licensees. A

third alternative would be to designate the entire General Category for

future licensing exclusively to SMR applicants. In light of the

proposed restriction on future SMR use of Pool Channels, and possibly,

General Category channels that are designated for non-SMR use, the

Commission also tentatively concludes that other Part 90 services

should be restricted from future eligibility for licenses on SMR

Category channels. The Further Notice seeks comment on this proposal,

including whether incumbent SMRs on the General Category or Pool

Channels should be allowed to apply for new authorizations on these

channels.

20. The Commission proposes that both existing licensees and new

applicants should be eligible for MTA licenses as well as for local

licenses in the 800 MHz SMR band. It requests comment on this proposal,

including whether there is any need to restrict eligibility for MTA

licenses to incumbent licensees (or to restrict eligibility based on

other criteria) if competitive bidding procedures are used.

21. For 800 MHz SMR MTA licenses, the Commission proposes to use

application procedures similar to those used for licensing of PCS based

on the common use of Commission-defined geographic areas and spectrum

blocks to define the scope of licenses in both services. The Commission

seeks comment on this view, and on any alternative procedural approach

that commenters may consider appropriate. It also proposes (1) to treat

all MTA applicants as initial applicants for public notice, application

processing, and competitive bidding purposes, (2) to require applicants

for MTA-based SMR licenses to file an initial ``short-form''

application to qualify for competitive bidding, after which the

successful bidder files a ``long form'' application, and (3) to adopt

rules analogous to its PCS rules with respect to application content,

amendment and modification of applications, return of defective

applications, waiver procedures, and petitions to deny. In addition,

the Commission proposes to allow a limited opportunity for MTA

applicants to cure minor defects in their short-form applications (but

not to allow major amendments after the expiration of the short-form

filing window) and to adopt rules regarding major and minor

modification of MTA licenses and petition to deny procedures (including

``greenmail'' restrictions limiting payments that a petitioner may

receive in exchange for agreeing to withdraw a petition) that are

consistent with its PCS rules.

22. The Commission also seeks comment on licensing procedures for

local SMR channels. If local licensing is based on defined service

areas, the Commission proposes to use application procedures similar to

those used for the licensing of MTA blocks. If, on the other hand,

site-specific licensing is adopted for the locally licensed SMR

channels, the Commission proposes to use application procedures similar

to those recently adopted for non-cellular Part 22 licensees. To the

extent that 800 MHz SMR channels continue to be licensed on a site-

specific basis, the Commission proposes to classify the following as

``initial'' applications for new authorizations: all applications for

new frequencies or for stations more than 2 kilometers from an existing

facility using the same channel.

23. In addition, the Commission recently indicated that for CMRS

providers licensed on a site-specific basis, major modifications

include a change in frequency, an increase in the effective radiated

power or antenna height above average terrain in any azimuth, or a

change in location. The Commission seeks comment on the applicability

of this definition to locally licensed SMR systems and whether there

are other types of modifications that should be deemed major in this

context. The Commission proposes that major modification applications

would be subject to filing window and cutoff procedures and processed

on a first-come, first-served basis, except that (1) modification

applications that are mutually exclusive with initial or modification

applications filed on the same day would be classified as members of a

``same day filing group,'' and (2) modification applications filed

within the 30-day public notice period of a competing initial

application would be considered part of the 30-day filing group. In

both cases, the mutually exclusive group of applications would be

designated for comparative hearing (unless the parties negotiate a

legal settlement) because the Budget Act does not permit the use of

competitive bidding procedures to determine whether a modification

application should be granted. The Further Notice seeks comment on

whether our proposed definitions and procedures for dealing with

modification applications are appropriate for licensing of local SMR

channels. It also proposes adoption of petition to deny procedures for

local SMR licensing similar to those proposed for MTA-based licensing.

The Commission seeks comment, however, on whether petitions to deny

locally licensed SMR applications should be filed within the initial

30-day public notice period following acceptance of such applications,

or only after an auction winner has been determined, as is proposed in

the case of MTA applications. In either case, the Commission intends to

review only petitions filed against the auction winner.

24. The Commission proposes to classify all MTA licensees

presumptively as CMRS providers because they are likely to provide

interconnected service as part of their service offering. It further

proposes that such presumption may be overcome by demonstrating that

their service does not fall within the CMRS definition. In addition,

the Further Notice proposes not to apply this presumption prior to

August 10, 1996 in the case of any MTA licensee who was previously

licensed in the SMR service as of August 10, 1993, and is therefore not

subject to CMRS regulation for three years from the Budget Act's

enactment date. It also seeks comment on whether the presumption of

CMRS status should apply to licensees authorized for the 80 locally

licensed channels.

25. The Commission believes that multiple bidding methodologies may

be required for licensing of 800 MHz SMR service because the two

proposed categories of licenses (MTA-based and local) will vary

significantly from one another in terms of expected value and

interdependence. In addition, it believes that competitive bidding in

the 800 MHz SMR service presents a number of variables that have not

been presented in other services for which auction rules have been

developed. In particular, the proposed licensing of local SMR channels

on a site-specific basis requires examination of how competitive

bidding would work in a context where mutually exclusive applicants

have applied for overlapping rather than identical authorizations.

26. The Commission tentatively concludes that simultaneous multiple

round bidding is most likely to award MTA licenses to bidders who value

them most highly. the Further Notice asks commenters whether any other

competitive bidding designs might be more appropriate for the MTA-based

licensing of 800 MHz SMR spectrum. Assuming simultaneous multiple round

auctions are used, the Commission also seeks comment on which blocks

should be auctioned together, the intervals between rounds in each

auction, and the sequencing of each auction. Its tentative view is that

all MTA licenses should be auctioned simultaneously because of the

relatively high value and significant interdependence of the licenses.

The Further Notice seeks comment on its view and on possible

alternatives for grouping of licenses.

27. The Commission tentatively concludes that a simpler and less

costly auction method, such as single round sealed bid auctions, should

be used for licensing the 80 local SMR channels. The Further Notice

also asks commenters to suggest alternative bidding designs. For

example, if these channels are licensed on a site-specific basis, one

alternative would be to allow mutually exclusive applications to use

negotiated settlements or coordination to minimize the number of

overlapping applications that would require resolution by competitive

bidding. Another alternative would be to divide the local 80 SMR

channels into defined geographic areas (e.g., BTAs) and small blocks of

channels (e.g., five or ten channels) and conduct a series of separate

auctions for mutually exclusive applications within each area/block

combination. The Commission seeks comment on the practicality of these

alternatives, whether these auctions for the local licenses should be

conducted separately or simultaneously, and how such licenses should be

ordered for auction purposes.

28. The Commission also seeks comment on bidding procedures to be

used in 800 MHz SMR auctions, including bid increments, duration of

bidding rounds, stopping rules, and activity rules. Assuming that

simultaneous multiple round auctions are used for MTA-based SMR

licenses, the Commission generally proposed to use the same or similar

bidding procedures to those used in simultaneous multiple round bidding

for MTA-based PCS licenses. In the case of locally licensed 800 MHz SMR

channels, the Further Notice seeks comment on bidding procedures that

would be appropriate depending on whether single round sealed bid

auctions or an alternative auction methodology is used. It generally

proposed to follow the procedural, payment, and penalty rules

established in Subpart Q of Part 1 of the Commission's Rules, but seeks

comment on whether any service-specific modifications of these rules

are needed based on the particular characteristics of the 800 MHz SMR

service.

29. As in the case of other auctionable services, the Commission

proposes to require SMR auction participants to tender in advance to

the Commission a substantial upfront payment as a condition of bidding.

It seeks comment on whether the standard upfront payment formula of

$0.02 per pop per MHz for the largest combination of MHz-pops a bidder

anticipates bidding on in any single round of bidding is appropriate

for 800 MHz SMR services. The Commission also proposes to require that

winning bidders for 800 MHz SMR licenses supplement their upfront

payments with a down payment sufficient to bring their total deposits

up to 20 percent of their winning bid(s).

30. The Commission further proposes to adopt bid withdrawal,

default, and disqualification rules for 800 MHz SMR licensing based on

its general competitive bidding rules and seeks comment on these

proposals. Under these procedures, any bidder who withdraws a high bid

during an auction before the Commission declares bidding closed, or

defaults by failing to remit the required down payment within the

prescribed time, would be required to reimburse to the Commission the

difference between its high bid and the winning bid amount the next

time the license is offered by the Commission, if the subsequent

winning bid is lower. A defaulting auction winner would be assessed an

additional penalty of three percent of the subsequent winning bid or

three percent of the amount of the defaulting bid, whichever is less.

In the event that an auction winner defaults or is otherwise

disqualified, we propose to re-auction the license either to existing

or new applicants. The Commission would retain discretion, however, to

offer the license to the next highest bidder at its final bid level if

the default occurs within five business days of the close of bidding.

31. The Further Notice also proposes to adopt the transfer

disclosure requirements contained in Section 1.211(a) of the

Commission's rules for all 800 MHz SMR licenses obtained by competitive

bidding and specific rules governing unjust enrichment by designated

entities. Generally, applicants transferring their licenses within

three years after the initial license grant will be required to file,

together with their transfer application, the associated contracts for

sale, option agreements, management agreements, and all other documents

disclosing the total consideration received in return for the transfer

of its license.

32. The Commission also proposes to apply its previously adopted

special rules prohibiting collusive conduct in the context of

competitive bidding to the 800 MHz SMR service and seeks comment on

this proposal.

33. The Further Notice proposes specific measures and eligibility

criteria for designated entities, i.e., businesses owned by minorities

and/or women, small businesses, and rural telephone companies. The

Commission seeks comment on these proposals, and specifically on

identifying special provisions that will create meaningful incentives

and opportunities for such entities that are tailored to the unique

characteristics of the 800 MHz SMR service.

34. The Commission proposes to utilize bidding credits and a tax

certificate program to encourage participation by businesses owned by

women and minorities in auctions for the 800 MHz SMR service. It seeks

comment on whether the likely value of MTA-based SMR licenses would

support a 40 percent bidding credit, but proposes a bidding credit of

25 percent for the ``lower 80'' channel licenses given their expected

lower value. To prevent unjust enrichment by women and minorities

trafficking in licenses acquired through the use of bidding credits,

the Further Notice proposes imposition of a forfeiture requirement on

transfers of such licenses to entities that are not owned by women or

minorities.

35. The Commission also proposes to establish a tax certificate

program under which tax certificates would be issued to: (a) non-

controlling initial investors in minority and women-owned 800 MHz SMR

applicants and licensees, upon the sale of their non-controlling

interests; and, (b) 800 MHz SMR licensees who assign or transfer

control of their licenses to minority and women-owned entities. It also

proposes to impose a one-year holding requirement on the transfer or

assignment of 800 MHz SMR licenses obtained through the benefit of tax

certificates.

36. In terms of eligibility criteria, the Commission proposes that

in order to be deemed a business owned by minorities and/or women,

minorities or women must have at least 50.1 percent equity ownership

and a 50.1 controlling interest in the designated entity. For limited

partnerships, the general partner must be a minority and/or a woman (or

an entity 100 percent owned and controlled by minorities and/or women)

that owns at least 50.1 percent of the partnership equity. In the PCS

context, the Commission established an alternative definition for

minority- and female-owned businesses whereby women and/or minority

principals control the applicant and own at least 25 percent of the

equity and 50.1 percent of the voting stock (in the case of

corporations). The Further Notice seeks comment on which of these

definitions is most appropriate for purposes of determining designated

entity eligibility in the 800 MHz SMr service, or whether both

definitions should be adopted in the alternative. It also proposes to

apply to the 800 MHz SMR applicants the same affiliation and

attribution rules for calculating equity and stock ownership previously

adopted in the PCS context.

37. The Commission proposes to adopt installment payments for small

businesses bidding for 800 MHz SMR licenses. To ensure that large

businesses do not become the unintended beneficiaries of installment

payment provisions meant for small businesses, the Commission also

proposes to make the unjust enrichment provisions in its general

competitive bidding rules applicable to installment payments by SMR

applicants. The Commission seeks comment on this proposal including

whether additional unjust enrichment provisions are necessary for the

800 MHz SMR service.

38. In terms of eligibility criteria, the Commission presents two

alternatives for a small business definition. One alternative is the

existing SBA net worth/net income size standard where an entity would

qualify as a small business if its net worth is not in excess of $6

million with average net income after Federal income taxes for the two

preceding years not in excess of $2 million. A second alternative is

adoption of a gross revenue standard like that used in the broadband

PCS context. The Further Notice requests commenters to address whether

the SBA definition or a gross revenue standard should be used and the

appropriate gross revenue threshold for the 800 MHz SMR context.

39. The Commission seeks comment on Whether bidding credits or

other special provisions should be provided for rural telephone

companies, but does not propose to adopt such special provisions.

40. In addition to the special provisions proposed above for

designated entities, the Commission solicits comment on the following

alternatives and related issues for the 800 MHz SMR service: (1)

expansion of eligibility for installment payments to designated

entities other than small businesses; (2) reduction in upfront payment

for any class of designated entities; (3) the costs and benefits with

respect to auction administration and designated entity participation

associated with a reduced upfront payment in the 800 SMR service in the

absence of a spectrum set-aside; and (4) whether the ``lower 80''

channels should be designated as an ``entrepreneurs' block.'' The

Commission tentatively concludes that it would not be feasible to

designate an MTA channel block as an entrepreneur's block because the

large number of incumbents already licensed throughout the proposed MTA

band make it virtually impossible to identify a particular block that

would be suitable. On the other hand, an entrepreneurs' block approach

could be more feasible for the ``lower 80'' channels, which we

contemplate will be used primarily, if not exclusively, for operation

of local SMR systems.

41. In addition, if the Commission adopts an entrepreneurs' block

approach, it seeks comment on how eligibility for the block should be

defined. Specifically, commenters are asked to address whether

applicants other than designated entities should be eligible to bid for

entrepreneurs' block licenses, whether the same financial caps should

be applied for determining eligibility for SMR entrepreneurs' block

licenses, how designated entities should be treated within the

entrepreneurs' block in terms of eligibility criteria and special

provisions. The Further Notice also requests comment on whether the

definitions for small businesses and business owned by minorities and/

or women should be different for purposes of determining eligibility

for the entrepreneurs' block, what specific special provisions should

be afforded to designated entities within the entrepreneurs' block,

what type of attribution and affiliation rules should apply, and what

additional measures are needed to protect against unjust enrichment.

Initial Regulatory Flexibility Analysis

As required by Section 603 of the Regulatory Flexibility Act, the

Commission has prepared an Initial Regulatory Flexibility Analysis

(IREA) of the expected impact on small entities of the policies and

rules proposed in this Further Notice of Proposed Rule Making. Written

public comments are requested on the IRFA.

A. Reason for Action

This rule making proceeding was initiated to secure comment on

proposals for establishing a flexible regulatory scheme for the 800 MHz

SMR service that would promote efficient licensing and enhance the

service's competitive potential in the commercial mobile radio

marketplace. The proposals advanced in the Further Notice are also

designed to implement Congress's goal of regulatory symmetry in the

regulation of competing commercial mobile radio services as described

in Sections 3(n) and 332 of the Communications Act, 47 U.S.C. 153(n),

332, as amended by Title VI of the Omnibus Budget Reconciliation Act of

1993 (Budget Act). The Commission also seeks to adopt rules regarding

competitive bidding in the 800 MHz SMR service based on Section 309(j)

of the Communications Act, 47 U.S.C. 309(J), which delegates authority

to the Commission to use auctions to select among mutually exclusive

applications in certain services, including 800 MHz SMR.

B. Objectives

The Commission proposes changes to its rules for the 800 MHz SMR

service that are intended to promote the growth of both traditional

local SMR service and emerging wide-area SMR services, and to enhance

the ability of all SMR providers to compete in the larger commercial

mobile services market. Specifically, the Commission seeks to designate

a block of contiguous spectrum in the 800 MHz SMR band for licensing to

wide-area systems to enable them to use innovative wideband

technologies and compete more effectively against Personal

Communications Services and cellular, which also use contiguous

spectrum. The Commission proposes to license non-contiguous spectrum in

the 800 MHz SMR band on a local basis to provide opportunities for

smaller SMR systems that seek to provide local niche services. It also

seeks to encourage more efficient use of spectrum in congested areas

and to accommodate technologically advanced systems. Finally, the

Further Notice seeks to establish a new licensing mechanism for the 800

MHz SMR service that will significantly streamline the processing of

applications, reducing the administrative burden for both applicants

and the Commission.

C. Legal Basis

The proposed action is authorized under the Budget Act, Pub. L. No.

103-66, title VI, Section 6002, and Sections 2(a), 3(n), 4(i), 302,

303(g), 303(r), 309(i), 309(j), 332(a), 332(c), and 332(d) of the

Communications Act of 1934, 47 U.S.C. 152(a), 153(n), 154(i), 302,

303(g), 303(r), 309(i), 309(j), 332(a), 332(c) and 332(d), as amended.

D. Reporting, Recordkeeping, and Other Compliance Requirements

Under the proposal contained in the Further Notice, SMR licensees

who obtain MTA-based licenses may be required to report information

regarding location of their facilities and coverage of their service

areas. SMR applicants seeking treatment as ``designated entities'' may

also be subject to reporting and recordkeeping requirements to

demonstrate compliance with our competitive bidding rules.

E. Federal Rules Which Overlap, Duplicate or Conflict With These Rules

None.

F. Description, Potential Impact, and Number of Small Entities Involved

The Further Notice potentially affects numerous small entities

already operating 800 MHz SMR systems on frequencies that would be

designated for licensing on a wide-area bases. The Further Notice of

proposed Rule making tentatively concludes that existing licensees on

these frequencies should be allowed to continue operating under their

existing authorizations, but also seeks to encourage voluntary

frequency transfers or other arrangements to allow for efficient

spectrum use. The competitive bidding proposals contained in the

Further Notice also could affect small entities seeking initial

licenses in the 800 MHz SMR service. The Further Notice proposes

special provisions in the Commission's auction rules to benefit

``designated entity'' applicants, including small businesses. After

evaluating comments filed in response to the Further Notice, the

Commission will examine further the impact of all rule changes on small

entities and set forth its findings in the Final Regulatory Flexibility

Analysis.

G. Significant Alternatives Minimizing the Impact on Small Entities

Consistent With the Stated Objectives

This Further Notice solicits comment on a variety of alternatives.

Any additional significant alternatives presented in the comments will

also be considered.

H. IRFA Comments

We request written public comment on the foregoing Initial

Regulatory Flexibility Analysis. Comments must have a separate and

distinct heading designating them as responses to the IRFA and must be

filed by the deadlines specified in the summary above.

List of Subjects in 47 CFR Part 90

Radio.

Amendatory Text

Part 90 of Chapter I of Title 47 of the Code of Federal Regulations

is proposed to be amended as follows:

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

1. The authority citation for Part 90 continues to read as follows:

Authority: Sections 4, 303, and 332, 48 Stat. 1066, 1082, as

amended; 47 U.S.C. Secs. 154, 303, and 332, unless otherwise noted.

2. Section 90.7 is amended by adding the following definitions in

alphabetical order to read as follows:

Sec. 90.7 Definitions.

* * * * *

Major Trading Areas (MTAs). A total of 51 licensing regions based

on the Rand McNally 1992 Commercial Atlas & Marketing Guide, 123rd

Edition, at pages 38-39, with the exceptions and additions set forth

below. The Guide is available for public inspection at the Office of

Engineering and Technology's Technical Information Center, Room 7317,

2025 M St. NW., Washington, DC.

(1) Alaska is separate from the Seattle MTA and is licensed as a

single MTA-like area separately.

(2) Guam and Northern Mariana Islands are licensed as a single MTA-

like area.

(3) Puerto Rico and the U.S. Virgin Islands are licensed as a

single MTA-like area.

(4) American Samoa is licensed as a single MTA-like area.

* * * * *

MTA-based or MTA license. A license authorizing the right to use a

specified block of SMR spectrum within one of the 51 Major Trading

Areas.

* * * * *

3. Section 90.609 is amended by adding paragraph (e) to read as

follows:

Sec. 90.609 Special limitations on amendment of applications for

assignment or transfer of authorizations for radio systems above 800

MHz.

* * * * *

(e) Assignments and transfers of SMR Category stations in the 816-

821/861-866 band licensed on or before August 9, 1994, must follow the

procedures detailed in Sec. 90.667.

4. Section 90.617 is amended by revising the introductory text of

paragraphs (b), (c), (d), and Table 4A in paragraph (d) to read as

follows:

Sec. 90.617 Frequencies in the 809.750-824/854.750-869 MHz, and 896-

901/935-940 MHz bands available for trunked or conventional system use

in non-border areas.

* * * * *

(b) The channels listed in Table 2A are available to eligible

applicants in the Industrial/Land Transportation Category (consisting

of the Power, Petroleum, Forest Products, Film and Video Production,

Relay Press, Special Industrial, Manufacturers, Telephone Maintenance,

Motor Carrier, Railroad, Taxicab and Automobile Emergency Radio

Services). These frequencies are available in areas farther than 110 km

(68.4 miles) from the U.S./Mexico border and farther than 140 km (87.0

miles) from the U.S./Canada border. Specialized Mobile Radio Systems

(SMRS) will not be authorized on these frequencies.

* * * * *

(c) The channels listed in Table 3A are available to eligible

applicants in the Business Radio Category. This category does not

include Specialized Mobile Radio Systems as defined in Sec. 90.603(c).

These frequencies are available in areas farther than 110 km (68.4

miles) from the U.S./Mexico border and farther than 140 km (87.0 miles)

from the U.S./Canada border. Specialized Mobile Radio Systems will not

be authorized on these frequencies. These channels are available for

inter-category sharing as indicated in Sec. 90.621(g).

* * * * *

(d) The channels listed in Tables 4A and 4B are available only to

eligibles in the SMR category which consists of Specialized Mobile

Radio (SMR) stations and eligible end users. The frequencies listed in

Table 4A are available to SMR eligibles desiring to be authorized on

MTA service areas in accordance with Section 90.661. SMR licensees

licensed on Channels 400-600 on or before August 9, 1994 may continue

to utilize these frequencies within their existing service areas. This

paragraph deals with the assignment of frequencies only in areas

farther than 110 km (68.4 miles) from the U.S./Mexico border and

farther than 140 km (87 miles) from the U.S./Canada border. See

Sec. 90.619 for the assignment of SMR frequencies in these border

areas. For stations located within 113 km (70 miles) of Chicago,

channels 401-600 will be assigned in groups as outlined in Table 4C.

Table 4A.--SMR Category 806-821/851-866 MHz Band Channels

[MTA-Based SMR Systems

------------------------------------------------------------------------

Group Spectrum block

------------------------------------------------------------------------

A......... 816.0000/861.0000 to 817.2500/862.2500 (Channel Nos. 401-

450)

B......... 817.2500/862.2500 to 818.5000/863.5000 (Channel Nos. 451-

500)

C......... 818.5000/863.5000 to 819.7500/864.7500 (Channel Nos. 501-

550)

D......... 819.7500/864.7500 to 821.0000/866.0000 (Channel Nos. 551-

600)

------------------------------------------------------------------------

Local Channels\1\

------------------------------------------------------------------------

Group No. Channel Nos.

------------------------------------------------------------------------

201............................................ 201-241-281-321-361

202............................................ 202-242-282-322-362

203............................................ 203-243-283-323-363

204............................................ 204-244-284-324-364

205............................................ 205-245-285-325-365

206............................................ 206-246-286-326-366

207............................................ 207-247-287-327-367

208............................................ 208-248-288-328-368

221............................................ 221-261-301-341-381

222............................................ 222-262-302-342-382

223............................................ 223-263-303-343-383

224............................................ 224-264-304-344-384

225............................................ 225-265-305-345-385

226............................................ 226-266-306-346-386

227............................................ 227-267-307-347-387

228............................................ 228-268-308-348-388

------------------------------------------------------------------------

\1\These frequencies are available to SMR eligibles on a local basis.

* * * * *

5. Section 90.619 is amended by revising the introductory text of

paragraphs (a)(3) and (a)(5), Table 4A in paragraph (a)(5), (b)(8)

Table 12, (b)(9) Table 16, (b)(10) Table 20, and (b)(11) Table 24 to

read as follows:

Sec. 90.619 Frequencies available for use in the U.S./Mexico and U.S./

Canada border areas.

(a) * * *

(3) Tables 2A and 2B list the channels that are available for

assignment to eligible applicants in the Industrial/Land Transportation

Category (consisting of the Power, Petroleum, Forest Products, Video

Production, Relay Press, Special Industrial, Manufacturers, Telephone

Maintenance, Motor Carrier, Railroad, Taxicab and Automobile Emergency

Radio Services). Specialized Mobile Radio Systems (SMRS) will not be

authorized in this category.

* * * * *

(5) Tables 4A and 4B list the channels that are available for

assignment for the SMRS Category (consisting of Specialized Mobile

Radio Systems (SMRS) as defined in Sec. 90.603(c)). These channels are

not available for inter-category sharing.

Table 4A.--United States-Mexico Border Area, SMRS Category 806-821/851-

866 MHz Band (95 Channels)

------------------------------------------------------------------------

Group Offset channel No.

------------------------------------------------------------------------

MTA-Based SMR Category (30 Channels)

A........................................... 429-431-433-435-437-439

B........................................... 469-471-473-475-477-479

C........................................... 509-511-513-515-517-519-

549

D........................................... 551-553-555-557-559-589-

591-593-595-597-599

SMR Category--Local Channels (65 Channels)

228......................................... 228-268-308-348-388

229......................................... 229-269-309-349-389

230......................................... 230-270-310-350-390

231......................................... 231-271-311-351-391

232......................................... 232-272-312-352-392

233......................................... 233-273-313-353-393

234......................................... 234-274-314-354-394

235......................................... 235-275-315-355-395

236......................................... 236-276-316-356-396

237......................................... 237-277-317-357-397

238......................................... 238-278-318-358-398

239......................................... 239-279-319-359-399

240......................................... 240-280-320-360-400

------------------------------------------------------------------------

* * * * *

(b) * * *

Table 12.--SMRS Category--95 Channels

[Regions 1, 4, 5, 6]

------------------------------------------------------------------------

Group Channel No.

------------------------------------------------------------------------

MTA-Based SMR Category (90 Channels)

A................................ None.

B................................ 463 through 480, 493 through 500.

C................................ 501 through 510, 523 through 540.

D................................ 553 through 570, 583 through 600.

SMR Category--Local Channels (5 Channels)

30............................... 30-60-90-120-150

------------------------------------------------------------------------

* * * * *

(9) * * *

Table 16.--SMRS Category--60 Channels

[Region 2]

------------------------------------------------------------------------

Group Channel No.

------------------------------------------------------------------------

MTA-Based SMR Category (55 Channels)

A................................ None.

B................................ None.

C................................ 518 through 528, 536 through 546.

D................................ 554 through 564, 572 through 582, 590

through 600.

SMR Category--Local Channels (5 Channels)

18............................... 18-36-54-72-90

------------------------------------------------------------------------

(10) * * *

Table 20.--SMRS Category--135 Channels

[Region 3]

------------------------------------------------------------------------

Group Channel No.

------------------------------------------------------------------------

MTA-Based SMR Category (120 Channels)

A................................ 417 through 440.

B................................ 457 through 480, 497 through 500.

C................................ 501 through 520, 537 through 550.

D................................ 551 through 560, 577 through 600.

SMR Category--Local Channels (15 Channels)

38............................... 38-78-118-158-198

39............................... 39-79-119-159-199

40............................... 40-80-120-160-200

------------------------------------------------------------------------

(11) * * *

Table 24.--(Regions 7, 8) SMRS Category--190 Channels

------------------------------------------------------------------------

Group Channel No.

------------------------------------------------------------------------

MTA-Based SMR Category (80 Channels)

A................................ 425 through 440.

B................................ 465 through 480.

C................................ 505 through 520, 545 through 550.

D................................ 551 through 560, 585 through 600.

SMR Category--Local Channels (110 Channels)

35............................... 35-75-115-155-195

36............................... 36-76-116-156-196

37............................... 37-77-117-157-197

38............................... 38-78-118-158-198

39............................... 39-79-119-159-199

40............................... 40-80-120-160-200

225.............................. 225-265-305-345-385

226.............................. 226-266-306-346-386

227.............................. 227-267-307-347-387

228.............................. 228-268-308-348-388

229.............................. 229-269-309-349-389

230.............................. 230-270-310-350-390

231.............................. 231-271-311-351-391

232.............................. 232-272-312-352-392

233.............................. 233-273-313-353-393

234.............................. 234-274-314-354-394

235.............................. 235-275-315-355-395

236.............................. 236-276-316-356-396

237.............................. 237-277-317-357-397

238.............................. 238-278-318-358-398

239.............................. 239-279-319-359-399

240.............................. 240-280-320-360-400

------------------------------------------------------------------------

* * * * *

6. Section 90.621 is amended by revising paragraphs (e)(2) and

(e)(4) to read as follows:

Sec. 90.621 Selection and assignment of frequencies.

* * * * *

(e) * * *

(2) Channels in the Industrial/Land Transportation and Business

categories will not be available to SMR systems for inter-category

sharing.

* * * * *

(4) Channels in the SMRS category will not be available to

Industrial/Land Transportation and Business category systems for inter-

category sharing.

* * * * *

7. Section 90.629 is amended by adding a new paragraph (e) to read

as follows:

Sec. 90.629 Extended implementation period.

* * * * *

(e) SMR Systems licensed after August 9, 1994 will not be eligible

for extended implementation periods under this section.

8. Subpart S is amended by adding a new heading following

Sec. 90.659 to read as follows:

Policies Governing the Licensing and Use of MTA-Based SMR Systems in

the 816-821/861-866 Band

9. A new Sec. 90.661 is added to subpart S to read as follows:

Sec. 90.661 MTA-based SMR service areas.

MTA licenses for SMR spectrum blocks in the 816-821/861-866 band

listed in Table 4A of Sec. 90.617(d) are available in 51 Major Trading

Areas (MTAs) as defined in Sec. 90.7.

10. A new Sec. 90.663 is added to subpart S to read as follows:

Sec. 90.663 MTA-based SMR system operations.

(a) MTA-based licensees authorized in the 816-821/861-866 MHz band

pursuant to section 90.661 may construct and operate base stations

using any frequency identified in their spectrum block anywhere within

their authorized MTA, provided that:

(1) The MTA licensee affords protection, in accordance with

Sec. 90.621(b), to all previously authorized co-channel stations that

are not associated with another MTA license.

(2) The MTA licensee complies with any rules and international

agreements that restrict use of frequencies identified in their

spectrum block, including the provisions of section 90.619 relating to

U.S./Canadian and U.S./Mexican border areas.

(3) The MTA licensee limits its field strength at any location on

the border of the MTA service area in accordance with Sec. 90.771.

(b) In the event that the authorization for a previously authorized

co-channel station within the MTA licensee's authorized spectrum block

is terminated or revoked, the MTA licensee's co-channel obligations to

such station will cease upon deletion of the facility from the

Commission's licensing record. The MTA licensee then will be able to

construct and operate base stations using such frequency.

11. A new section 90.665 is added to subpart S to read as follows:

Sec. 90.665 Authorization, construction and implementation of MTA

licenses.

(a) MTA licenses in the 816-821/861-866 MHz band will be issued for

a term not to exceed ten years.

(b) MTA licensees in the 816-821/861-866 band will be permitted

five years to construct their stations. This five-year period will

commence with the issuance of the MTA-wide authorization and will apply

to all of the licensee's stations within the MTA spectrum block,

including any stations that may have been subject to an earlier

construction deadline arising from a pre-existing authorization.

(c) MTA licensees in the 816-821/861-866 MHz band must, within

three years, construct and place into operation a sufficient number of

base stations to provide coverage to at least one-third of the

population of the MTA. Further, each MTA licensee must provide coverage

to at least two-thirds of the population of the MTA within five years.

12. A new section 90.667 is added to subpart S to read as follows:

Sec. 90.667 Special provisions regarding assignments and transfers of

authorizations for incumbent SMR licensees in the 816-821/861-866 MHz

band.

An SMR licensee initially authorized on any of the channels listed

in Table 4A of Section 90.617 on or before August 9, 1994 may transfer

or assign its channel(s) to another entity subject to the provisions of

Sections 90.153 and 90.609(b). If the proposed transferee or assignee

is the MTA licensee for the spectrum block to which the channel is

allocated, such transfer or assignment presumptively will be deemed to

be in the public interest.

13. A new Section 90.771 is added to Subpart S to read as follows:

Sec. 90.771 Field strength limits.

The predicted or measured field strength at any location on the

border of the MTA service area for MTA licensees shall not exceed 22

dBuV/m unless all bordering MTA licensees agree to a higher field

strength. In the event that this standard conflicts with the MTA

licensee's obligation to provide co-channel protection to incumbent

licensees under Section 90.621(b), the requirements of Section

90.621(b) shall prevail.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 94-28760 Filed 11-21-94; 8:45 am]

BILLING CODE 6712-01-M