The Wireless Communications Service (``WCS'')

SUMMARY: On February 19, 1997, the Federal Communications Commission

(``Commission'') adopted a Report and Order establishing rules and

policies for a new Wireless Communications Service (``WCS'') in the

2305-2320 and 2345-2360 MHz bands. This action is being taken pursuant

to the Omnibus Consolidated Appropriations Act, 1997. The effect of

this action is to make thirty megahertz of spectrum available for the

provision of fixed, mobile, and radiolocation services, and satellite

Digital Audio Radio Services.

EFFECTIVE DATE: March 3, 1997.

FOR FURTHER INFORMATION CONTACT: Matthew Moses or Josh Roland, Wireless

Telecommunications Bureau, (202) 418-0660.

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

and Order in GN Docket No. 96-228. The complete Report and Order is

available for inspection and copying during normal business hours in

the FCC reference Center (Room 239), 1919 M Street, N.W., Washington,

D.C., and also may be purchased from the Commission's copy contractor,

International Transcription Service, (202) 857-3800, 2100 M Street,

N.W., Washington, D.C. 20037. The complete Report and Order is also

available on the Commission's Internet home page (http://www.fcc.gov).

Summary of the Report and Order

1. In this Report and Order, the Commission fulfills the

Congressional mandate expressed in section 3001 of the Omnibus

Consolidated Appropriations Act for 1997, Public Law 104-208, 110 Stat.

3009 (1996) (``Appropriations Act''), to reallocate and assign the use

of the frequencies at 2305-2320 and 2345-2360 MHz. The Commission

considers the proposals set forth in the Notice of Proposed Rule Making

concerning amendment of the Commission's rules to establish the WCS.

See Amendment of the Commission's Rules To Establish Part 27, the

Wireless Communications Service, GN Docket No. 96-228, Notice of

Proposed Rule Making, FCC 96-441, 61 FR 59048 (November 20, 1996)

(``NPRM'').

A. Licensing Plan for WCS

i. Permitted Services

2. In the NPRM, the Commission concluded that the Appropriations

Act's reallocation directive means that the Commission may allocate the

2305-2320 and 2345-2360 MHz bands to any or all radio services

contained in the International Table of Frequency Allocations

applicable to the United States. The Commission proposed to allocate

this spectrum to the fixed, mobile, and radiolocation services on a

primary basis, which are all the services authorized on a primary basis

for these entire bands in the International Table. The Commission also

proposed to retain the current primary audio broadcasting-satellite

allocation that exists in 45 of the 50 MHz of these bands (2310-2320

and 2345-2360 MHz). The Commission did not propose to change the

Amateur Radio Service secondary allocation of the 2300-2310 MHz band,

nor the authorization for the 2310-2360 MHz band to be used on a

secondary basis by aeronautical telemetry operations.

3. The Commission noted that in its Satellite DARS NPRM it had

requested comment on whether it should delay issuing licenses for DARS

in the 2310-2320 MHz portion of the DARS allocated spectrum due to the

number and type of Canadian fixed service facilities in that band. See

Establishment of Rules and Policies for the Digital Audio Radio

Satellite Service in the 2310-2360 MHz Frequency Band, IB Docket No.

95-91, Notice of Proposed Rule Making, 11 FCC Rcd 1, 60 FR 35166 (July

6, 1996) (``Satellite DARS NPRM''). The Commission also noted that in

February 1996, it had informed DARS applicants that previously unknown

additional Canadian operations existed in the 2310-2360 MHz band that

particularly impacted potential use of the 2345-2360 MHz portion of the

band for DARS. Accordingly, the Commission requested comment on the

feasibility of satellite DARS in parts of the 2305-2320 and 2345-2360

MHz bands.

4. The Commission concludes that under the totality of

circumstances presented, the 2310-2320 and 2345-2360 MHz bands will be

allocated on a primary basis for fixed, mobile, radiolocation, and

broadcasting-satellite (sound) services without further designations.

The 2305-2310 MHz band will be allocated on a primary basis for fixed,

mobile except aeronautical mobile, and radiolocation services. WCS

licensees themselves will determine the specific services they will

provide within their assigned spectrum and geographic areas. The

services that can be provided, however, will be subject to specific

technical rules we adopt infra to prevent interference to other

services. The Commission emphasizes that with the current state of

technology there is a substantial risk that these rules will severely

limit, if not preclude, most mobile and mobile radiolocation uses.

Fixed uses will be less severely affected, but still will require

equipment that will meet technical standards higher than those used for

similar purposes on comparable bands, and therefore may be more costly.

5. The Commission believes that in this instance a flexible use

allocation serves the public interest. Permitting a broad range of

services to be provided on this spectrum will permit the development

and deployment of new telecommunications services and products to

consumers. Moreover, WCS licensees will not be constrained to a single

use of this spectrum and, therefore, may offer a mix of services and

technologies to their customers.

6. The Commission recognizes the concerns raised by commenters

about the general application of flexible allocations, and it is our

intent to address those concerns fully in future proceedings. In this

regard, the Commission emphasizes that its decision in this instance to

adopt a broadly defined service for this spectrum should not be

interpreted as a finding on the merits of flexibility as general

allocation policy or prejudging the merits of flexibility in any other

proceeding before us. Rather, the Commission's decision here is based

on the totality of the circumstances and facts particular to this

proceeding, not the least of which is the short time mandated by

Congress to bring this spectrum to auction. Importantly, in this

particular instance the record does not convincingly demonstrate how

this spectrum should be distributed among particular uses in a manner

that would provide maximum benefit to the public. Specific services

advocated by commenters span a wide range of potential uses, including

interactive, high-speed, broadband data services, such as wireless

Internet access; return links for interactive cable and broadcasting

service; mobile data; satellite DARS; fixed terrestrial use; new and

innovative services; radiolocation; educational applications; and

wireless local loop. While individual commenters advocate specific

allocations for one or more of these uses, the Commission has no clear

basis in the current record to prefer some uses

[[Page 9637]]

over others. Thus, limiting the use as some have suggested would risk

precluding potentially beneficial services.

7. The Commission finds that allocating this spectrum for fixed,

mobile, radiolocation, and audio broadcasting-satellite services is

consistent with the international agreements governing this spectrum,

the Appropriations Act, the Communications Act, and Commission

precedent. The Commission notes that the Appropriations Act

specifically directs the Commission to reallocate the WCS frequencies

to ``wireless services that are consistent with international

agreements concerning spectrum allocations.'' See Appropriations Act,

section 3001(a)(1). Nothing in this provision or its legislative

history restricts the Commission's authority to assign or allocate this

spectrum to more than one permissible use. Additionally, the

Commission's allocation to more than one service is consistent with the

Commission's obligations under the Communications Act. Section 303 of

the Communications Act does not restrict the Commission's discretion to

prescribe the nature of the service to be rendered over radio

frequencies or its authority to allocate frequencies to the various

classes of stations or assign spectrum to stations for more than one

permissible use. With respect to allocation decisions, the courts have

accorded ``substantial deference'' to Commission determinations.

8. Commission precedent also supports the permissibility of

allocating spectrum in a manner that allows for a broad range of uses.

The Commission noted in the NPRM that the Commission took this approach

in establishing GWCS in August of 1995, where it concluded that

authorizing a wide variety of services bounded only by international

allocations comported with its statutory authority and served the

public interest by fostering the provision of a mix of services.

Because GWCS licenses have yet to be auctioned, the evidence regarding

the benefits of having allocated that spectrum to all uses permitted by

the Commission's international obligations is inconclusive.

9. The Commission continues to believe that such broad allocations

are permitted under the Communications Act, and the Commission notes

that it also recently permitted CMRS licensees to provide fixed and

mobile services. See Amendment of the Commission's Rules to Permit

Flexible Service Offerings in the Commercial Mobile Radio Services, WT

Docket No. 96-6, First Report and Order, 11 FCC Rcd 8965, 61 FR 43721

(August 26, 1996). The action the Commission takes here is consistent

with this precedent. The Commission notes also that its service

designation decision is not so broad as to allow use of the WCS

frequencies for any purpose whatsoever. For example, the international

allocation for part of this spectrum is for audio broadcast satellite

services, and therefore satellite services will be limited to this type

of satellite services.

10. The Commission disagrees specifically with those commenters who

assert that allocating these frequencies for fixed, mobile,

radiolocation and audio broadcasting-satellite services is an

impermissible allocation by auction or otherwise inconsistent with

Section 309(j). The allocation decision the Commission makes in this

proceeding is based on the Commission's finding that under the

circumstances presented, including the statutory deadline and the lack

of a record that supports a specific allocation, this allocation to

fixed, mobile, radiolocation, and audio broadcasting-satellite services

comports with the public interest and with the Commission's statutory

authority. Thus, the Commission's decision to allocate this spectrum in

this manner is unrelated to its decision to award WCS licenses through

competitive bidding.

11. In addition, the Commission disagrees with those commenters'

arguments that by adopting its proposal the Commission is impermissibly

delegating its authority to allocate spectrum and set technical rules

to other parties. The allocation the Commission makes here is not

entirely open-ended, and auction winners will be subject to strict

technical rules that are necessary to prevent interference to other

services and which also will likely limit the actual services they may

be able to offer. As discussed infra, these technical rules are

necessary to prevent interference. Therefore, the Commission has not

delegated to private parties its responsibility to allocate spectrum

and adopt appropriate technical standards.

12. The Commission also agrees with commenters such as Lucent,

Motorola, Nortel and CTIA who argue that economies of scale in

equipment supply are important and recognize that our decision to adopt

a flexible allocation may make achieving those economies of scale more

difficult. However, the Commission has taken several steps that it

hopes will assist licensees in achieving economies of scale. For

example, the Commission has established relatively large geographic

service areas and spectrum block sizes. The Commission also is adopting

licensing and auction rules designed to facilitate geographic area and

spectrum aggregations that may foster economies of scale and, in

developing their bidding and aggregation strategies, bidders can

consider the benefits of such economies. The Commission believes that

the allocation and service rules adopted herein comply with all legal

requirements and, considering the totality of the circumstances, serve

the public interest.

13. The Commission does not believe that the public interest will

be served by prohibiting use of this spectrum for CMRS. It has been the

Commission's consistent policy to actively seek to increase competition

in telecommunications markets, and its decision here is consistent with

that policy. Indeed, in the Omnibus Budget Reconciliation Act of 1993,

Public Law 103-66, Congress ordered the transfer of a large amount of

government spectrum to the Commission's jurisdiction for

nongovernmental use. CMRS licensees have no reasonable basis to expect

that the Commission would limit the possibility of further entry by

withholding spectrum or by unnecessarily restricting the permissible

uses of newly allocated spectrum. However, the Commission notes that,

given the out-of-band emission limits it adopt for WCS, technology will

likely severely limit, if not preclude, most mobile services on this

spectrum, at least in the near term.

14. Some commenters express concern with difficulties in

controlling interference. The Commission is responding to this concern

by setting specific limits on field strength at the geographic

boundaries between licensees and on emissions outside the assigned

spectrum blocks. While the Commission recognizes that different system

designs have different sensitivities to interference and cause

different types and degrees of interference, the Commission believes

that these limits provide a reasonable degree of predictability as to

the magnitude of interfering signals one can expect from adjacent areas

and spectrum blocks. However, the Commission recognizes that these out-

of-band and out-of-area power limits do not by themselves ensure

interference-free operation. They control primary factors that

determine the amount of interference a licensee can expect from

neighboring areas and blocks, but there are many other factors that

affect interference that they do not control and that are not under the

receiver owner's direct control. For example, the level of interference

caused to a licensee's receivers from transmitters in an adjacent

spectrum block may also

[[Page 9638]]

depend on the number of such transmitters, their location relative to

the receivers, their antenna directivity and polarization, their duty

cycle, and other factors. Since these factors are not regulated by the

Commission, they create uncertainty about the amount of interference a

licensee may receive. Licensees can reduce this uncertainty by

coordinating with their neighbors, and the Commission encourages them

to do so. They also can reduce the risk of interference by properly

designing and engineering their receiving systems and by using

technologies that reduce their receivers' susceptibility to unwanted

signals. Also, bidders can reduce their exposure to interfering signals

from neighboring spectrum blocks or areas by aggregating adjoining

licenses in the auction or through post-auction transactions. But again

the Commission emphasizes that interference-free operation is not

assured by the Commission's limits. Each WCS licensee must ultimately

assume responsibility for protecting its own receiving system from

interference from transmitters in adjoining blocks and areas that meet

the Commission's limits, and applicants should understand this before

they bid for these licenses.

15. Finally, in the NPRM, the Commission proposed to permit

amateurs to continue to use the 2305-2310 MHz band on a secondary

basis. The Commission also proposed to permit continued flight test and

vehicle launch use of the 2310-2320 and 2345-2360 MHz bands on a

secondary basis. The Commission is adopting these proposals. The effect

of this action is that amateurs and aeronautical telemetry operations

will be able to continue to use these bands so long as these operations

do not interfere with WCS service. In addition, the Commission updates

and clarifies the frequency sharing requirements for amateur use of the

2300-2310 MHz and adjacent bands. The Commission also clarifies that

footnotes US276 and US339 permit the use of various frequencies for

telemetering and associated telecommand operations of launch vehicles

``on a co-equal basis by Government and non-Government stations.'' With

respect to Primosphere's request that all flight test operations be

precluded from the WCS bands, the Commission finds no basis for

precluding such operations on a secondary basis. The Commission makes

clear that if secondary flight test operations cause harmful

interference to WCS operations, they must immediately either correct

the problem or cease operations. If such operations prove to be a

problem, however, the Commission may re-evaluate this issue in the

future.

ii. Spectrum for Each License

16. In the NPRM, the Commission requested comment on the

appropriate amount of spectrum to be provided for each WCS license at

2.3 GHz. The Commission specifically requested comment on whether 5,

10, 15 or 30 MHz is the most suitable amount. The Commission noted that

5 MHz bandwidths would be sufficient for paging, radiolocation,

dispatch, or point-to-point backbone operations. The Commission also

observed that larger bandwidths, such as 10 to 15 MHz, would allow more

direct competition with existing fixed and mobile service providers and

may also better support some multi-channel satellite DARS. The

Commission also asked for comment on whether a single 30 MHz license

would offer the most effective approach for providing new two-way fixed

or point-to-multipoint uses, such as interconnection with the Internet

and other digital network services. Finally, the Commission requested

comment on what size spectrum block could best support, in part or

fully, the provision of fixed local loop services.

17. The Commission also sought comment on whether the WCS spectrum

should be assigned on a paired or unpaired basis. Alternatively, the

Commission requested comment on an approach where spectrum bandwidths

or pairing of the spectrum are determined through the competitive

bidding process. The Commission noted that the 30 MHz of spectrum could

be divided into 5 MHz blocks and the amount of spectrum and the

location of the spectrum (i.e., contiguous or paired) for each WCS

licensee could be determined through the auction process. The

Commission further invited commenting parties to suggest additional

alternatives for both the amount of spectrum and the size of service

areas for WCS licensees. The Commission noted that the Appropriations

Act requires that we conclude initial licensing of this spectrum and

the collection of all bidding proceeds no later than September 30,

1997. The Commission stated its belief that licensing the WCS spectrum

for service to large areas, with relatively few licenses to be awarded,

would speed the WCS licensing process and the collection of bidding

proceeds, consistent with the requirements of the Appropriations Act.

Whatever initial licensing approach is chosen for WCS, the Commission

proposed to permit spectrum and service area aggregation through the

auction process, e.g., the Commission would permit parties to bid for

more than one license in each geographic area and for multiple areas.

18. The Commission observes that the commenting parties generally

support either 5 MHz unpaired channel blocks or 10 MHz paired channel

blocks, with the vast majority finding that at least 10 MHz is needed

to provide certain WCS services in an efficient and competitive manner.

The Commission notes, however, that the potential uses of the WCS

spectrum will be greatly affected by the out-of-band emission limits,

discussed in Section III.D.7 infra, needed to protect satellite DARS

reception in the 2320-2345 MHz band. In particular, these limits will

have the greatest impact on the portion of the WCS spectrum immediately

adjacent to the satellite DARS band, namely, the WCS spectrum at 2315-

2320 MHz and 2345-2350 MHz. In order to account for this effect in

light of the overall record of this proceeding, and to minimize its

impact on WCS operations generally, the Commission finds that WCS

should be licensed initially as two 10 MHz channel blocks (with 5 MHz

of this spectrum from the lower band paired with 5 MHz from the upper

band) plus two 5 MHz blocks (those immediately adjacent to the

satellite DARS spectrum). The Commission believes that this

channelization will permit WCS licensees to offer a wide variety of

services. For example, the record suggests that the 10 MHz channel

blocks represent the minimum amount of spectrum needed to support

certain data and wireless local loop services, including wireless

Internet access. In addition, the Commission believes that providing

for 10 MHz of spectrum on a paired basis would allow for the

introduction of both one-way and two-way services and would facilitate

the implementation of a variety of technologies. In the spectrum

adjacent to the satellite DARS band, however, the Commission believes

that WCS mobile operations may be prohibitively expensive and

technologically infeasible for a substantial period of time. Also, the

narrow (i.e., 30 MHz) transmit and receive separation between the 2315-

2320 MHz and 2345-2350 MHz bands would substantially increase the cost

of equipment employing traditional frequency division duplex technology

if pairing of these blocks were required. By making this spectrum

available initially to WCS licensees as two 5 MHz unpaired channel

blocks, the spectrum may have increased utility for satellite DARS and

a variety of WCS fixed operations, especially those employing time

division duplex technology. Also,

[[Page 9639]]

the Commission will not preclude WCS licensees from pairing this

spectrum on their own initiative, whether through submission of winning

bids for each block at auction or through spectrum aggregation in the

aftermarket. Another advantage of this overall initial licensing

approach is that the offering of only four licenses in each service

area will allow the WCS auction to be completed within the timetable

contemplated by the Appropriations Act. In this respect, the Commission

believes that this licensing plan is superior to other options

suggested by the commenters that would involve greater licensing

complexity and probably greater delay. The initial channel blocks the

Commission has selected are shown in the Table below.

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

Channel block Frequency range

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

A................................. 2305-2310 and 2350-2355 MHz.

B................................. 2310-2315 and 2355-2360 MHz.

C................................. 2315-2320 MHz.

D................................. 2345-2350 MHz

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

19. As discussed, infra, the Commission also is allowing for

spectrum aggregation and disaggregation, without restriction, so that

parties, for example, desiring to employ technology that requires

unpaired spectrum or asymmetrically paired spectrum can either

disaggregate the channels initially offered or purchase additional

needed amounts of spectrum in the after-market. In addition, applicants

may bid on all four channel blocks in a service area and, if

successful, render the type of services addressed by those commenters

supporting the licensing of WCS spectrum in a single 30 MHz block.

Thus, the initial offering of WCS spectrum in 5 MHz or 10 MHz blocks

does not preclude the offering of services which might require a

greater amount of spectrum. Further, the disaggregation flexibility

afforded licensees potentially allows provision of WCS services which

require less spectrum than contained in the initial blocks. In sum,

initially licensing the WCS spectrum according to the channel block

plan identified above and allowing for spectrum aggregation and

disaggregation will permit a wide variety of applicants to provide

services and satisfy the requirements of the Appropriations Act. The

Commission also believes that providing for four blocks, along with our

spectrum disaggregation rules, will promote the objectives of Section

309(j)(4)(C) of the Communications Act by providing for distribution of

licenses and services among geographic areas and providing greater

opportunity for a wide variety of applicants, including small

businesses and other designated entities, than would be possible under

a single 30 MHz block plan.

iii. Licensed Service Areas

20. In deciding on the appropriate service areas size for WCS

licenses, the Commission must balance several factors. The Commission

wishes to encourage the rapid deployment of new telecommunications

technologies and services on WCS spectrum; thus, the Commission must

assess the use or uses to which this spectrum is likely to be put and

determine the geographic scope that would best facilitate rapid

deployment thereof. In addition, the Commission believes that because

this spectrum has not heretofore been used to provide commercial

services and no equipment has yet been developed for use in this band,

consumers would benefit if the WCS band plan enables equipment

manufacturers to realize economies of scale that will translate to

lower equipment costs to service providers. The Commission also

recognizes that the Appropriations Act directed it to ``assign the use

of (WCS) frequencies by competitive bidding pursuant to section

309(j).'' Appropriations Act, section 3001(a)(2). Section 309(j) of the

Communications Act includes as objectives for competitive bidding the

avoidance of excessive concentration of licenses and the dissemination

of licenses among a wide variety of applicants. See 47 U.S.C.

309(j)(3)(B). In addition, the Commission is mindful of our statutory

obligation to conduct the auction for WCS licenses to ensure that all

proceeds are deposited by September 30, 1997, and of our experience in

previous auctions, which has shown that simultaneous, multiple round

auctions for a larger number of licenses are more complex and take

longer to complete than similar auctions involving fewer licenses.

Finally, the Commission notes that aggregation of both spectrum and

service areas through the auction process has proven to be an effective

method of allowing bidders to acquire the right amount of spectrum for

their business needs.

21. Balancing the various factors noted above, the Commission

concludes that WCS will be licensed in two ways. First, with respect to

the C and D blocks, WCS will be licensed on the basis of regional areas

similar to those used in our narrowband PCS rules. In WCS, however, the

Commission will define the regions by aggregating EAs in the

continental United States into 6 larger groupings. The Commission will

refer to these service areas as Regional Economic Area Groupings

(REAGs). In addition, consistent with the Commission's approach in

other services, the Commission will create separate REAGs covering the

five U.S. possessions, as follows: Guam and the Northern Mariana

Islands (REAG # 9), Puerto Rico and the U.S. Virgin Islands (REAG

# 10) and American Samoa (REAG # 11), as well as separate

service areas for Alaska (REAG # 7) and Hawaii (REAG # 8). As

discussed more fully infra, the Commission also will create a service

area in the Gulf of Mexico (REAG # 12). Second, the A and B blocks

will be licensed in smaller areas, by aggregating EAs into 46 areas (to

be called Major Economic Areas, or MEAs) in the continental United

States and an additional 6 areas covering Alaska (MEA # 47);

Hawaii (MEA # 48); Guam and the Northern Mariana Islands (MEA

# 49); Puerto Rico and the U.S. Virgin Islands (MEA # 50);

American Samoa (MEA # 51); and the Gulf of Mexico (MEA # 52).

The Commission believes that this licensing scheme satisfies the

various and often conflicting positions raised by the commenters and

will best accommodate our objectives under 309(j) of the Communications

Act.

22. Specifically, the larger WCS license areas that the Commission

will provide for in the C and D blocks will accommodate those

commenters who argue that large areas will (1) encourage the rapid

development and deployment of innovative service; (2) facilitate

interoperability and the setting of standards; (3) allow for economies

of scale that will encourage the development of low cost equipment; and

(4) facilitate provision of satellite DARS services. Many commenters in

this proceeding point out that WCS spectrum can be used effectively to

provide wireless local loop, broadband data services and DARS services.

At least with respect to these services, there may be significant

economic efficiencies that could be realized--to the ultimate benefit

of consumers--if these services were to be provided with nationwide

scope. Licensing the C and D blocks in WCS on a REAG basis may

facilitate aggregation of service areas and speed implementation of

these new services.

23. In addition, a number of commenters point out that ensuring

technical coordination and minimizing interference across geographic

areas is very difficult when the exact nature of the services to be

provided is unknown and the spectrum may be used to provide a variety

of service offerings. The larger service areas in the C and D

[[Page 9640]]

blocks will speed and simplify the process of interference coordination

along geographic boundaries, as well as minimize transaction costs and

disputes arising from interference, and facilitate implementation of

services that would require roaming capabilities and easy

interoperability. In addition, because equipment currently is not

available for use in this band, the larger service areas in the C and D

blocks also should enable manufacturers to achieve greater economies of

scale in production of equipment, thus reducing its per-unit cost and

allowing more rapid deployment of services to the ultimate benefit of

consumers.

24. While the Commission is mindful of the desire of some parties

to have large licenses, the Commission also agrees with commenters that

contend that smaller businesses will have more difficulty competing in

the WCS auction for licenses in the large regions. In this regard, the

Commission believes that the creation of smaller MEAs in the A and B

blocks (along with the large bidding credits provided for small

businesses, see infra), will provide greater opportunities for smaller

businesses to compete in an auction and participate in the provision of

WCS services. The Commission further notes that, consistent with views

of some commenters, these smaller service areas will: (1) Enable a

larger number of entities to participate in the provision of services

and result in increased competition; (2) encourage a more diverse group

of service providers due to the lower costs of participating in the

auction; and (3) result in broader flexibility in service offerings by

WCS licensees. The Commission also believes that these smaller service

areas will encourage efficiencies by making it easy for a bidder to

acquire licenses for only as much area as required for its prospective

service.

25. The Commission notes that some commenters support even smaller

BTAs and MSAs/RSAs to facilitate participation in the WCS service by

small businesses. The Commission finds that service areas based on such

smaller areas might compromise its ability to complete the WCS auction

within the statutorily mandated time frame. In any event, the

Commission notes that in addition to the large bidding credits offered

to small businesses, our provisions for partitioning and disaggregation

(see infra) should work to provide significant opportunities to smaller

businesses to participate in the provision of WCS services.

26. As noted above, two commenters, SOSCO and PetroCom, advocate

licensing the Gulf of Mexico as a separate service area to help meet

the growing communications needs of petroleum and natural gas providers

in the area. In light of those requests, the Commission designates a

separate REAG and MEA covering the Gulf of Mexico. The Commission

determines that land-based license regions abutting the Gulf of Mexico

will extend to the limit of the territorial waters of the United States

in the Gulf, which is the maritime zone that extends approximately

twelve nautical miles from the U.S. baseline. Beyond that line of

demarcation, the Commission will create the Gulf of Mexico REAG and

MEA, which will extend from that line outward to the broadest

geographic limits consistent with international agreements (see maps at

Appendices C and D of the Report and Order). The limits and

coordination of signal strengths at the boundaries of the service areas

meeting in the Gulf region will be the same as those that will apply

for all service areas.

27. Finally, the Commission notes that several commenters argue

that their suggested WCS licensed service area sizes will increase

auction revenues. The Commission wishes to make clear that, consistent

with section 309(j)(7)(A) of the Communications Act, the Commission has

considered the communications needs of potential service providers and

the American public in developing these service areas. The Commission

has not considered anticipated auction revenue.

B. Use of Competitive Bidding

28. The Commission will adopt rules providing for the assignment of

these frequencies through the use of competitive bidding pursuant to

section 309(j). As the Commission noted in the NPRM, the Appropriations

Act directs the Commission to assign licenses to use the 2305-2320 and

2345-2360 MHz bands through competitive bidding pursuant to Section

309(j) of the Communications Act. Section 309(j) provides that auctions

may be used to award licenses among mutually exclusive applicants where

the principal use of such spectrum will involve, or is reasonably

likely to involve, a subscription-based service. See 47 U.S.C.

309(j)(1), (2). The Commission continues to believe that it is

reasonable to conclude that the principal use of WCS spectrum will

involve, or is reasonably likely to involve, the transmission or

reception of communications signals to subscribers for compensation.

While the Commission has decided to permit WCS licensees to provide a

range of services, the uses of this spectrum most mentioned by

commenters appear to involve services that would be provided on a

subscription basis. Fixed (and radiolocation) services that could be

provided include services similar to the Multichannel Multipoint

Distribution Service (``MMDS''), the Location and Monitoring Service

(``LMS''), Digital Termination Systems (``DTS''), Digital Electronic

Messaging Service (``DEMS''), wireless local loop, and certain of the

services provided by Local Multipoint Distribution Service (``LMDS'').

Although it may be technologically infeasible to provide mobile

services as a WCS offering in the near future due to the necessity for

strict technical standards (see infra), services that may ultimately be

provided include those similar to PCS, cellular, Specialized Mobile

Radio (``SMR'') and paging. All of these services currently are

provided to subscribers for compensation and the Commission believes

that it is reasonable to expect that WCS offerings will be provided on

a similar basis. In this regard, even if a WCS licensee chooses to

offer a satellite DARS service on that portion of the spectrum

available for such use, the Commission believes it is likely that such

service also will be offered on a subscription basis.

29. The Commission's decision today also advances the objectives

contained in section 309(j) of the Communications Act. Section

309(j)(3)(A) directs the Commission to seek to promote the development

and rapid deployment of new technologies, products, and services for

the benefit of the public, including those residing in rural areas,

without administrative or judicial delays. In this regard, the

Commission believes that its service and licensing rules, in

conjunction with its allocation plan, will allow for and foster the

development of a range of new services and technologies. These policies

also will advance the objective, expressed in section 309(j)(3)(B), of

promoting economic opportunity and competition and ensuring that new

and innovative technologies are readily accessible to the American

people by avoiding excessive concentration of licenses and by

disseminating licenses among a wide variety of applicants, including

small businesses, rural telcos, and businesses owned by members of

minority groups and women.

30. The Appropriations Act states that in making these frequencies

available for competitive bidding, the Commission shall seek to promote

the most efficient use of the spectrum. See Appropriations Act, section

3001(b)(1). As the Commission stated in the NPRM, the Commission

believes that its competitive bidding rules will ensure

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that spectrum is made available to those who value it most highly and

therefore are most likely to put it to its most economically efficient

use. This outcome will be further assured by the Commission's use of a

simultaneous, multiple round auction that will allow applicants to

aggregate spectrum and service areas into parcels of efficient size and

to realize economies of scale and scope without the need for costly and

time consuming post-auction transactions. In addition, as indicated

above, the Commission has decided to permit the WCS licensee to provide

fixed, mobile, radiolocation or satellite DARS services. The Commission

believes there are significant competitive alternatives for each of

these types of services that will ensure that WCS licensees have

incentives to operate in an efficient and effective manner. The

Commission therefore believes that there will be sufficient market

incentives to promote the most efficient use of the 2305-2320 and 2345-

2360 MHz bands, as required by the Appropriations Act and section

309(j)(3)(D) of the Communications Act.

C. Consideration of Public Safety Needs

31. As the Commission discussed in the NPRM, the Appropriations Act

instructs it to take into account the needs of public safety radio

services in making the WCS spectrum available through competitive

bidding. Recognizing that the Appropriations Act marks the first time

that Congress has specifically directed the Commission to consider the

needs of public safety radio services in connection with licensing a

particular spectrum band, the Commission sought comment generally on

how it can best effectuate Congressional intent with regard to public

safety needs as related to this spectrum. In addition, the Commission

noted that in a post-enactment letter, the Chairman and Ranking Member

of the House Committee on Commerce suggest that the Commission,

consistent with its obligation to promote the public interest, pay

particular attention to how the needs of public safety as well as

commercial applicants may best be met in determining how to design this

auction. The Commission referred to the recommendations made by the

Public Safety Wireless Advisory Committee in its final report, and

asked interested parties how our WCS rules should be fashioned so as to

benefit the public safety community consistent with those

recommendations. Finally, the Commission invited commenters to address

a broad array of options, including making an allocation of some

portion of the WCS spectrum for public safety entities, assigning the

WCS spectrum with an obligation to contribute toward needs identified

by the public safety community, and taking steps to encourage the use

of WCS spectrum for services useful to public safety entities.

32. The Appropriations Act requires that the Commission take into

account the needs of public safety radio services. Therefore, the

Commission must consider the communications needs of the public safety

community in assigning WCS frequencies. The record compiled in this

proceeding and in the Commission's public safety proceeding

demonstrates that spectrum currently allocated to public safety

spectrum is inadequate to meet the public safety community's voice and

data needs. In addition, this record suggests that currently allocated

spectrum will not permit deployment by public safety agencies of needed

advanced data and video systems. The Appropriations Act requires,

however, that the use of 30 MHz of spectrum in the 2.3 GHz band be

assigned by competitive bidding pursuant to section 309(j) of the

Communications Act. The Commission therefore concludes that allocating

a portion of the 2.3 GHz spectrum for public safety appears to be

inconsistent with the Appropriations Act because, pursuant to the

Commission's auction authority, the Commission is not permitted to

assign spectrum to public safety applicants by competitive bidding.

33. In any case, even if spectrum were to be allocated for

assignment only to public safety entities, the Commission does not

believe that such an allocation would be the best way to meet those

needs. The Commission notes that the WCS spectrum was not identified in

the PSWAC Final Report as useful in meeting the public safety

community's spectrum requirements. In this regard, the Commission

believes that it is significant that APCO, the only public safety

entity to comment in this proceeding, noted in its recent ex parte

filing that facilitating possible public safety use of a small portion

of the 2.3 GHz band for non-mission critical operations will have

little or no impact on the spectrum needs identified by PSWAC. In

addition, the Commission believes that it is significant that public

safety entities do not currently have operations in any spectrum in or

near the 2.3 GHz band. Thus, it may be more difficult for public safety

entities to avail themselves of equipment economies of scale or to

integrate this spectrum into their current communications systems. In

addition, even if WCS spectrum were of some use to the public safety

community, costly networks would still need to be constructed in order

for useful services to be provided. In this regard, the Commission

finds it significant that, as noted above, several commenters (both

public safety entities and others) questioned whether a specific public

safety allocation at 2.3 GHz would significantly assist public safety

entities given the technical configuration and the financial resources

that a 2.3 GHz system would require.

34. The record in this proceeding also demonstrates that public

safety agencies require additional funding to enable them to migrate to

new spectrum and to upgrade and purchase new equipment. In addition,

the Commission notes that the PSWAC Final Report found, the radio

systems used by the Public Safety community are laboring under

increasing burdens. Equipment is old and funding for new equipment is

often scarce. The PSWAC Final Report also found that funding for

acquisition of new spectrum-efficient technologies and/or relocation to

different frequency bands is likely to be a major impediment to

improving Public Safety wireless systems. The PSWAC Final Report

includes recommendations regarding the future operational requirements

of public safety agencies, methods for achieving greater

interoperability among agencies, the technologies that are and will be

available to meet public safety requirements, and the amount of radio

spectrum that will be necessary to meet these requirements. Many of

these requirements can be met by the Commission's allocation of

additional spectrum to public safety agencies, and the report examined

alternative approaches for obtaining funding to assist public agencies

in an orderly migration to new spectrum allocations and advanced

technologies.

35. The Commission believes that, in order for the future needs of

public safety wireless communications to be satisfied, new sources of

funding will have to be devised. This is true regardless of the amount

of spectrum made available for public safety. In this proceeding, the

Commission has considered whether funds from the WCS auction could

provide a source of funding for public safety agencies. The Commission

notes, however, that section 309(j)(8)(A) requires that ``all proceeds

from the use of a competitive bidding system under this subsection

shall be deposited in the Treasury * * * .'' 47 U.S.C. 309(j)(8)(A).

The only exceptions to this general rule are contained in sections

309(j)(8)(B) (providing for retention of revenues as

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an offsetting collection for developing and implementing the auction

program) and 309(j)(8)(C) (providing for deposit of upfront payments in

an interest-bearing account, with interest transferred to the

Telecommunications Development Fund). Therefore, it appears that

legislative action is required before auction revenues can be used to

provide a source of funding for public safety agencies to acquire new

communications technologies. It is the Commission's belief that public

safety agencies would benefit greatly from such action. The Commission

notes that legislation recently introduced by Senator John McCain would

provide for a portion of the revenues raised from an auction of

spectrum currently used by television broadcast stations operating on

channels 60-69 to be earmarked for ``funding State and local law

enforcement and public safety agencies' mission-related radio

communications capabilities.'' See S. 255, The Law Enforcement and

Public Safety Telecommunications Empowerment Act, as introduced in the

United States Senate on February 4, 1997, section 5(b)(1). The

Commission believes that legislative approaches such as that taken in

the McCain bill would substantially aid public safety agencies in their

communications needs and thereby improve the safety of all Americans.

36. Though the Commission has concluded that designating 2.3 GHz

spectrum for use exclusively by public safety entities is not

advisable, the Commission emphasizes its continuing commitment to

address public safety needs. Specifically, the Commission is

considering the operational, technical and spectrum requirements of the

public safety community in our Public Safety proceeding. See The

Development of Operational, Technical, and Spectrum Requirements for

Meeting Federal, State and Local Public Safety Agency Communication

Requirements Through the Year 2010, WT Docket No. 96-86, Notice of

Proposed Rule Making, 11 FCC Rcd 12460, 61 FR 25185 (May 20, 1996).

That proceeding examines what spectrum bands could be useful for

meeting existing and future communications requirements, including

voice, data (such as transmission of fingerprints, building floor plans

and medical data), and video for surveillance monitoring. The

Commission expects that additional spectrum will be made available for

public safety use as a result of that proceeding, and that its decision

in that proceeding will address the specific communications

requirements and bands identified by PSWAC. In addition, the Commission

notes that several commenters, including APCO and Motorola, reiterated

the public safety community's need for 24 MHz of spectrum at UHF

channels 60-69. The Commission believes that their proposal has merit

and plan to give it serious consideration in our Digital Television

proceeding. See Advanced Television Systems and Their Impact Upon the

Existing Television Broadcast Service, MM Docket No. 87-268, Sixth

Further Notice of Proposed Rule Making, 11 FCC Rcd 10968, 61 FR 43209

(August 21, 1996). The Commission notes that legislation recently

introduced by Senator McCain would direct the Commission to allocate 24

MHz of the channel 60-69 spectrum to public safety use, See S. 255, The

Law Enforcement and Public Safety Telecommunications Empowerment Act,

as introduced in the United States Senate on February 4, 1997, section

4(a), and that the Administration's 1998 budget also supports such a

reallocation. See Testimony of Larry Irving, Assistant Secretary for

Communications and Information, U.S. Department of Commerce, before the

Subcommittee on Telecommunications, Trade and Consumer Protection of

the U.S. House of Representatives Committee on Commerce, February 12,

1997, at 24; see also Statement by Attorney General Janet Reno on

Proposal to Set Aside Communications Frequencies for Public Safety Use,

released February 6, 1997.

37. The Commission declines to adopt special provisions to benefit

petroleum and natural gas providers, railway operators and operators of

water supply systems. Though the Commission recognizes that these

entities perform valuable public service functions, the Commission does

not believe that Congress intended that they be included in the class

of ``public safety radio services'' that the Appropriations Act directs

the Commission to take into account in this proceeding. The

Commission's Rules define that term to include ``Local Government,

Police, Fire, Highway Maintenance and Forestry-Conservation Radio

Services.'' 47 CFR 90.15. The Commission declines to deviate from this

established definition.

D. Service and Technical Rules

i. Eligibility

38. The Commission concludes that, with the exception of the

foreign ownership restrictions set forth in section 310 of the

Communications Act, see 47 U.S.C. 310, there will be no eligibility

restrictions on participation in WCS. As the Commission stated in the

NPRM, opening the WCS market to a wide range of applicants will permit

and encourage entrepreneurial efforts to develop new technologies and

services. The Commission also believes that, given the relatively large

amount of spectrum that is available to provide services similar to

those that can be operated on the WCS spectrum, providing open

eligibility in this instance will not lead to excessive concentration

of market power. The Commission agrees with CPI that Section 27.302

should ensure that WCS licensees are subject to all of the foreign

ownership restrictions set forth in Section 310 of the Communications

Act to the extent the restrictions are applicable to the particular

service in question. Thus, for example, common carrier services would

be subject to the restrictions in section 310(b). See 47 U.S.C. 310.

ii. CMRS Spectrum Cap

39. The decisional factor in whether to apply the CMRS spectrum cap

to any particular service is a balancing of the potential benefits and

costs. The Commission believes that, in these unique circumstances

where the Commission is allocating spectrum and licensing a wholly new

service pursuant to congressional directive, the potential benefits do

not outweigh the potential costs. Thus the Commission will not count

holdings of WCS spectrum at 2.3 GHz against the CMRS spectrum cap.

40. As the Commission noted in the NPRM, the CMRS spectrum cap was

imposed out of concern that ``excessive aggregation [of spectrum] by

any one of several CMRS licensees could reduce competition by

precluding entry by other service providers and might thus confer

excessive market power on incumbents.'' Implementation of sections 3(n)

and 332 of the Communications Act, GN Docket No. 93-252, Third Report

and Order, 9 FCC Rcd 7988, 8101, 59 FR 59945 (November 21, 1994)

(``CMRS Third Report and Order''). The spectrum cap is intended to

promote a vigorous competitive market for the provision of commercial

mobile radio services, and to ensure that each mobile service provider

(i.e., cellular, PCS or SMR licensee) has the opportunity to obtain

sufficient spectrum to compete effectively and that no single provider

is able to preclude the provision of service by effective competitors

or significantly reduce the number of competitors by aggregating

spectrum.

41. As discussed more fully in Section III.D.7, infra, because the

spectrum allocated for satellite DARS is situated between the two WCS

bands, limitations

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on out-of-band emissions by equipment operating on WCS spectrum are

needed to protect against interference with sensitive satellite DARS

reception. The Commission believes that the out-of-band emission limits

we are adopting likely will, at least in the near term, make mobile

operations in the WCS spectrum technologically infeasible. Hence, there

is little likelihood that allowing an incumbent CMRS licensee to

acquire enough WCS spectrum that its total CMRS and WCS spectrum

holdings exceed the 45 MHz cap would have anticompetitive consequences

for mobile services. Application of the CMRS spectrum cap to WCS

spectrum is not necessary to guard against excessive concentration in

the CMRS market or the accumulation of undue market power.

42. Conversely, even if it is technically feasible to use this

spectrum for CMRS-type service, applying the cap and excluding many

existing CMRS providers from acquiring WCS licenses would, the

Commission believes, carry significant potential costs for consumers.

With their existing base station infrastructures, CMRS licensees may be

the most efficient users of WCS spectrum because economies of scope may

be large in the provision of new services combined with the provision

of conventional mobile voice CMRS. For example, it may be that a

current CMRS licensee would be able to use its existing infrastructure

to provide fixed services in the most cost efficient manner. Site

acquisition and zoning approval for new facilities is both a major cost

component and a major delay factor in deploying wireless systems.

Facilities at existing cellular or PCS sites might accommodate

additional equipment for new services or be modified to do so at a

significantly lower cost than deploying a whole new cell infrastructure

for the new service in a crowded environment. There may be other

economies of scope in the provision of different services as well.

Applying the CMRS spectrum cap to the WCS spectrum would interfere with

the realization of these savings by preventing the direct participation

by those entities who own the existing CMRS infrastructure, and

consequently, prevent consumers from benefiting from these savings,

with little off-setting benefit in competition.

43. The Commission recognizes that not applying the cap to WCS

spectrum may result in some CMRS licensees acquiring spectrum and,

provided that the technical obstacles noted infra can be overcome, that

at some point these licensees may use WCS spectrum to compete against

other CMRS licensees that have not acquired WCS spectrum. The

Commission does not believe, however, that such a circumstance

substantially risks impairing competition in the CMRS marketplace. When

30 MHz PCS systems are fully deployed with the minimum number of cells

needed for competitive coverage, they will provide a large increase in

capacity over what is currently available. As for the argument that

regulatory parity compels application of the CMRS spectrum cap to WCS

spectrum, the Commission disagrees. Whether or not the cap is applied,

all CMRS providers stand on equal footing with respect to the

acquisition of WCS licenses, and any entity using WCS spectrum to

provide CMRS services will be regulated in the same manner as all other

CMRS providers.

iii. Disaggregation and Partitioning

44. Consistent with the weight of the comments and with the

Commission's recent decision to adopt the approach proposed in WT

Docket No. 96-148 for broadband PCS, See Geographic Partitioning and

Spectrum Disaggregation by Commercial Mobile Radio Services Licensees;

Implementation of Section 257 of the Communications Act--Elimination of

Market Entry Barriers, WT Docket No. 96-148, Report and Order and

Further Notice of Proposed Rule Making, FCC 96-474, 62 FR 696 (January

6, 1997) (``Partitioning and Disaggregation R&O''), the Commission

adopts its proposals for geographic partitioning and spectrum

disaggregation. We will permit WCS licensees to partition their service

areas into smaller geographic service areas and to disaggregate their

spectrum into smaller blocks. We also conclude that the specific rules

pertaining to partitioning and disaggregation in WT Docket No. 96-148

shall apply to WCS licensees. In addition, for the purposes of

partitioning and disaggregation, we will require that WCS systems be

designed so as not to exceed a signal level of 47 dBuV/m at the

licensee's service area boundary, unless the affected adjacent service

area licensees have agreed to a different signal level.

45. In WT Docket No. 96-148, the Commission decided to permit

geographic partitioning by broadband PCS licensees along any service

area defined by the partitioner and partitionee. See Partitioning and

Disaggregation R&O. In addition, the Commission decided to permit

spectrum disaggregation by broadband PCS licensees without restriction

on the amount of spectrum to be disaggregated. The Commission concluded

that allowing parties to decide without restriction the amount of

spectrum to be disaggregated will encourage more efficient use of the

spectrum and permit the deployment of a broader mix of service

offerings, both of which will lead to a more competitive wireless

marketplace. Id. We believe that this reasoning applies with equal

force to WCS. Therefore, subject to the provisions discussed below with

respect to licensees who take advantage of bidding credits, once an

initial WCS license is granted, licensees will be free to partition

their service areas and disaggregate their spectrum. Finally,

consistent with PCS and other CMRS services, WCS licensees will be

allowed to use management and operational arrangements to permit others

to use portions of their spectrum and geographic service areas. The

Commission wishes to emphasize that the WCS licensee must retain

ultimate control over and responsibility for all operations under such

arrangements.

46. The Commission concludes that any licensee will be permitted to

partition its service area as long as it submits sufficient information

to the Commission to maintain our licensing records. Partitioning

applicants will be required to submit, as separate attachments to the

partial assignment application, a description of the partitioned

service area and a calculation of the population of the partitioned

service area and licensed market. The partitioned service area must be

defined by coordinate points at every 3 degrees along the partitioned

service area agreed to by both parties, unless either (1) an FCC-

recognized service area is utilized (i.e., Major Trading Area, Basic

Trading Area, Metropolitan Service Area, Rural Service or Economic

Area) or (2) county lines are followed. These geographical coordinates

must be specified in degrees, minutes and seconds to the nearest second

of latitude and longitude, and must be based upon the 1927 North

American Datum (NAD27). Applicants also may supply geographical

coordinates based on 1983 North American Datum (NAD83) in addition to

those required based on NAD27. This coordinate data should be supplied

as an attachment to the partial assignment application, and maps need

not be supplied. In cases where an FCC-recognized service area or

county lines are being utilized, applicants need only list the specific

area(s) (through use of FCC designations) or counties that make up the

newly partitioned area.

47. Similarly, where WCS licensees seek to disaggregate their WCS

spectrum, the Commission will not

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require the disaggregating party to retain a minimum amount of

spectrum. The Commission will allow disaggregating parties to negotiate

channelization plans among themselves as part of their disaggregation

agreements, and the Commission will continue to require that such plans

provide the necessary out-of-band emission protections to third party

licensees as required by our rules. The Commission is not adopting a

limit on the maximum amount of spectrum that licensees may

disaggregate. The Commission finds no evidence at this time that a

maximum limitation for disaggregation is necessary. WCS licensees shall

be permitted to disaggregate spectrum without limitation on the overall

size of the disaggregation as long as such disaggregation is otherwise

consistent with our rules.

48. The Commission declines to adopt RTG's proposal to provide

rural telcos with a right of first refusal. Section 254 of the

Telecommunications Act of 1996, Pub. L. 104-104, section 101, 110 Stat.

56 (1996), states that, in seeking to promote its goal of universal

service, the Commission should ensure that consumers from all parts of

the Nation, including rural areas, have access to telecommunications

and information services that is comparable to service in other, more

urban areas and at rates that are comparable to the rates available in

urban areas. Granting rural telcos a right of first refusal would be at

odds with the Commission's goals of ensuring that the largest number of

entities participate in the WCS marketplace and eliminating barriers to

entry for small businesses. As the Commission concluded in WT Docket

No. 96-148, the Commission also believes that a right of first refusal

would be difficult to administer and could discourage partitioning.

Partitioning and Disaggregation R&O. For example, an area proposed for

partitioning to a non-rural telco may intersect with an area for which

a rural telco has a right of first refusal. A further problem would be

uncertainty as to whether the rural telco's right of first refusal

would continue after the auction winner partitioned the license area to

another party. Additionally, a partitioning agreement may be part of a

larger assignment transaction. If a rural telco were able to exercise a

right of first refusal with respect to a partitioned area, it may not

be possible to separate out the partitioning agreement to stand on its

own and the entire assignment transaction could not be consummated.

49. If a WCS licensee that received a bidding credit partitions a

portion of its license to an entity that would not meet the eligibility

standards for a similar bidding credit, the Commission will require

that the licensee reimburse the government for the amount of the

bidding credit calculated on a proportional basis based upon the ratio

of population of the partitioned area to the overall population of the

licensed area. See 47 CFR 1.2110(f) and 24.717(c)(1). If a licensee

that received a bidding credit partitions to an entity that would

qualify for a lesser bidding credit, the Commission will require that

the licensee reimburse the government for the difference between the

amount of the bidding credit obtained by the licensee and the bidding

credit for which the partitionee is eligible, calculated on a

proportional basis based upon the ratio of population of the

partitioned area. See 47 CFR 1.2110(f) and 24.717(c)(2). Similar

provisions shall apply where a WCS licensee that receives a bidding

credit seeks to disaggregate a portion of its spectrum to an entity

that would not have qualified for such a bidding credit. All such

unjust enrichment payments will be calculated based upon the ratio of

the amount of spectrum disaggregated to the amount of spectrum retained

by the original licensee. With respect to disaggregation from one

licensee that qualified for a bidding credit to another licensee that

would also qualify for a bidding credit, the Commission will adopt an

approach similar to that adopted for partitioning.

50. Finally, to allow WCS licensees flexibility to design the types

of agreements they desire, the Commission will follow its decision in

WT Docket No. 96-148 to permit combined partitioning and

disaggregation. For example, a party may obtain a license for a single

county with only 5 MHz of WCS block A spectrum. By allowing such

combined partitioning and disaggregation, we believe that the goals of

providing competitive service offerings, encouraging new market

entrants, and ensuring quality service to the public will be advanced.

The Commission further concludes that in the event that there is a

conflict in the application of the partitioning and disaggregation

rules, the partitioning rules should prevail. For the purpose of

applying the Commission's unjust enrichment provisions relating to

bidding credits, when a combined partitioning and disaggregation is

proposed, the Commission will use a combination of both population of

the partitioned area and amount of spectrum disaggregated to make these

pro rata calculations. For example, if a WCS licensee that availed

itself of a bidding credit and a non-qualifying partitionee/

disaggregatee were to agree on a 20 percent disaggregation of spectrum

over 30 percent of the population of the licensed service area, an

unjust enrichment payment of 6 percent (.20 x .30) of the bidding

credit would be required.

51. The Commission also notes that these geographic partitioning

and spectrum disaggregation rules, while not a substitute for licensing

directly from the Commission, nevertheless will help to eliminate

market entry barriers, consistent with section 257 of the

Communications Act, by providing smaller, less capital-intensive areas

and spectrum blocks which are more accessible by small business

entities. See 47 U.S.C. 257.

iv. License Term

52. The WCS license term will be 10 years, with a renewal

expectancy similar to that afforded PCS and cellular licensees. The

Commission believes that this relatively long license term, combined

with a renewal expectancy, will help to provide a stable regulatory

environment that will be attractive to investors and, thereby,

encourage development of this new frequency band. In the event that a

WCS license is partitioned or disaggregated, any partitionee/

disaggregatee will be authorized to hold its license for the remainder

of the partitioner's/disaggregator's original ten-year license term,

and the partitionee/disaggregatee will be required to submit the

showings required at the five-year mark and with its renewal

application. The Commission believes that this approach, which is

similar to the partitioning provisions we recently adopted for the MDS

and for current broadband PCS licensees is appropriate because a

licensee, through partitioning, should not be able to confer greater

rights than it was awarded under the terms of its license grant.

53. The Commission will require that a WCS licensee's renewal

application include at a minimum the following showing to claim a

renewal expectancy: (1) A description of current service in terms of

geographic coverage and population served or links installed; (2) an

explanation of the licensee's record of expansion, including a

timetable for the construction of new base sites or links to meet

changes in demand for service; (3) a description of the licensee's

investments in its system; and (4) copies of any FCC orders finding the

licensee to have violated the Communications Act or any FCC rule or

policy, and a list of any pending proceedings that relate to any matter

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described by the requirements for the renewal expectancy.

v. Performance Requirements

54. The Commission has concluded that, considering the unique

circumstances in which WCS licenses are being awarded and the strict

technical requirements necessary to prevent interference, it will adopt

very flexible construction (or ``build-out'') requirements for WCS.

Specifically, the Commission will require licensees to provide

``substantial service'' to their service area within 10 years. Although

WCS licensees will have incentives to construct facilities to meet the

service demands in their licensed service area, the Commission believes

that minimum construction requirements can promote efficient use of the

spectrum, encourage the provision of service to rural, remote and

insular areas and prevent the warehousing of spectrum.

55. The build-out requirement that the Commission adopts today is

the most liberal construction requirement adopted by the Commission to

date. The Commission believes that this liberal build-out requirement

is appropriate in the case of WCS for a number of reasons. First, the

Commission is providing WCS licensees with the flexibility to offer a

range of services using the WCS spectrum. Given the broad range of new

and innovative services that the comments lead the Commission to

believe might be provided over WCS spectrum, imposing strict

construction requirements that would apply over the license term would

be neither practical nor desirable as a means of meeting Section

309(j)'s objectives regarding warehousing and rapid deployment. Without

knowing the specific type of service or services to be provided, it

would be difficult to devise specific construction benchmarks. Further,

given the undeveloped nature of equipment for use in this band and the

technical requirements the Commission is adopting to prevent

interference, the Commission is concerned that strict construction

requirements might have the effect of discouraging participation in the

provision of services over the WCS spectrum. It may be that a potential

licensee could efficiently conduct certain operations on WCS spectrum,

but must await further technological developments to do so affordably.

Adopting strict construction requirements here could effectively

preclude efficient uses of the spectrum. Particularly in light of the

technological uncertainties associated with use of WCS spectrum to

provide certain services consistent with the interference levels the

Commission adopts today, the Commission believes that stringent build-

out requirements are not warranted.

56. At the ten year period, the Commission will require all

licensees to submit an acceptable showing to the Commission

demonstrating that they are providing substantial service. Licensees

failing to demonstrate that they are providing substantial service will

be subject to forfeiture of their licenses. The Commission notes that

in the past it has defined substantial service as ``service which is

sound, favorable, and substantially above a level of mediocre service

which just might minimally warrant renewal.'' See, e.g., 47 CFR

22.940(a)(1)(i). For WCS, however, the Commission believes that further

elaboration on this standard in the form of examples of what might

constitute substantial service is useful. Thus, for a WCS licensee that

chooses to offer fixed, point-to-point services, the construction of

four permanent links per one million people in its licensed service

area at the ten-year renewal mark would constitute substantial service.

In the alternative, for a WCS licensee that chooses to offer mobile

services, a demonstration of coverage to 20 percent of the population

of its licensed service area at the ten-year mark would constitute

substantial service. In addition, the Commission may consider such

factors as whether the licensee is offering a specialized or

technologically sophisticated service that does not require a high

level of coverage to be of benefit to customers, and whether the

licensee's operations serve niche markets or focus on serving

populations outside of areas served by other licensees. These safe-

harbor examples are intended to provide WCS licensees a degree of

certainty as to how to comply with the substantial service requirement

by the end of the initial license term. This requirement can be met in

other ways, and the Commission will review licensees' showing on a

case-by-case basis.

57. The Commission believes that these build-out provisions fulfill

its obligations under section 309(j)(4)(B). The Commission also

believes that the auction and service rules which it is adopting for

WCS, together with its overall competition and universal service

policies, constitute effective safeguards and performance requirements

for WCS licensing. Because a license will be assigned in the first

instance through competitive bidding, it will be assigned efficiently

to a firm that has shown by its willingness to pay market value its

willingness to put the license to its best use. The Commission also

believes that service to rural areas will be promoted by its decision

to allow partitioning and disaggregation of WCS spectrum.

58. Finally, the Commission reserves the right to review this

liberal construction requirements in the future if we receive

complaints related to section 309(j)(4)(B), or if the Commission's own

monitoring initiatives or investigations indicate that a reassessment

is warranted. The Commission also reserves the right to impose

additional, more stringent construction requirements on WCS licenses in

the future in the event of actual anticompetitive or rural service

problems and if more stringent construction requirements can

effectively ameliorate those problems.

vi. Regulatory Status

59. The Commission concludes that it will rely on each WCS

applicant to identify in its long-form application the type of WCS

service or services it will provide. Although the Commission will not

presume at the outset that a WCS applicant will provide CMRS service,

the Commission continues to believe, as it stated in the NPRM, that

this approach will allow the Commission to carry out its

responsibilities while imposing the least regulatory burden on the

licensee. The Commission also delegates to the Wireless

Telecommunications Bureau and to the International Bureau authority to

develop forms appropriate to collect this data, and to monitor changes

in licensee status. The predominant uses of WCS spectrum mentioned by

commenters involved personal communications such as broadband voice and

data transmission, including wireless local loop and wireless Internet

access. If WCS spectrum is used for satellite DARS services, those

services will be governed by the satellite DARS regulations currently

under development in IB Docket No. 95-91.

60. The Commission's decision to permit WCS licensees to provide a

variety or combination of services requires that the Commission adopt a

licensing framework that authorizes WCS licensees to provide non-common

carrier services as well as common carrier services. The Commission has

recently increased the flexibility of licensees in other wireless

services to provide both common carrier and non-common carrier

services. In adopting a new application form for MDS, for example, the

Commission provided applicants with the option on the new form to

indicate their choice for common carrier or non-common carrier

regulatory status. Amendment of Parts 21 and 74 of the Commission's

Rules

[[Page 9646]]

with Regard to Filing Procedures in the Multipoint Distribution Service

and in the Instructional Television Fixed Service, MM Docket No. 94-

131, and Implementation of Section 309(j) of the Communications Act--

Competitive Bidding, PP Docket No. 93-253, Report and Order, 10 FCC Rcd

9589, 9619, 60 FR 36524 (July 17, 1995) (``MDS and ITFS Competitive

Bidding Report and Order''). For satellite services, the Commission has

decided to provide all U.S.-licensed fixed satellite service systems

with a choice between offering common carrier and non-common carrier

services and also the opportunity to elect their regulatory

classification in their applications. Amendment to the Commission's

Regulatory Policies Governing Domestic Fixed Satellites and Separate

International Systems, IB Docket No. 95-41, Notice of Proposed Rule

Making, 10 FCC Rcd 7789, 7795-7796, 60 FR 24817 (May 10, 1995); Report

and Order, 11 FCC Rcd 2429, 2436, 61 FR 9946 (March 12, 1996) (``DISCO

I Report and Order''). In another proceeding, the Commission has

adopted streamlined rules in part 25 for satellite services to use a

simplified procedure to change licenses from non-common carrier status

to common carrier status. Streamlining the Commission's Rules and

Regulations for Satellite Application and Licensing Procedures, IB

Docket No. 95-117, Notice of Proposed Rule Making, 10 FCC Rcd 10624, 60

FR 46252 (September 6, 1995); Report and Order, FCC 96-425, 62 FR 5924

(February 10, 1997) (``Satellite Rules Report and Order''). Finally,

when the Commission implemented DBS systems under interim rules it

adopted a policy to permit the dual provision of common and non-common

carrier services which continues under the permanent rules. The

flexible licensing framework the Commission adopts for WCS is

consistent with the treatment accorded these services.

61. The Commission therefore will allow the service offering

selected by a WCS licensee to determine its regulatory status. If a

service offering falls within the statutory definition of common

carrier, see 47 U.S.C. 153, the licensee will be subject to Title II

and the licensing requirements of Title III of the Communications Act

and the Commission's Rules. Otherwise, services provided on a non-

common carriage basis will be subject to Title III and certain other

statutory and regulatory requirements, depending on the specific

characteristics of the service. The Telecommunications Act of 1996

provides that a telecommunications carrier will ``be treated as a

common carrier under this Act only to the extent that it is engaged in

providing telecommunications services.'' 47 U.S.C. 153(44). A

telecommunications service is the ``offering of telecommunications for

a fee directly to the public, or to such classes of users as to be

effectively available directly to the public, regardless of the

facilities used.'' 47 U.S.C. 153(46). Telecommunications means ``the

transmission, between or among points specified by the user, of

information of the user's choosing, without change in the form or

content of the information as sent and received.'' 47 U.S.C. 153(43).

The Commission adopted these definitions in new part 51, which provides

the rules governing interconnection of such carriers. Implementation of

the Local Competition Provisions in the Telecommunications Act of

1996--CC Docket No. 96-98, Interconnection between Local Exchange

Carriers and Commercial Mobile Radio Service Providers, CC Docket No.

95-185, First Report and Order, 11 FCC Rcd 15499, 61 FR 45476 (August

29, 1996), adopting new Rule 51.5. The U.S. Court of Appeals for the

Eighth Circuit has stayed the pricing rules in the Order, pending

review on the merits. See Iowa Utilities Board v. FCC, No. 96-3321 (8th

Cir., Oct. 15, 1996). Thus, to the extent a WCS licensee is providing a

service that fits within these definitions, that licensee will be

subject to Title II and governed by the common carrier requirements

pertinent to its services. Those requirements are set out in Part 1 and

other parts of the Commission's Rules. In addition, the regulatory

treatment of WCS licensees who choose to offer fixed or mobile

telecommunications services will be addressed by the Commission in WT

Docket No. 96-6. See Amendment of the Commission's Rules to Permit

Flexible Service Offerings in the Commercial Mobile Radio Services, WT

Docket No. 96-6, First Report and Order, 11 FCC Rcd 8965, 61 FR 43721

(August 26, 1996).

62. Apart from this designation of regulatory status, the

Commission will not require WCS applicants to describe the services

they seek to provide. It is sufficient that an applicant indicate its

choice for regulatory status in a streamlined application process. In

providing guidance on this issue to MDS applicants, for example, the

Commission pointed out that an election to provide service on a common

carrier basis requires that the elements of common carriage be present;

otherwise, the applicant must choose non-common carrier status. Of

course, if an applicant is unsure of the nature of its services and

their classification as common carrier services, it may submit a

petition with its application or at any time request clarification and

include service descriptions for that purpose.

63. The Commission also declines to require an applicant to choose

between either common carrier or non-common carrier status in providing

services in instances where it proposes to provide services that

include elements of both common carrier and non-common carrier

services. Instead, the Commission will permit both common carrier and

non-common carrier services in a single license. An applicant may

request both common carrier and non-common carrier status in the same

application, which will result in the issuance of both authorizations

in a single license. The licensee will be able to provide all WCS

services anywhere within its licensed area at any time. This approach

achieves efficiencies in the licensing and administrative process. The

Commission notes that it has allowed certain mobile services in part 24

and part 90 to be authorized in a single license on both a common

carrier and private carrier basis in order to provide services in both

categories of service. Implementation of Sections 3(n) and 332 of the

Communications Act: Regulatory Treatment of Mobile Services, GN Docket

No. 93-252, Second Report and Order, 9 FCC Rcd 1411, 1459, 59 FR 18493

(April 19, 1994); 47 CFR Sec. 20.9(b).

vii. Out-of-Band Emission Limits

64. In the NPRM, the Commission stated that, because WCS will

operate in the 2305-2320 and 2345-2360 MHz bands, interference

protection is required for the following adjacent operations: (1)

Satellite DARS at 2320-2345 MHz, (2) Government Deep Space Network

receivers at 2290-2300 MHz, and (3) Government and commercial telemetry

above 2360 MHz.

65. In order to provide protection to these adjacent operations,

the Commission proposed that all emissions outside of the WCS bands of

operation be attenuated below the maximum spectral power density (p)

within the band of operation, as follows:

(1) For fixed operations, including radiolocation: By a factor

not less than 43 + 10 log (p) decibels (``dB'') on all frequencies

between 2300 and 2305 MHz and above 2360 MHz; and not less than 70 +

10 log (p) dB on all frequencies below 2300 MHz and between 2320-

2345 MHz band.

(2) For mobile operations, including radiolocation: By a factor

not less than 43 +

[[Page 9647]]

10 log (p) dB on all frequencies between 2300 and 2305 MHz, between

2320 and 2345 MHz, and above 2360 MHz; and not less than 70 + 10 log

(p) dB on all frequencies below 2300 MHz.

(3) For WCS satellite DARS operations: The limits set forth in

Sec. 25.202(f) of the Commission's rules. See 47 CFR 25.202(f).

For fixed and mobile operations, including radiolocation, the

Commission stated that the above requirements are based on peak power

measurements (watts) using a resolution bandwidth of at least 1 MHz. In

addition, to further protect operations in adjacent bands, the

Commission proposed to require that the frequency stability of

transmission within the 2305-2320 and 2345-2360 MHz bands be sufficient

to ensure that the fundamental emissions remain within the authorized

frequency bands.

66. Finally, in order to protect Government Deep Space Network

receivers at 2290-2300 MHz, the Commission proposed to prohibit use of

the 2305-2310 MHz band for airborne or space-to-Earth links. Further,

the Commission proposed that WCS operations within 50 kilometers (31

miles) of 35 deg.20' North Latitude and 116 deg.53' West Longitude

(coordinates of the Deep Space Network receive site) be subject to

coordination. Alternatively, we requested comment on whether it would

be more appropriate to require less out-of-band attenuation in the case

of mobile transmitters (i.e., such transmitters would be subject to

only the 43 + 10 log (p) dB requirement) but require that the

coordination zone be extended to 120 kilometers (75 miles). The

Commission specifically requested that parties address the trade-offs

with regard to lower mobile equipment costs and the additional

coordination constraints imposed by this alternative.

67. Based on the record before it, the Commission finds that the

WCS out-of-band limits proposed in the NPRM would be insufficient to

protect certain sensitive operations on adjacent frequencies. While it

is the Commission desire to provide WCS licensees with the maximum

flexibility to provide a wide range of services, the Commission also

must ensure that WCS operations do not cause harmful interference or

disruption to adjacent satellite DARS reception or the operations of

the Arecibo Observatory. With regard to satellite DARS reception in the

2320-2345 MHz band, the Commission concurs with those commenting

parties that suggest that additional attenuation of WCS out-of-band

emissions is needed to protect such operations. The Commission is

therefore modifying its original proposal and will require that all

emissions from WCS fixed transmitters be attenuated below the

transmitter power (p) by at least 80 + 10 log (p) dB and that all

emissions from WCS mobile transmitters be attenuated at least 110 + 10

log (p) dB within the 2320-2345 MHz band. In complying with these

requirements, WCS equipment that uses circular polarization will be

permitted to assume an allowance of 10 dB where such WCS equipment

operates with opposite sense circular polarization from that used by

DARS operators in the 2320-2345 MHz band.

68. In addition, the Commission clarifies that (p) is the output

power of the transmitter, in watts. The Commission further clarifies

that out-of-band emissions in any 1 MHz bandwidth must be attenuated by

X + 10 log (p) dB below the output power of the transmitter, where X is

the attenuation required for a one watt transmitter. In addition, the

Commission believes that requiring the out-of-band emissions

measurement to be made by setting the measurement instrument resolution

bandwidth to 1 MHz would unfairly penalize WCS equipment due to the

difficulty of eliminating energy outside of the 1 MHz resolution

bandwidth. Therefore, for out-of-band emissions measurements the

Commission believes it is appropriate to permit use of a measurement

instrument resolution bandwidth of less than the reference bandwidth of

1 MHz, provided that the energy is integrated over a 1 MHz bandwidth.

69. The Commission believes that these changes will provide

significantly improved interference protection to DARS from WCS

operations. The Commission is aware that these out-of-band emission

limits may have significant cost or service implications for WCS,

especially for operations on the channels immediately adjacent to the

2320-2345 MHz band. In particular, the Commission understands that

there is a substantial risk that the out-of-band emission limits it is

adopting will, at least in the foreseeable future, make mobile

operations in the WCS spectrum technologically infeasible. Nonetheless,

the Commission finds that this level of attenuation is required in

order to adequately protect satellite DARS reception from WCS

transmissions. The Commission believes that WCS transmitters can meet

these limits through a variety of measures, including the use of linear

amplifiers, filters distributed throughout the transmitter, and

spectrum shaping signal processing. In this regard, the Commission

encourages potential WCS bidders and WCS equipment manufacturers to

consult with one another prior to the commencement of the auction to

determine what services and equipment can be economically provided on

these frequencies. The Commission believes that the limits it is

adopting will allow both WCS and DARS to successfully operate. The

Commission also encourages and will allow WCS and DARS licensees to

coordinate their operations to provide for greater or lesser protection

on a mutually agreed basis. The Commission expects WCS and DARS

licensees to cooperate fully to minimize the possibility of harmful

interference from one service to the other.

70. With regard to satellite DARS operations in WCS spectrum and

the Arecibo Observatory, the Commission finds Cornell's comments

persuasive. Accordingly, satellite DARS operations will be limited to a

maximum power flux density of -197 dBW/m \2\/4 kHz in the 2370-2390 MHz

band at Arecibo, Puerto Rico. The adoption of a power flux density

limit has the advantages of being readily measurable and of not needing

to be adjusted if spectrum outside the 2320-2345 MHz band is employed

for satellite DARS operations. Thus, the Commission does not believe

that Cornell's alternative out-of-band emission limit is necessary.

Instead, since the location of the satellite will be known, it is a

relatively simple matter for a satellite DARS licensee to meet this

requirement.

71. With regard to fixed and mobile operations, the Commission is

adopting Cornell's proposed out-of-band emission limit of 70 + 10 log

(p) dB for all frequencies above 2370 MHz. The Commission also believes

that this out-of-band emission limit will help to protect aeronautical

telemetry and associated telecommand operations in the 2360-2390 MHz

band and the launch vehicle frequencies at 2370.5 and 2382.5 MHz.

72. In order to protect the Deep Space receiver site located on

Fort Irwin at Goldstone, California, the Commission is prohibiting use

of the 2305-2310 MHz band for airborne or space-to-Earth links.

Additionally, in the 2305-2320 MHz band, the Commission is requiring

that all WCS equipment meet an out-of-band emission limit of 70 + 10

log (p) on all frequencies below 2300 MHz. Finally, all WCS operations

within 50 kilometers of 35 deg.20' North Latitude and 116 deg.53' West

Longitude must be coordinated with the National Telecommunications and

Information Administration (``NTIA'').

73. In summary, the revised WCS out-of-band emission limits require

that all emissions outside of WCS Blocks A, B,

[[Page 9648]]

C and D (``the licensed bands of operation'') be attenuated below the

output power (p) of each transmitter, measured in watts, as follows:

(1) For fixed operations, including radiolocation: By a factor

not less than 80 + 10 log (p) dB on all frequencies between 2320 and

2345 MHz.

For mobile operations, including radiolocation: By a factor not

less than 110 + 10 log (p) dB on all frequencies between 2320 and

2345 MHz.

For fixed and mobile operations, including radiolocation: By a

factor not less than 70 + 10 log (p) dB on all frequencies below

2300 MHz and on all frequencies above 2370 MHz; and not less than 43

+ 10 log (p) dB on all frequencies between 2300 and 2320 MHz and on

all frequencies between 2345 and 2370 MHz that are outside the

licensed bands of operation. In addition, WCS operations within 50

kilometers of Goldstone, California must be coordinated with NTIA.

(2) For WCS satellite DARS operations: The limits set forth in

Section 25.202(f) of the Commission's Rules apply, except that

satellite DARS operations are limited to a maximum power flux

density of -197 dB(W/m2/4 kHz) in the 2370-2390 MHz band at

Arecibo, Puerto Rico.

74. In addition, the Commission believes it desirable to permit WCS

and satellite DARS licensees to voluntarily negotiate different limits

if they so choose. For example, a WCS licensee could negotiate an

agreement with a satellite DARS licensee that would permit the former

greater out-of-band emissions in exchange for monetary compensation, or

vice versa. If WCS and satellite DARS licensees negotiate different

limits, then the Commission will require that the parties to the

agreement maintain this information as part of their station files and

disclose it to prospective assignees or transferees.

75. The Commission also agrees with the commenting parties that

some in-band technical limits are needed between adjacent WCS channel

block operations in order to facilitate spectrum sharing. Accordingly,

the Commission is adopting an in-band emission limit that will require

WCS licensees to attenuate their signals by at least 43 + 10 log (p) at

the edge of their block, except between commonly held channel blocks

(which require no attenuation). The Commission notes that an

attenuation of 43 dB is commonly employed in other services and that it

has been found there to adequately prevent adjacent channel

interference. See 47 CFR 22.359(iii), 22.917(e), and 24.238.

Furthermore, the Commission believes that the adoption of a minimum

adjacent block attenuation value of 43 dB--coupled with the median

field strength of 47 dBuV/m at any location on the border of a WCS

service area--is the least intrusive regulation possible that will

minimize harmful interference.

viii. International Coordination

76. In the NPRM the Commission stated that until international

agreements are completed WCS operations will be required to protect

existing non-U.S. operations in the 2305-2320 and 2345-2360 MHz bands

and WCS operations in the border areas would be subject to coordination

with those countries, as appropriate. In addition, the Commission noted

that satellite DARS operations on WCS spectrum would be subject to

international satellite coordination procedures. The Commission stated

that parties should be aware that international coordination could be a

complex and lengthy process and could vary significantly depending upon

the types of WCS services that are to be provided. The Commission

stressed therefore that international coordination requirements should

be taken into account in developing business plans for the provision of

WCS and that international coordination would be particularly important

for parties contemplating the provision of WCS in border areas or the

provision of satellite DARS operations.

77. The Commission reiterates that international coordination will

be required for WCS operations near the United States' borders and,

depending on the service and its interference potential, may also be

required for non-border areas. This coordination requirement

particularly may affect the implementation of satellite DARS operations

in the 25 MHz of WCS spectrum being allocated to DARS on a co-primary

basis with other services. Potential satellite DARS applicants should

consult the February 16, 1996 letter from the FCC Satellite Engineering

Branch to representatives of the current four satellite DARS applicants

and responses thereto that address coordination in these bands for

satellite DARS. These documents are filed in IB Docket No. 95-91, GN

Docket 90-357, RM No. 8610, PP-24, PP-86, and PP-87. Use of the WCS

spectrum for DARS services will be governed by the rules and

regulations that will apply to the exclusive DARS spectrum between

2320-2345 MHz. These rules are expected to be adopted shortly in a

Report and Order to be issued in IB Docket No. 95-91. See Establishment

of Rules and Policies for the Digital Audio Radio Satellite Service in

the 2310-2360 MHz Frequency Band, IB Docket No. 95-91, GEN Docket No.

90-357, Notice of Proposed Rule Making, 11 FCC Rcd 1, 60 FR 35166 (July

6, 1995).

ix. RF Safety

78. With regard to RF safety requirements, the Commission proposed

in the NPRM to treat WCS services and devices, operating within the

2305-2320 MHz and 2345-2360 MHz bands, in a comparable manner to other

services and devices that have similar operating characteristics. The

Commission noted that Secs. 1.1307(b), 2.1091 and 2.1093 of our Rules

list the services and devices for which an environmental evaluation

must routinely be performed. See 47 CFR 1.1301, 1.1307(b), 2.1091, and

2.1093. The RF radiation exposure limits are set forth in 47 CFR

1.1310, 2.1091, and 2.1093, as applicable. Accordingly, the Commission

proposed that an environmental evaluation for RF exposure would be

required for the following WCS operations: (1) Transmitting terrestrial

stations in the satellite DARS service, e.g., ``gap fillers''; (2)

fixed operations, including base stations and radiolocation, that have

an effective radiated power (``ERP'') greater than 2000 watts; and (3)

mobile and portable devices. The Commission invited comment on this

proposal and requested suggestions for alternatives that would ensure

public health with respect to exposure to RF radiation.

79. In the NPRM, the Commission proposed not to limit the output

power of any WCS transmitter, but to require that WCS transmitters

comply with our RF exposure limits. The Commission recognizes

Omnipoint's concerns; however, the Commission notes that it recently

adopted new, more stringent exposure limits in ET Docket No. 93-62

which apply to all frequencies between 300 kHz and 100 GHz. See

Guidelines for Evaluating the Environmental Effects of Radiofrequency

Radiation, ET Docket No. 93-62, Report and Order, 11 FCC Rcd 15123, 61

FR 41006 (August 7, 1996). See also First Memorandum Opinion and Order,

ET Docket No. 93-62, 11 FCC Rcd 17512, 62 FR 3232 (January 22, 1997).

When adopting these new exposure limits, the Commission considered

recommendations from, inter alia, the Environmental Protection Agency,

the Food and Drug Administration, and other federal health and safety

agencies. Although Omnipoint has raised questions about the power

threshold below which WCS facilities would be excluded from routinely

determining compliance with the new exposure limits, the Commission has

not received information in this proceeding indicating that the new

exposure limits would not adequately protect public health at WCS

operating frequencies.

[[Page 9649]]

Because all fixed, mobile, and portable transmitters are required to

comply with our RF safety rules, as more specifically discussed below,

the Commission believes that this decision will satisfactorily protect

public health and should allay Omnipoint's concerns.

80. Specific to this proceeding, the Commission is requiring

applicants desiring to use the following types of transmitters to

perform routine environmental evaluations: (1) Transmitting terrestrial

stations in the satellite DARS service and fixed operations, including

base stations and radiolocation transmitters, when the ERP is greater

than 1000 watts; (2) all portable devices; and (3) mobile devices, if

the EIRP of the station, in its normal configuration, will be 1.5 watts

or greater. The Commission has chosen the 1000 W ERP threshold, instead

of the proposed 2000 watts, because of the flexibility in this service

with respect to use, power, location, and other factors, and we believe

that this power limit is appropriate for most exposure situations. This

approach is consistent with the Commission's existing rules for

transmitters and devices of comparable use and similar operating

frequencies. The Commission will be providing guidance on acceptable

methods of evaluating compliance with the Commission's exposure limits

in OET Bulletin 65.

x. WCS Interference to MDS/ITFS

81. The Multipoint Distribution Service (``MDS'') and the

Instructional Television Fixed Service (``ITFS'') operate in the 2150-

2162 and 2500-2690 MHz bands. See 47 CFR part 21, subpart K and part

74, subpart I. After the comment period for this proceeding had closed,

several parties filed ex parte statements expressing their concern that

WCS transmissions would interfere with MDS/ITFS receiving

installations. Specifically, BellSouth states that the receiver/

downconverter (``downconverter'') located at each MDS/ITFS customer's

home is an inexpensive broadband device that receives all frequencies

between 2.1 GHz and 2.7 GHz. Thus, BellSouth states that a MDS/ITFS

downconverter located sufficiently close to a WCS transmitter would

directly receive WCS signals that would prevent clear reception of MDS/

ITFS signals. Specifically, BellSouth calculates that a WCS transmitter

that radiates more than 80 watts EIRP and that is located within 300

feet (91.44 meters) of a MDS/ITFS downconverter would overload the

downconverter and thus prevent the reception of MDS/ITFS programming

and information services. In order to counteract this problem,

BellSouth requests that the Commission limit WCS radiated power to 20

watts EIRP, unless the WCS licensee obtains an interference consent

agreement from the existing MDS and ITFS licensees. BellSouth states

that its proposed limit on WCS power would limit the maximum input to

MDS/ITFS receivers to 12 decibels below one milliwatt (or -12 dBm),

thus providing protection against receiver overload.

82. The Wireless Cable Association asserts that there currently are

one million analog MDS/ITFS installations and that interference from

WCS operations could cost $125,000,000 or more to cure. The National

ITFS Association notes that the Commission has a long standing policy

of protecting existing operations from interference caused by newly

authorized services and requests that the Commission address this issue

in a manner that would allow existing ITFS licensees to use the

frequencies licensed to them as intended by the Commission.

83. At this time the Commission will not impose any technical

restrictions on WCS licensees aimed at protecting the MDS/ITFS

services. The Commission understands the concerns expressed by the MDS/

ITFS licensees, and appreciates the value of the educational,

entertainment and other programming provided by these services,

including competition in the MVPD market. As it has repeatedly stated,

it is the Commission's desire that these services continue to flourish.

However, based on the record before us, the Commission is not persuaded

that the operation of WCS facilities would irreparably harm the MDS and

ITFS services. Without a clear sense of what particular services WCS

licensees will provide, and how soon these will be operational, the

interference impact of WCS operations on MDS/ITFS is unclear. Therefore

the Commission believes it would be premature at this time to consider

specific interference protection for MDS/ITFS. The Commission also

observes that the record on this issue is incomplete in that concerns

of the MDS/ITFS community were first raised in late filed ex parte

comments and thus no potential WCS applicants have had an opportunity

to respond to those comments. The Commission also notes that

traditional, analog MDS/ITFS downconverters have employed an

inexpensive design that has minimal frequency selectivity. Thus, even

though MDS/ITFS is licensed in the 2150-2162 MHz and 2500-2690 MHz

bands only, their downconverters receive all signals throughout the

entire 2.1-2.7 GHz band. The Commission is aware that the MDS/ITFS

industry is converting to newer, more robustly designed downconverters

that have vastly improved frequency selectivity and would not receive

WCS signals. Also, the digital downconverters to which the MDS/ITFS

industry is expected to convert over the next several years are

expected to be better designed and not subject to overloading from WCS

signals. The Commission applauds these developments and does not wish

to impede them. The public is served through the efficient use of

available spectrum which, in turn, is facilitated by the use of

receiving technology designed to provide protection from other spectrum

users in the market. Thus, to the extent that the Commission may in the

future, based on actual WCS operations, find it necessary to adopt an

interference rule for WCS, it would protect only those MDS/ITFS

downconverters installed within a year from the adoption date of this

Report and Order. After that time, the Commission would expect that

only more spectrally efficient downconverters would be installed by

MDS/ITFS licensees. In sum, the Commission concludes that it would be

improvident to adopt a requirement for WCS licensees to protect MDS/

ITFS operations unless and until it has a more precise understanding

about the nature and extent of problems that may actually arise.

xi. Field Strength Between Service Areas

84. In order for licensees to share spectrum along a common border,

each licensee must decrease its signal level at the border so that,

while it can provide acceptable communications within its licensed

service area, its signal level across the border is sufficiently

reduced to avoid causing interference to the neighboring system. In

broadband PCS, the Commission adopted a predicted or measured median

field strength of 47 dBV/m at any location on the border of

the PCS service area unless the parties agree to a higher field

strength. In drafting the proposed rules in the NPRM, we had to assume

one of the service area options that were proposed in text. We assumed

a nationwide license and thus did not specifically address the issue of

median field strength between initial service areas. Nevertheless, we

did specifically propose requiring a maximum median field strength of

47 dBV/m between those service areas which would be formed

through geographic partitioning. The Commission shall adopt this same

47 dBV/m maximum median field strength requirement between all

service

[[Page 9650]]

areas, unless the parties agree to a different field strength.

xii. Additional Technical Issues

85. In addition, Sun Microsystems requests that a minimum data rate

of 5 bits per hertz be required for the WCS bands. Sun Microsystems

argues that setting the minimum data rate at this high level would

stimulate new technologies. Sun Microsystems proposes that analog

transmission on the WCS spectrum be prohibited. Sun Microsystems states

that each service offering should be tiered in order to allow the

largest possible number of people to afford its benefits. Sun

Microsystems requests that high gain directional antenna systems (with

beamwidths no greater than 2 deg. to 3 deg.) be required for high power

use and that any omnidirectional antenna be required to use low power

and 18 to 25 dB gain antennas. Finally, Sun Microsystems suggests that

orthogonal coding and modulation schemes be permitted in order to allow

more than one licensee to use the same spectrum simultaneously. No

party commented on Sun Microsystems' proposals.

86. The Commission believes that the licensees will have a strong

incentive to put the spectrum to its best use. There is nothing in the

record of this proceeding that suggests that prohibiting certain

technologies or requiring specific technologies is appropriate for the

WCS. Accordingly, the Commission declines to adopt the technical

regulations proposed by Sun Microsystems.

E. Auction Procedures

87. In the NPRM, the Commission proposed an auction design and pre-

auction procedures for the WCS service in accordance with the

Appropriations Act and the expedited schedule which it imposes.

Specifically, the Commission proposed to award the WCS licenses through

competitive bidding and by means of a simultaneous multiple round

electronic auction. The Commission based this proposal on the need to

auction the WCS licenses quickly and to promote the efficient use of

the spectrum. As the Commission noted, the Appropriations Act requires

it to commence the WCS auction no later than April 15, 1997 and to

conduct the auction in a manner that ensures that all proceeds are

deposited into the United States Treasury no later than September 30,

1997.

i. Competitive Bidding Design

88. In the NPRM, the Commission proposed to auction licenses to

offer WCS service in conformity with the general competitive bidding

rules in part 1, subpart Q of the Commission's Rules and substantially

consistent with the auctions that have been employed in other wireless

services. 47 CFR part 1, subpart Q. In addition, the Commission

proposed certain modifications, addressed infra, to help speed the

auction process given the deadlines imposed by the Appropriations Act.

89. The Commission adopts its proposal to employ a single

simultaneous multiple round auction design for the WCS auction similar

to that used in the PCS auctions. As the Commission explained in the

NPRM, multiple round bidding will provide more information to bidders

about the values of the licenses during the auction than single round

bidding. With better information, bidders will have less incentive to

shade their bids downward in order to avoid the ``winner's curse'',

that is the tendency for the winner to be the bidder who most

overestimates the value of the item being auctioned. The Commission

also believes that multiple round bidding is likely to be fairer than

single round bidding as every bidder will have the opportunity to win a

license if it is willing to pay the most for it. Finally, as the

Commission stated in the NPRM, a single simultaneous auction will

facilitate any aggregation strategies that bidders may have and will

provide the most information to bidders about license values at a time

that they can best put that information to use.

90. In addition, the Commission adopts its proposal to require

bidding for WCS licenses by electronic means only. As the Commission

indicated in the NPRM, this decision is based on the belief that while

oral outcry auctions can be simple and rapid, it is not possible to

auction multiple licenses simultaneously in an oral auction. The

Commission also notes that because of the potentially large value of

the WCS licenses, an electronic multiple round auction will be

preferable because it will permit bidders time between rounds to confer

with principals and reassess their valuation models and bidding

strategies. The Commission also adopts its proposal to require that

bidders submit their bids electronically, rather than by telephone.

Given the time constraints imposed by the Appropriations Act, as well

as the recent improvements in our electronic bidding software, the

Commission believes that telephonic bidding should be permitted only

under exceptional circumstances, to be determined by the Wireless

Telecommunications Bureau. Finally, the Commission delegates to the

Wireless Telecommunications Bureau the discretion to determine whether

bidding for the WCS auction will be remote or on-site.

ii. Bidding Procedures

91. In the NPRM, the Commission tentatively concluded that the WCS

auction should follow the general competitive bidding procedures of

part 1, subpart Q of the Commission's rules. See 47 CFR part 1, subpart

Q. In addition, the Commission proposed to adopt specific provisions

regarding certain bidding-related issues. Finally, the Commission asked

interested parties to suggest the appropriate level of a minimum

opening bid for the WCS license or licenses.

92. The Commission adopts the bidding procedures proposed in the

NPRM. The WCS auction will be conducted using the general bidding

procedures set forth in part 1, subpart Q of the Commission's rules,

with some minor modifications designed to speed the auction in order to

comply with the time constraints imposed by the Appropriations Act.

Specifically, the Commission delegates to the Wireless

Telecommunications Bureau the discretion to establish a minimum opening

bid for the WCS licenses and to announce the minimum opening bid by

public notice. As the Commission stated in the NPRM, a minimum opening

bid will cause bidders to start bidding at a substantial fraction of

the final price of the license or licenses, thus ensuring that the

auction proceeds quickly and increasing the likelihood that the public

receives fair market value for the license or licenses. In keeping with

its obligation under the Appropriations Act to ensure that the auction

proceed rapidly, the Commission also delegates to the Wireless

Telecommunications Bureau the discretion to establish, raise and lower

minimum bid increments in the course of the auction. See 47 CFR

1.2104(d). Finally, the Commission concludes that where a tie bid

occurs, the high bidder will be determined by the order in which the

bids were received by the Commission.

iii. Procedural and Payment Issues

93. In the NPRM, the Commission tentatively concluded that, with

certain proposed modifications, subpart Q of part 1 of the Commission's

rules establishing procedural and payment rules for FCC auctions

generally should apply to the WCS auction. Only one commenter addressed

these issues. DigiVox contends that to effectively compete in the

auctions, many parties (especially small businesses) will need 90 days

from the release of the final rules before FCC Forms 175 are due in

[[Page 9651]]

order to finalize their business plans. DigiVox proposes a schedule

that includes commencing the auction on May 2, 1997. As the Commission

recognized in the NPRM, the Appropriations Act requires that the

Commission ``shall commence the competitive bidding'' for WCS licenses

no later than April 15, 1997. Although DigiVox urges an interpretation

of this requirement that would allow applicants to submit their short-

form applications on that date, the Commission concludes that the

statute clearly requires that ``bidding'' commence on April 15, 1997.

The Commission therefore will commence the WCS auction on April 15,

1997, and the auction will be conducted in substantial conformity with

subpart Q of part 1 of the Commission's Rules. The Commission also

adopts general rules regarding application and licensing procedures.

See subpart E of new part 27.

94. Pre-Auction Application Procedures. In the NPRM, the Commission

proposed that WCS applicants be required to file a short-form

application (FCC Form 175) prior to the auction. See 47 CFR 1.2105(a).

In addition, the Commission tentatively concluded that the Commission

should require electronic filing of all applications for this auction.

The Commission received no comments addressing this issue, and will

implement this proposal. Each bidder in the WCS auction must submit a

short-form application (FCC Form 175) by means of electronic filing. As

the Commission stated in the NPRM, the Commission believes that

electronic filing of applications will serve the best interests of

auction participants as well as ensure that the WCS auction will be

completed within the time frame mandated under the Appropriations Act.

The Commission has developed user-friendly electronic filing software

and Internet World Wide Web forms to give applicants the ability to

easily and inexpensively file and review applications. In addition, the

Commission believes that in light of the legislative deadline of April

15, 1997 for commencement of this auction, requiring electronic filing

will be helpful to applicants as well as the Commission. By shortening

the time required for the Commission to process applications before the

auction, electronic filing will increase the lead time available to

applicants to finalize their business plans and arrange necessary

financing before the short-form filing deadline.

95. The Commission also proposed in the NPRM that an applicant's

electronic submission of FCC Form 175 include a certification that the

applicant is not in default on any Commission licenses and that it is

not delinquent on any extension of credit from any federal agency. No

commenters addressed this issue. The Commission therefore adopts this

certification requirement for the WCS auction. As the Commission stated

in the NPRM, a certification regarding defaulted licenses and

delinquent payments to federal agencies will enable us to better

evaluate the financial qualifications of potential bidders, because it

will allow us to determine whether any bidder may later be subject to a

monetary judgment or collection procedures that may impair its

financial ability to provide service. In the Second Report and Order,

we decided that we should require sufficient information on the short-

form application to make a determination that ``the application is not

in violation of Commission Rules and that applications not meeting

those requirements may be dismissed prior to the competitive bidding.''

Implementation of Section 309(i) of the Communications Act--Competitive

Bidding, PP Docket No. 93-253, Second Report and Order, 59 FR 22980

(May 4, 1994) (``Second Report and Order''). Part of this documentation

necessarily includes certification that the bidder has the legal,

technical, financial, and other qualifications to bid in the auction.

96. Upfront Payment Amount. The Commission's Part 1 Rules require

the submission of an upfront payment as a prerequisite to participation

in spectrum auctions. See 47 CFR 1.2106. In the NPRM, the Commission

proposed to set the amount of the WCS upfront payment based on the

general formula the Commission adopted in the Second Report and Order

of $.02 per megahertz per population. In addition to seeking comment on

this proposal, the Commission asked commenters to suggest alternative

methods of establishing an upfront payment, and in particular, how the

Commission may estimate the value of the spectrum to be auctioned. The

Commission received no comments or alternative suggestions on this

issue, and will therefore adopt the proposed upfront payment for the

WCS auction. Given that a range of services may be provided on WCS

spectrum, it is difficult to estimate the value of this spectrum. The

Commission believes, however, that a $.02 per megahertz per population

upfront payment will serve the twin purposes of upfront payments--to

deter insincere bidding and to provide the Commission with a source of

funds to satisfy any bid withdrawal or default payments--without being

so high as to discourage participation in the WCS auction.

97. Procedure For Upfront Payment. The Commission also proposed to

require bidders to deposit their upfront payments in the Commission's

lock-box bank by wire transfer only by a date to be announced by public

notice. No commenters addressed this issue. The Commission therefore

adopts the requirement that bidders in the WCS auction deposit their

upfront payment by wire transfer only. Although in the past the

Commission has permitted payment by cashier's check, the Commission

believes that requiring payment by wire transfer will benefit bidders

by streamlining and expediting the administration of the auction. As

the Commission noted in the NPRM, the Commission's experience has shown

that verification of payments remitted by cashier's check is time-

consuming and cumbersome, and requires the allotment of extra

processing time prior to the start of the auction. Permitting payment

by cashier's check would require that upfront payments be made at an

earlier point, which would decrease applicants' lead time to pursue

business plans and arrange necessary financing before the start of the

auction. In addition, given the large number of financial institutions

offering wire transfer services, a requirement that bidders remit their

upfront payments by wire transfer will result in minimal, if any, extra

cost to auction applicants. Such a cost is far outweighed by the

benefit of speeding the auction process through quicker verification of

payments.

98. Down Payment and Full Payment. In the NPRM, the Commission

tentatively concluded that to help ensure that auction winners are able

to pay the full amount of their bids, every winning bidder in the WCS

auction would be required to tender a down payment sufficient to bring

its total amount on deposit with the Commission up to 20 percent of its

winning bid. See 47 CFR 1.2107(b). No commenters addressed this issue.

The Commission therefore concludes that a down payment equal to 20

percent of each high bidder's total winning bids will be due within 10

business days after the issuance of a public notice announcing the

winning bidder for each WCS license.

99. The Commission also proposed that a winning bidder that makes

its down payment in a timely manner be required to file an FCC Form 600

long-form application and follow the long-form application procedures

in Sec. 1.2107. See 47 CFR 1.2107. The Commission proposed that after

reviewing the

[[Page 9652]]

winning bidder's long-form application, and after verifying receipt of

the winning bidder's 20 percent down payment, the Commission would

announce the application's acceptance for filing, thus triggering the

filing window for petitions to deny. The Commission also noted that

given the abbreviated auction schedule contemplated by the

Appropriations Act, a condensed schedule for the filing of petitions to

deny would apply for the WCS auction. No commenters addressed this

issue. The Commission therefore adopts these proposals governing long-

form application procedures. Winning bidders that have made the

necessary down payment will be required to file a modified FCC Form 600

that has been updated to provide for the Commission's decision to

permit flexibility in terms of permissible uses. Finally, the

Appropriations Act provides that no application for a WCS authorization

may be granted earlier than seven (7) days following public notice of

the acceptance for filing of such an application, and that parties will

have no less than five (5) days following such public notice to file a

petition to deny. See Appropriations Act, section 3001(c). The

Commission will therefore afford parties five (5) days to file a

response to any petition to deny. If, pursuant to Section 309(d) of the

Communications Act, the Commission dismisses or denies any and all

petitions to deny, the Commission will announce by public notice that

it is prepared to award a license and the winning bidder will then have

ten (10) business days to submit the balance of its winning bid. If the

bidder does so, the license will be granted. If the bidder fails to

submit the required down payment or the balance of the winning bid or

the license is otherwise denied, the Commission will assess a default

payment as discussed infra.

100. Amendments and Modifications of Applications. In the NPRM, the

Commission stated that to encourage maximum bidder participation,

applicants should be permitted to amend or modify their short-form

applications as provided in Sec. 1.2105. 47 CFR 1.2105. The Commission

also noted that in the broadband PCS context, the Commission modified

its rules to permit ownership changes that result when consortium

investors drop out of bidding consortia, even if control of the

consortium changes due to this restructuring. No commenters addressed

this issue. The Commission therefore adopts the same exception to its

rules prohibiting major amendments in the WCS auction.

101. Bid Withdrawal, Default and Disqualification. In the NPRM, the

Commission tentatively concluded that the withdrawal, default, and

disqualification rules for the WCS auction would be based upon the

procedures established in the Commission's general competitive bidding

rules. With regard to bids which are submitted in error, the Commission

proposed to apply the guidelines which it recently fashioned to provide

for relief from the bid withdrawal payment requirements under certain

circumstances. See Atlanta Trunking Associates, Inc. and MAP Wireless

L.L.C. Requests to Waive Bid Withdrawal Payment Provisions, Order 11

FCC Rcd 17189, 61 FR 25807 (May 23, 1996), recon. pending. See also

Georgia Independent PCS Corporation Request to Waive Bid Withdrawal

Payment Provision, Order, 11 FCC Rcd 13728, 61 FR 25810 (May 23, 1996),

app. rev. pending. No commenters addressed this issue. We therefore

adopt these provisions governing bid withdrawal, default and

disqualification for the WCS auction.

iv. Anti-Collusion Rules

102. In the NPRM, the Commission tentatively concluded that the

anti-collusion rules which the Commission adopted in the Second Report

and Order, and which are codified at 47 CFR 1.2105, should apply to the

WCS auction. The Commission received no comments addressing the issue

of collusion. The Commission has therefore determined that these rules

prohibiting collusive conduct will apply to the WCS auction.

v. Treatment of Designated Entities

103. Race- and gender-based classifications must meet exacting

standards of judicial review. In Adarand Constructors v. Pena, 115

S.Ct. 2097 (1995) (``Adarand'') the Supreme Court held that all racial

classifications, whether imposed at the federal, state or local

government level, must be analyzed by a reviewing court under a strict

scrutiny standard of review. This standard requires such

classifications to be narrowly tailored to further a compelling

governmental interest. Adarand, 115 S. Ct. at 2113. In United States v.

Virginia, 116 S.Ct. 2264 (June 26, 1996) (``VMI'') the Supreme Court

reviewed a state program containing gender classification and held it

was unconstitutional under an intermediate scrutiny standard of review.

This standard requires that ``[p]arties who seek to defend gender-based

government action must demonstrate an `exceedingly persuasive

justification' for that action.'' VMI, 116 S. Ct. at 2274 (citing

J.E.B. v. Alabama ex rel. T. B., 511 U.S. 127, 136-37 and n. 6 (1994)

and Mississippi Univ. for Women v. Hogan, 458 U.S. 718, 724 (1982)).

Under this test, the government must show ``at least that the

(challenged) classification serves `important governmental objectives

and that the discriminatory means employed' are `substantially related

to the achievement of those objectives.' '' Id. at 2275 (quoting

Mississippi Univ. for Women v. Hogan, 458 U.S. at 724 (quoting Wengler

v. Druggists Mutual Ins. Co., 446 U.S. 142, 150 (1980))). While the

Supreme Court has not directly addressed constitutional challenges to

federal gender-based programs since Adarand and VMI, the Commission's

review of the relevant broad language in VMI indicates that the Court

does not differentiate between federal and state official actions in

its equal protection analysis. Similarly, the Adarand decision

definitively eliminated any distinction between federal and state race-

based programs in setting its strict scrutiny standard of judicial

review. Adarand, 115 S. Ct. at 2113. Therefore, the Commission

concludes that any gender-based preference maintained in the WCS

auction rules would need to meet the VMI intermediate scrutiny standard

of review.

104. The Commission believes that the record in this proceeding is

insufficient to support race- and gender-based provisions that would

survive judicial scrutiny. Moreover, adopting race- and gender-based

provisions unsupported by a substantial record would disserve the

public interest because it might result in litigation that could

further delay the conduct of the auction and the award of WCS licenses,

and postpone the introduction of new competition to the marketplace.

The Commission therefore concludes that it should not adopt special

auction provisions that are race- and gender-based.

105. While the Commission declines to establish race- and gender-

based provisions for the WCS auction rules, the Commission will adopt

provisions for small businesses, as suggested by several commenters.

The Commission notes that nothing in the Adarand or VMI decisions calls

the Commission's small business provisions into question. Moreover, by

retaining small business preferences, the Commission believes that it

fulfill its mandate under section 309(j) to provide increased

opportunities for minority- and women-owned businesses, 47 U.S.C.

309(j)(3),

[[Page 9653]]

because many minority- and women-owned entities are small businesses

who therefore will qualify for the same special provisions that would

have applied to them under the previous rules.

106. The Commission also has initiated a comprehensive rule making

proceeding to gather evidence regarding market barriers to entry faced

by small businesses as well as minority- and women-owned firms. See

Section 257 Proceeding to Identify and Eliminate Market Entry Barriers

for Small Businesses, GN Docket No. 96-113, Notice of Inquiry, 11 FCC

Rcd 6280, 61 FR 33066 (June 26, 1996). If a sufficient record is

adduced that will support race- and gender-based provisions that will

satisfy judicial scrutiny, the Commission will consider race- and

gender-based provisions for future auctions. Toward this end, the

Commission will continue to request bidder information on the WCS

short-form filings as to minority- or women-owned status. In its

analysis of the applicant pool and the auction results, the Commission

will monitor whether it has accomplished substantial participation by

minorities and women through the broad provisions available to small

businesses. This will also assist the Commission in preparing its

report to Congress on the success of designated entities in auctions.

See 47 U.S.C. 309(j)(12)(D).

i. Special Provisions for Designated Entities

A. Bidding Credits

107. The Commission will adopt bidding credits for small businesses

and will adopt a tiered bidding credit approach, as supported by

several commenters. The Commission agrees with commenters that the

availability of bidding credits is consistent with the Commission's

obligations under section 309(j) to promote economic opportunity for a

wide variety of applicants, including small businesses and businesses

owned by minorities and women. The Commission believes that a tiered

approach, which enhances the discounting effect of bidding credits

because not all entities receive the same benefit, will encourage

smaller businesses to participate in the provision of WCS services. As

for the level of the credits, the Commission believes that bidding

credits of 25 percent for small businesses and 35 percent for very

small businesses are appropriate. These levels reflect the thresholds

used in the broadband PCS auctions with a reasonable adjustment for the

unavailability of installment payment plans for WCS licensees. It is

difficult to accurately calculate the net present value of an

installment program (which would depend on several variables including

future commercial interest rates), and the Commission therefore is

adjusting the broadband PCS bidding credit levels upward by ten

percentage points. The Commission believes that this tiered bidding

credit approach and 10 percent adjustment are reasonable and consistent

with the comments. These credits are narrowly tailored to the varying

abilities of businesses to access capital and also take into account

that different small businesses will pursue different strategies.

B. Definition of Small Business

108. Consistent with the suggestions of many of the commenters, the

Commission will generally employ the small business definitions and

standards used in broadband PCS, which the Commission believes have the

advantages of ready availability and familiarity to many small

businesses that might be interested in this spectrum. The Commission

will therefore define a ``small business'' as an entity with average

gross revenues not exceeding $40 million for each of the preceding

three years, and a ``very small business'' as an entity with average

gross revenues not exceeding $15 million in each of the preceding three

years. The Commission declines to adopt the higher revenue standard

suggested by Vanguard because it does not believe that Congress, in

enacting section 309(j), intended for firms with $500 million in

revenue to be regarded as ``small''. Furthermore, adopting Vanguard's

suggested standard would create severe disparities between ``small

businesses'' in terms of capitalization and access to financing.

109. In determining whether an entity qualifies as a small business

at either threshold, the Commission will consider the gross revenues of

the applicant, its affiliates, and certain investors in the applicant.

Specifically, the Commission will attribute the gross revenues of all

controlling principals in the applicant as well as the gross revenues

of affiliates of the applicant. Consistent with broadband PCS rules,

the Commission will apply two notable exceptions to these attribution

rules. First, the Commission determines that personal net worth is not

included in the determination of eligibility for bidding as a small

business. Second, the Commission agrees with CIRI that entities owned

by Alaska Native Corporations and Indian Tribes are exempt from

affiliation for purposes of determining eligibility of applicants for

bidding credits, because of the general lack of availability of

revenues from such entities for purposes of participation in WCS. This

exception is consistent with treatment afforded such entities by the

Small Business Administration's 8(a) program, See 13 CFR

124.112(c)(2)(iii), and as the Commission previously has determined, it

does not believe such a provision to be affected by Adarand.

110. The Commission declines, however, to employ the specific

control group equity requirements that the Commission adopted for

broadband PCS, because the time frame for the conduct of the WCS

auction is likely to be too short to allow for the creation of the type

of complex financial relationships as arose in the broadband PCS

context. Instead, the Commission will simply define the term

``control'' to include both de jure and de facto control of the

applicant. However, the Commission will still require that, in order

for an applicant to qualify as a small business, qualifying small

business principals must maintain ``control'' of the applicant. The

Commission also notes that while it is not imposing specific equity

requirements on the small business principals, the absence of

significant equity could raise questions about whether the applicant

qualifies as a bona fide small business.

C. Unjust Enrichment

111. The Commission agrees with CIRI on the employment of an unjust

enrichment restriction on the transfer of licenses acquired by small

businesses, similar to that set forth in 47 CFR 24.839(d), which the

Commission believes is necessary to ensure that meaningful small

business participation is not thwarted by transfers of licenses to non-

designated entities. To permit otherwise would severely impede the

meaningful participation of designated entities because bidders could

participate as small businesses with the intention not of providing

service but only of profiting from the difference in the discounted

auction price and the worth of the license on the resale market. To

prevent unjust enrichment by small businesses transferring licenses

acquired through the use of bidding credits, the Commission imposes a

payment requirement on transfers of such licenses to entities that are

not owned by small businesses. The Commission believes it is

appropriate to conform our unjust enrichment rules for WCS to the

broadband PCS unjust enrichment rules as they relate to bidding

credits. These rules provide

[[Page 9654]]

that, during the initial license term, licensees utilizing bidding

credits and seeking to assign or transfer control of a license to an

entity that does not meet the eligibility criteria for bidding credits

will be required to reimburse the government for the amount of the

bidding credit before the transfer will be permitted. 47 CFR

24.716(d)(1). Additionally, the rules which the Commission now adopts

provide that if, within the original term, a licensee applies to assign

or transfer control of a license to an entity that is eligible for a

lower bidding credit, the difference between the bidding credit

obtained by the assigning party and the bidding credit for which the

acquiring party would qualify must be paid to the United States

Treasury as a condition of approval of the assignment or transfer. 47

CFR 24.716(d)(2). See also 47 CFR 1.2111. These provisions also will

apply to WCS licensees who partition or disaggregate their licenses.

112. If a licensee that utilizes bidding credits seeks to make any

change in ownership structure that would render the licensee ineligible

for bidding credits, or eligible only for a lower bidding credit, the

licensee must first seek Commission approval and reimburse the

government for the amount of the bidding credit, or the difference

between its original bidding credit and the bidding credit for which it

is eligible after the ownership change, plus interest based on the rate

for ten year U.S. Treasury obligations applicable on the date the

license is granted. Additionally, if an investor subsequently purchases

an interest in the business and, as a result, the gross revenues of the

business exceed the applicable financial caps, this unjust enrichment

provision will apply.

113. The amount of this payment will be reduced over time as

follows: (1) A transfer in the first five years of the license term

will result in a forfeiture of 100 percent of the value of the bidding

credit (or, in the case of very small businesses transferring to small

businesses, 100 percent of the difference between the bidding credit

received by the former and the bidding credit for which the latter is

eligible); (2) in year six of the license term the payment will be 80

percent; (3) in year seven the payment will be 60 percent; in year

eight the payment will be 40 percent; and in year nine the payment will

be 20 percent, after which there will be no required payment. These

assessments will have to be paid to the U.S. Treasury as a condition of

approval of the assignment, transfer, or ownership change.

D. Other Matters

114. Based upon the record in this proceeding, the Commission has

determined that special provisions for rural telcos are not warranted.

However, rural telcos can take advantage of the geographic partitioning

and spectrum disaggregation provisions which the Commission adopts, and

those rural telcos that qualify as small or very small businesses may

take advantage of the Commission's tiered bidding credits. In addition,

the Commission declines to afford an additional bidding credit, as

suggested by DigiVox, to small businesses bidding in areas in which

they hold no CMRS licenses. The Commission believes that such

preferences might discourage small businesses from acquiring WCS

spectrum as supplemental for CMRS services already offered in that

geographic license area, which would run counter to our goal of

flexible use. The Commission also declines to adopt any limit on the

total number of WCS licenses for which an entity may take advantage of

small business bidding credits. The Commission does not regard such

limitation as necessary and generally believes that, absent a strong

justification to do otherwise, the auction process should be permitted

to work without constraint to allow all bidders to express their

valuations of the licenses up for bid. Finally, the Commission also

declines to set aside a block of licenses for auction only to

designated entities because the Commission does not believe such set-

asides to be necessary to ensure opportunities for participation by

designated entities in light of the substantial bidding credits, as

well as the partitioning and disaggregation rules the Commission is

adopting.

115. The Commission also notes that its decision both to license

WCS in two 10 MHz blocks and two 5 MHz blocks, and to designate MEA and

REAG service areas should increase the opportunities for participation

in WCS by small businesses and other designated entities. These

decisions will help to ensure that the cost of obtaining WCS spectrum

remains within reach of a larger number of prospective applicants than

would be the case were we to offer only one or two licenses in each

area. In addition, by offering licenses for smaller blocks of spectrum,

the Commission will enable WCS applicants to acquire only the amount of

spectrum necessary to implement their particular service plans. Such

efficiencies directly benefit small businesses who may not be able to

afford to acquire larger blocks of spectrum. For example, permitting

bidders to acquire smaller blocks of spectrum will enable small

businesses that have identified niche markets to focus their bidding

and avoid paying for more spectrum than they actually need.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Parts 1, 2, 27, and 97 of title 47 of the Code of Federal

Regulations are amended as follows:

PART 1--PRACTICE AND PROCEDURE

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

Authority: 47 U.S.C. 151, 154, 303, and 309(j) unless otherwise

noted.

2. Section 1.1307 is amended by revising paragraphs (b)(1) and the

first sentence of paragraph (b)(2) and Table 1 in paragraph (b)(1) is

amended by adding the entry for the Wireless Communications Service to

read as follows:

Sec. 1.1307 Actions that may have a significant environmental effect,

for which Environmental Assessments (EAs) must be prepared.

* * * * *

(b) * * *

(1) The exposure limits in Sec. 1.1310 are generally applicable to

all facilities, operations and transmitters regulated by the

Commission. However, a determination of compliance with the exposure

limits in Sec. 1.1310 (routine environmental evaluation), and

preparation of an EA if the limits are exceeded, is necessary only for

facilities, operations and transmitters that fall into the categories

listed in Table 1, or those specified in paragraph (b)(2) of this

section. All other facilities, operations and transmitters are

categorically excluded from making such studies or preparing an EA,

except as indicated in paragraphs (c) and (d) of this section. For

purposes of Table 1, ``rooftop'' means the roof or otherwise outside,

topmost level or levels of a building structure that is occupied as a

workplace or residence and where either workers or the general public

may have access. The term ``power'' in column 2 of Table 1 refers to

total operating power of the transmitting operation in question in

terms of effective radiated power (ERP), equivalent isotropically

radiated power (EIRP), or peak envelope power (PEP), as defined in

Sec. 2.1 of this chapter. For the case of the Cellular Radiotelephone

Service, subpart H of part 22 of this

[[Page 9655]]

chapter; the Personal Communications Service, part 24 of this chapter;

the Wireless Communications Service, part 27 of this chapter; and

covered Specialized Mobile Radio Service operations, part 90 of this

chapter; the phrase ``total power of all channels'' in column 2 of

Table 1 means the sum of the ERP or EIRP of all co-located

simultaneously operating transmitters of the facility. When applying

the criteria of Table 1, radiation in all directions should be

considered. For the case of transmitting facilities using sectorized

transmitting antennas, applicants and licensees should apply the

criteria to all transmitting channels in a given sector, noting that

for a highly directional antenna there is relatively little

contribution to ERP or EIRP summation for other directions.

Table 1.--Transmitters, Facilities and Operations Subject to Routine

Environmental Evaluation

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

Service (Title 47 CFR rule part) Evaluation required if:

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

* * * * * ......................... * * * * *

Wireless Communications Service (Part 27). Total power of all channels

> 1000 W ERP (1640 W EIRP)

* * * * * ......................... * * * * *

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(2) Mobile and portable transmitting devices that operate in the

Cellular Radiotelephone Service, the Personal Communications Services,

the Satellite Communications Services, the Wireless Communications

Service, the Maritime Services (ship earth stations only), and covered

Specialized Mobile Radio Service providers authorized under subpart H

of part 22, part 24, part 25, part 27, part 80, and part 90 of this

chapter are subject to routine environmental evaluation for RF exposure

prior to equipment authorization or use, as specified in Secs. 2.1091

and 2.1093 of this chapter. * * *

* * * * *

PART 2--FREQUENCY ALLOCATIONS AND RADIO TREATY MATTERS; GENERAL

RULES AND REGULATIONS

1. The authority citation for part 2 continues to read as follows:

Authority: Secs. 4, 302, 303, and 307 of the Communications Act

of 1934, as amended, 47 U.S.C. 154, 302, 303 and 307, unless

otherwise noted.

2. Section 2.106, the Table of Frequency Allocations, is amended as

follows:

a. Remove the existing entries for 2300-2450 MHz.

b. Add entries in numerical order for 2300-2450 MHz.

c. In the International Footnotes under heading I., add footnotes

S5.150, S5.282 , S5.393, S5.394, S5.395, and S5.396 in numerical order.

d. In the International Footnotes under heading II., remove

footnotes 750B, 751, 751A, and 751B.

e. Remove United States footnote US253.

f. Add United States footnotes US338 and US339 in numerical order.

g. Revise United States footnotes US276 and US328.

h. Revise Government footnote G2.

i. Add Government footnotes G120, G123 and G124 in numerical order.

The revisions and additions read as follows:

Sec. 2.106 Table of Frequency Allocations.

* * * * *

International table United States table FCC use designators

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

Government Non-

Region 2-- Region 3-- --------------- Government

Region 1-- allocation MHz allocation MHz --------------- Rule Special-use

allocation MHz Allocation Allocation part(s) frequencies

MHz MHz

(1) (2) (3) (4) (5) (6) (7)

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

* * * * * * *

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

2300-2305 2300-2305 2300-2305 2300-2305 2300-2305 ........... ..............

FIXED FIXED FIXED ............. Amateur Amateur ..............

(97)

MOBILE MOBILE MOBILE ............. ............. ........... ..............

Amateur RADIOLOCATION RADIOLOCATION ............. ............. ........... ..............

Radiolocation Amateur Amateur ............. ............. ........... ..............

S5.394 ................ G123

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

2305-2310 2305-2310 2305-2310 2305-2310 2305-2310 ........... ..............

FIXED FIXED FIXED ............. FIXED WIRELESS ..............

COMMUNICAT

IONS (27)

MOBILE MOBILE MOBILE ............. MOBILE except ........... ..............

aeronautical

mobile

Amateur RADIOLOCATION RADIOLOCATION ............. RADIOLOCATION Amateur ..............

(97)

Radiolocation Amateur Amateur ............. Amateur ........... ..............

S5.394 ................ US338 G123 US338

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

2310-2320 2310-2320 2310-2320 2310-2320 2310-2320 ........... ..............

FIXED FIXED FIXED FIXED BROADCASTING- WIRELESS Digital Audio

-SATELLITE COMMUNICAT Radio

US327 IONS (27) Services

MOBILE MOBILE MOBILE Mobile US339 MOBILE US339 ........... ..............

Amateur RADIOLOCATION RADIOLOCATION Radiolocation RADIOLOCATION ........... ..............

G2

Radiolocation Amateur Amateur ............. ............. ........... ..............

................ ................ ............. ............. ........... ..............

[[Page 9656]]

S5.395 S5.393 S5.394 S5.393 S5.396 S5.396 US327 S5.396 US338

S5.396 US338 G120

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

2320-2345 2320-2345 2320-2345 2320-2345 2320-2345 ........... ..............

BROADCASTING

-SATELLITE

US327

FIXED FIXED FIXED Fixed ............. ........... Digital Audio

Radio

Services

MOBILE MOBILE MOBILE Mobile US 276 Mobile US 276 ........... ..............

US328

Amateur RADIOLOCATION RADIOLOCATION Radiolocation ............. ........... ..............

G2

Radiolocation Amateur Amateur ............. ............. ........... ..............

S5.395 S5.393 S5.394 S5.393 S5.396 S5.396 US327 S5.396

S5.396 US328 G120

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

2345-2360 2345-2360 2345-2360 2345-2360 2345-2360 ........... Digital Audio

BROADCASTING Radio

-SATELLITE Services

US327

FIXED FIXED FIXED Fixed FIXED WIRELESS ..............

COMMUNICAT

IONS (27)

MOBILE MOBILE MOBILE Mobile US339 MOBILE US339 ........... ..............

Amateur RADIOLOCATION RADIOLOCATION Radiolocation RADIOLOCATION ........... ..............

G2

Radiolocation Amateur Amateur ............. ............. ........... ..............

................ ................ ............. ............. ........... ..............

S5.395 S5.393 S5.394 S5.393 S5.396 S5.396 US327 S5.396

S5.396 G120

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

2360-2390 2360-2390 2360-2390 2360-2390 2360-2390 ........... ..............

FIXED FIXED FIXED MOBILE US276 MOBILE US276 ........... ..............

MOBILE MOBILE MOBILE RADIOLOCATION ............. ........... ..............

G2

Amateur RADIOLOCATION RADIOLOCATION Fixed ............. ........... ..............

Radiolocation Amateur Amateur ............. ............. ........... ..............

S5.394 ................ G120

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

2390-2400 2390-2400 2390-2400 2390-2400 2390-2400 ........... ..............

FIXED FIXED FIXED ............. AMATEUR AMATEUR ..............

(97)

MOBILE MOBILE MOBILE ............. ............. Radio ..............

Frequency

Devices

(15)

Amateur RADIOLOCATION RADIOLOCATION ............. ............. ........... ..............

Radiolocation Amateur Amateur ............. ............. ........... ..............

S5.394 ................ G122

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

2400-2402 2400-2402 2400-2402 2400-2402 2400-2402 ........... ..............

FIXED FIXED FIXED ............. Amateur Amateur ..............

(97)

MOBILE MOBILE MOBILE ............. ............. ........... ..............

Amateur RADIOLOCATION RADIOLOCATION ............. ............. ........... ..............

Radiolocation Amateur Amateur ............. ............. ........... ..............

S5.150 S5.282 S5.150 S5.282 S5.150 S5.282 S5.150 G123 S5.150 S5.282

S5.394

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

2402-2417 2402-2417 2402-2417 2402-2417 2402-2417 ........... ..............

FIXED FIXED FIXED ............. AMATEUR AMATEUR ..............

(97)

MOBILE MOBILE MOBILE ............. ............. Radio ..............

Frequency

Devices

(15)

Amateur RADIOLOCATION RADIOLOCATION ............. ............. ........... ..............

Radiolocation Amateur Amateur ............. ............. ........... ..............

S5.150 S5.282 S5.150 S5.282 S5.150 S5.282 S5.150 G122 S5.150 S5.282

S5.394

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

2417-2450 2417-2450 2417-2450 2417-2450 2417-2450 ........... ..............

FIXED FIXED FIXED Radiolocation Amateur Amateur ..............

G2 (97)

MOBILE MOBILE MOBILE ............. ............. ........... ..............

Amateur RADIOLOCATION RADIOLOCATION ............. ............. ........... ..............

Radiolocation Amateur Amateur ............. ............. ........... ..............

[[Page 9657]]

S5.150 S5.282 S5.150 S5.282 S5.150 S5.282 S5.150 S5.282 S5.150 S5.282

S5.394 G124

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

* * * * * * *

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

International Footnotes

* * * * *

I. New ``S'' Numbering Scheme.

* * * * *

S5.150 The following bands:

13533-13567 kHz (centre frequency 13560 kHz),

26957-27283 kHz (centre frequency 27120 kHz),

40.66-40.70 MHz (centre frequency 40.68 MHz),

902-928 MHz in Region 2 (centre frequency 915 MHz),

2400-2500 MHz (centre frequency 2450 MHz),

5725-5875 MHz (centre frequency 5800 MHz), and

24-24.25 GHz (centre frequency 24.125 GHz)

are also designated for industrial, scientific and medical (ISM)

applications. Radiocommunication services operating within these bands

must accept harmful interference which may be caused by these

applications. ISM equipment operating in these bands is subject to the

provisions of No. 1815/S15.13.

S5.282 In the bands 435-438 MHz, 1260-1270 MHz, 2400-2450 MHz,

3400-3410 MHz (in Regions 2 and 3 only) and 5650-5670 MHz, the amateur-

satellite service may operate subject to not causing harmful

interference to other services operating in accordance with the Table

(see No. S5.43). Administrations authorizing such use shall ensure that

any harmful interference caused by emissions from a station in the

amateur-satellite service is immediately eliminated in accordance with

the provisions of No. 2741/S25.11. The use of the bands 1260-1270 MHz

and 5650-5670 MHz by the amateur-satellite service is limited to the

Earth-to-space direction.

* * * * *

S5.393 Additional allocation: in the United States and India, the

band 2310-2360 MHz is also allocated to the broadcasting-satellite

service (sound) and complementary terrestrial sound broadcasting

service on a primary basis. Such use is limited to digital audio

broadcasting and is subject to the provisions of Resolution 528 (WARC-

92).

S5.394 In the United States, the use of the band 2300-2390 MHz by

the aeronautical mobile service for telemetry has priority over other

uses by the mobile services. In Canada, the use of the band 2300-2483.5

MHz by the aeronautical mobile service for telemetry has priority over

other uses by the mobile services.

S5.395 In France, the use of the band 2310-2360 MHz by the

aeronautical mobile service for telemetry has priority over other uses

by the mobile service.

S5.396 Space stations of the broadcasting-satellite service in the

band 2310-2360 MHz operating in accordance with No. S5.393 that may

affect the services to which this band is allocated in other countries

shall be coordinated and notified in accordance with Resolution 33.

Complementary terrestrial broadcasting stations shall be subject to

bilateral coordination with neighboring countries prior to their

bringing into use.

* * * * *

United States (US) Footnotes

* * * * *

US276 Except as otherwi

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