Use of the 28 GHz and 31 GHz Bands for Local Multipoint Distribution Service

FEDERAL COMMUNICATIONS COMMISSION

47 CFR PART 101

[CC Docket No. 92-297; FCC 97-82]

Use of the 28 GHz and 31 GHz Bands for Local Multipoint

Distribution Service

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission adopts a Second Report and Order, Order on

Reconsideration and Fifth Notice of Proposed Rulemaking regarding the

use of the 28 GHz and 31 GHz Bands for Local Multipoint Distribution

Service (LMDS). The Second Report and Order designates an additional

300 megahertz of spectrum in the 31 GHz band to LMDS and adopts service

and competitive bidding rules for LMDS. The Order on Reconsideration

denies petitions for reconsideration of the Commission's dismissal of

applications for waiver of the Commission's point-to-point rules

governing the 28 GHz band. These portions of the decision will be

summarized in a future edition of the Federal Register. The Fifth

Notice of Proposed Rulemaking (Fifth NPRM) seeks comment on specific

rules to be applied for the partitioning and disaggregation of LMDS

licenses. This action is taken to establish a record from which to

consider procedural, administrative and operational rules for

partitioning and disaggregating LMDS licenses and to reach an ultimate

decision. This Fifth NPRM contains new information collections subject

to the Paperwork Reduction Act of 1995 (PRA). It will be submitted to

the Office of Management and Budget (OMB) for review under the PRA. The

general public is invited to comment on the proposed information

collections contained in this proceeding.

DATES: Comments are due on or before April 21, 1997, and reply comments

are due on or before May 6, 1997. Written comments by the public on the

proposed information collections are due by April 21, 1997.

ADDRESSES: Secretary, Federal Communications Commission, Washington, DC

20554. In addition to filing comments with the Secretary, a copy of any

comments on the information collections contained herein should be

submitted to Dorothy Conway, Federal Communications Commission, Room

234, 1919 M Street, NW., Washington, DC 20554, or via the Internet to

[email protected].

FOR FURTHER INFORMATION CONTACT:

Bob James, Private Wireless Division, (202) 418-0680, Mark Bollinger or

Jay Whaley, Auctions Division, (202) 418-0660, or Joe Levin or Jane

Phillips, Policy Division, (202) 418-1310. For additional information

concerning the information collections contained in this Fifth NPRM,

contact Dorothy Conway at 202-418-0217, or via the Internet at

[email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Fifth NPRM segment

of the Second Report and Order, Order on Reconsideration and Fifth

Notice of Proposed Rulemaking in CC Docket No. 92-297, FCC 97-82,

adopted March 11, 1997, and released March 13, 1997. The Second Report

and Order portion of this decision will be summarized in a future

edition of the Federal Register. The complete text of this decision is

available for inspection and copying during normal business hours in

the FCC Reference Center (Room 239), 1919 M Street, NW., Washington,

DC, and also may be purchased from the Commission's copy contractor,

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

NW., Suite 140, Washington, DC 20037.

Paperwork Reduction Act

1. This Fifth NPRM contains a proposed information collection. The

Commission, as part of its continuing effort to reduce paperwork

burdens, invites the general public to comment on the information

collections contained in this Fifth NPRM, as required by the Paperwork

Reduction Act of 1995, Public Law 104-13. Public and agency comments

are due at the same time as other comments on this Fifth NPRM. Comments

should address: (a) whether the proposed collection of information is

necessary for the proper performance of the functions of the

Commission, including whether the information shall have practical

utility; (b) the accuracy of the Commission's burden estimates; (c)

ways to enhance the quality, utility, and clarity of the information

collected; and (d) ways to minimize the burden of the collection of

information on the respondents, including the use of automated

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collection techniques or other forms of information technology.

OMB Approval Number: 3060-0531.

Title: Redesignation of 27.5 GHz Frequency Band, Establishing Rules

and Policies for Local Multipoint Distribution (NPRM CC Docket No. 92-

297).

Form No.: N/A.

Type of Review: Reinstatement, with change, of a previously

approved collection for which approval has expired.

Respondents: Business or other for-profit.

Number of Respondents: 197.

Estimated Time Per Response: 21 hours.

Total Annual Burden: 3,132.5 hours.

Total Annual Cost: $205,800.

Needs and Uses: The information requested will be used by FCC

personnel to determine whether partitioning and disaggregation

applicants are qualified legally and technically to be licensed to use

the radio spectrum.

OMB Approval Number: New Collection (which adds respondents to

three existing collections 3060-0105, FCC 430; 3060-0068, FCC 702;

3060-0623, FCC 600).

Title: Redesignation of 27.5 GHz Frequency Band, Establishing Rules

and Policies for Local Multipoint Distribution (NPRM CC Docket No. 92-

297).

Form No.: FCC Forms 430, 600, and 702.

Type of Review: New collection.

Respondents: Potential LMDS applicants.

Number of Respondents; Estimated Time Per Response and Total Annual

Burden: If the proposed changes in the Fifth NPRM are adopted the

respondents and burden for the FCC Form's 430, 600, and 702 as follows:

The FCC 430 has 1,900 respondents, to be increased to 3,433; the

estimated time for completion is 2 hours per respondent. The total

annual burden for the FCC 430 is now 3,800 hours, and would increase to

6,866 hours. The FCC 600 has 194,769 respondents, which would be

increased to 198,053. The estimated time for completion is 4 hours per

respondent. The total annual burden is currently 779,076. This figure

will be increased to 792,212 hours if the changes proposed in the Fifth

NPRM are adopted. The Form 702 has 1,000 respondents, to be increased

to 2,644 respondents. The estimated time for completion is 5 hours per

respondent. The total annual burden for the FCC 702 is now 5,000 hours

and would increase to 13,220 hours.

Needs and Uses: The information will be used by Commission

personnel to determine if the licensee is a qualifying entity to obtain

a partitioned license or disaggregated spectrum. Additionally, the

information will be used by Commission personnel to determine who is

using spectrum and thus maintain the integrity of the spectrum.

Synopsis of the Fifth Notice of Proposed Rulemaking

2. The Commission has concluded in the Second Report and Order that

any LMDS licensee will be permitted to partition or disaggregate

portions of its authorization. As part of the next phase of our LMDS

rulemaking, the Commission is proposing specific procedural,

administrative, and operational rules to ensure effective

implementation of the general partitioning and disaggregation rules

adopted in the Second Report and Order for LMDS. It is the Commission's

tentative view that a more complete delineation of these partitioning

and disaggregation mechanisms, which we hope to achieve in this

rulemaking, will ensure realization of the competitive benefits that

are at the core of our partitioning and disaggregation policy.

3. In the Fifth NPRM we will seek comment as to how various

requirements imposed on LMDS licensees (e.g., construction

requirements) may be modified if such licensees partition or

disaggregate their authorization. We seek comment as to whether

partitioning of LMDS licenses should be permitted in a manner similar

to the rules for partitioning we have adopted for broadband PCS

licensees. In addition, we seek comment as to specific procedural,

administrative, and operational rules under which LMDS licensees are

permitted to disaggregate their licensed spectrum.

4. We seek comment on the following specific aspects of

partitioning and disaggregation, which we will need to address in order

to administer the general partitioning and disaggregation rules for

LMDS licensees that we have adopted in the Second Report and Order. For

example, we seek comment as to whether there are any technical or

regulatory constraints unique to the LMDS service that would render any

aspects of partitioning or disaggregation impractical or

administratively burdensome. Further, we recognize that there are

special competitive bidding issues, similar to those raised in the

broadband personal communications services (PCS) context, that must be

resolved if we permit partitioning and disaggregation for LMDS. We

address those issues separately in paragraphs 13 through 15, of the

Second Report and Order.

Available License Area

5. In the Partitioning and Disaggregation Report and Order, (62 FR

653, January 6, 1997) we found that allowing partitioning of broadband

PCS licenses along any service area defined by the parties is the most

logical approach. We concluded that allowing the parties to define the

partitioned PCS service area would allow licensees to design flexible

and efficient partitioning agreements which would permit marketplace

forces to determine the most suitable service areas. We also found that

requiring PCS partitioning along county lines was too restrictive and

might discourage partitioning.

6. We have decided to base LMDS licenses on Basic Trading Area

(BTA) geographic service areas, finding that BTAs are logical licensing

areas for LMDS because they comprise areas within which consumers have

a community of interest. We tentatively conclude that a flexible

approach to partitioned areas, similar to the one we adopted for

broadband PCS, is appropriate for LMDS. We therefore propose to permit

partitioning of LMDS licenses based on any license area defined by the

parties. We seek comment on this proposal, and in particular on whether

there are any technical or other issues unique to the LMDS service that

might impede the adoption of a flexible approach to defining the

partitioned license area.

Minimum or Maximum Disaggregation Standards

7. We seek comment as to whether we should augment our general rule

permitting disaggregation of LMDS spectrum in order to establish

minimum disaggregation standards. We seek to determine whether, given

any unique characteristics of LMDS, technological and administrative

considerations warrant the adoption of such standards. We seek comment

as to whether we should adopt standards which would be flexible enough

to encourage disaggregation while providing a standard which is

consistent with our technical rules and by which we would be able to

track disaggregated spectrum and review disaggregation proposals in an

expeditious fashion.

Combined Partitioning and Disaggregation

8. We seek comment regarding whether combined partitioning and

disaggregation should be permitted for LMDS. By ``combined''

partitioning and disaggregation we refer to circumstances

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in which a licensee would be authorized, for example, to obtain a

license for a portion of a BTA with only a portion of the 1,150

megahertz license or the 150 megahertz license involved in the

disaggregation of spectrum. As another example, the licensee could

obtain a license consisting of a partitioned portion of one or more

other licenses held by other LMDS providers and a disaggregated portion

of one or more other licenses held by other LMDS providers. We

tentatively conclude that we should permit such combinations in order

to provide carriers with the flexibility they need to respond to market

forces and demands for service relevant to their particular locations

and service offerings.

Construction Requirements

9. In paragraphs 266-272 of the Order we have adopted today we have

promulgated a performance standard under which a licensee must make a

showing of substantial service at the end of the license term. In the

case of partitioned LMDS licenses, we propose that the partitionee must

certify that it will satisfy the same construction requirements as the

original licensee. The partitionee then must meet the prescribed

service requirements in its partitioned area while the partitioner is

responsible for meeting those requirements in the area it has retained.

10. In the case of disaggregated LMDS licenses, we propose to adopt

rules for LMDS licensees similar to those disaggregation certification

rules we have adopted for broadband PCS. (See Partitioning and

Disaggregation Report and Order, at paras. 61-63.) Under such a

certification approach, the disaggregating parties would be required to

submit a certification, signed by both the disaggregator and

disaggregatee, stating whether one or both of the parties will retain

responsibility for meeting the performance requirement for the LMDS

market involved. If one party takes responsibility for meeting the

performance requirement, then actual performance by that party would be

taken into account in a renewal proceeding at the end of the license

term, but such performance would not affect the status of the other

party's license. If both parties agree to share the responsibility for

meeting the performance requirement, then the performance of each of

the parties would be taken into account in the respective renewal

proceedings.

License Term

11. In the Order we have adopted today we established a 10-year

license term for LMDS licenses. In this Fifth NPRM we are proposing

that LMDS licenses should be eligible for a license renewal expectancy

based upon the criteria established in Section 22.940(a) of the

Commission's Rules.

12. In the Partitioning and Disaggregation Report and Order, we

found that allowing parties acquiring a partitioned license or

disaggregated spectrum to ``re-start'' the license term from the date

of the grant of the partial assignment application could allow parties

to circumvent our established license term rules and unnecessarily

delay service. We seek comment as to whether our LMDS rules should

similarly provide that parties obtaining partitioned LMDS licenses or

disaggregated spectrum hold their license for the remainder of the

original licensee's 10-year license term. In addition, we seek comment

as to whether LMDS partitionees and disaggregatees should be afforded

the same renewal expectancy as we have proposed for other LMDS

licensees. We tentatively conclude that limiting the license term of

the partitionee or disaggregatee is necessary to ensure that there is

maximum incentive for parties to pursue available spectrum as quickly

as practicable.

Competitive Bidding Issues

13. Competitive bidding issues similar to those in broadband PCS

arise in the context of LMDS partitioning and disaggregation. Our

competitive bidding rules for the LMDS service include provisions for

installment payments and bidding credits for small businesses and

businesses with average annual gross revenues not exceeding $75

million. We also adopted rules to prevent unjust enrichment by such

entities that seek to transfer licenses obtained through use of one of

these special benefits.

14. We tentatively conclude that LMDS partitionees and

disaggregatees that would qualify for installment payments should be

permitted to pay their pro rata share of the remaining Government

obligation through installment payments. We seek comment on this

tentative conclusion. We further invite comment as to the exact

mechanisms for apportioning the remaining Government obligation between

the parties and whether there are any unique circumstances that would

make devising such a scheme for LMDS more difficult than for broadband

PCS. Since LMDS service areas are allotted on a geographic basis, in a

manner similar to broadband PCS, we propose using population as the

objective measure to calculate the relative value of the partitioned

area and amount of spectrum disaggregated as the objective measure for

disaggregation, and we seek comment on this proposal.

15. We seek comment regarding whether to apply unjust enrichment

rules to small business LMDS licensees, or LMDS licensees with average

annual gross revenues not exceeding $75 million, that partition or

disaggregate to larger businesses. Commenters should address how to

calculate unjust enrichment payments for LMDS licensees paying through

installment payments and those that were awarded bidding credits that

partition or disaggregate to larger businesses. Commenters should

address whether the unjust enrichment payments should be calculated on

a proportional basis, using population of the partitioned area and

amount of spectrum disaggregated as the objective measures. We propose

using methods similar to those adopted for broadband PCS for

calculating the amount of the unjust enrichment payments that must be

paid in such circumstances, and we seek comment on this proposal. (See

Partitioning and Disaggregation Report and Order at paras. 34-35).

Licensing Issues

16. We propose that all LMDS licensees who are parties to

disaggregation or partitioning arrangements must comply with our

technical and service rules established in the Order we are adopting

today. We also propose that coordination and negotiation among

licensees must be maintained and applied in licensing involving

disaggregated or partitioned licenses.

17. We propose to treat the disaggregation and partitioning of LMDS

licenses to be types of assignments requiring prior approval by the

Commission. We therefore propose to follow existing assignment

procedures for disaggregation and partitioning. Under this proposal,

the licensee must file FCC Form 702 signed by both the licensee and

qualifying entity. The qualifying entity would also be required to file

an FCC Form 430 unless a current FCC Form 430 is already on file with

the Commission.

Administrative Matters

18. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's Rules, 47 CFR Sections 1.415 and 1.419,

interested parties may file comments on or before April 21, 1997, and

reply comments on or before May 5, 1997. To file formally in this

proceeding, you must file an original plus four copies of all comments,

reply comments, and supporting comments. If you want each

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Commissioner to receive personal copy of your comments, you must file

an original plus nine copies. You should send comments and reply

comments to Office of the Secretary, Federal Communications Commission,

Washington, D.C. 20554. Comments and reply comments will be available

for public inspection during regular business hours in the FCC

Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C.

20554.

19. This is a non-restricted notice and comment rulemaking

proceeding. Ex parte presentations are permitted, except during the

Sunshine Agenda period, provided they are disclosed as provided in the

Commission Rules. See generally 47 CFR Sections 1.1202, 1.1203, and

1.1206(a).

Initial Regulatory Flexibility Analysis

20. As required by section 603 of the Regulatory Flexibility Act,

the Commission has prepared an Initial Regulatory Flexibility Analysis

(IRFA) of the expected impact on small entities of the proposals

suggested in this document. Written public comments are requested on

the IRFA. These comments must be filed in accordance with the same

filing deadlines as comments on the rest of this Fifth NPRM, but they

must have a separate and distinct heading designating them as responses

to the IRFA. The Secretary shall send a copy of this Fifth NPRM,

including the IRFA, to the Chief Counsel for Advocacy of the Small

Business Administration in accordance with paragraph 603(a) of the

Regulatory Flexibility Act. Public Law 96-354, 94 Stat. 1164, 5 U.S.C.

Section 601 et seq. (1981).

Initial Regulatory Flexibility Act Statement

21. Need for and Objectives: Our objectives are to afford licensees

the flexibility to disaggregate and partition their licenses so as to:

(1) promote efficient use of LMDS spectrum by leaving determinations

regarding the correct size of licenses to the licensees, who are in the

best position to analyze their business plans, assess new technology,

and determine customer demand, (2) encourage more rapid deployment of

services in the LMDS spectrum, (3) enable licensees to concentrate on

core areas or to deliver services to isolated complexes, such as rural

towns or university campuses, that do not lie within major market

areas, and (4) provide opportunities for small businesses seeking to

enter the multichannel video programming distribution and local

telephony marketplaces.

22. Legal Basis for Proposed Rules: The proposed action is

authorized under the Administrative Procedure Act, 5 U.S.C. Sec. 553;

and Secs. 4(i), 257, 303(g), 303(r), 309(j) and 332(a) of the

Communications Act of 1934, 47 U.S.C. Secs. 154(i), 257, 303(g),

303(r), 309(j), 332(a).

23. Description and Estimate of Small Entities Subject to the

Rules: The service regulations we adopt to implement LMDS would apply

to all entities seeking an LMDS license, including small entities. In

addition, the in-region, temporary eligibility restrictions we adopt

would apply to qualifying LECs and cable companies. Finally, the rules

we adopt to designate additional spectrum for LMDS in the 31.0-31.3 GHz

band would apply to all entities providing incumbent services under

existing rules for 31 GHz services. We consider these three groups of

affected entities separately below.

Estimates of Potential Applicants of LMDS

24. SBA has developed definitions applicable to radiotelephone

companies and to pay television services. We are using these

definitions that SBA has developed because these categories approximate

most closely the services that may be provided by LMDS licensees. The

definition of radiotelephone companies provides that a small entity is

a radiotelephone company employing fewer than 1,500 persons. (See 13

CFR 121.201, Standard Industrial Classification (SIC) 4812.) The

definition of a pay television service is one which has annual receipts

of $11 million or less. (SIC 4841)

25. The size data provided by SBA do not enable us to make an

accurate estimate of the number of telecommunications providers which

are small entities because it combines all radiotelephone companies

with 500 or more employees. We therefore use the 1992 Census of

Transportation, Communications, and Utilities, conducted by the Bureau

of the Census, which is the most recent information available. This

document shows that only 12 radiotelephone firms out of a total of

1,178 such firms which operated during 1992 had 1,000 or more

employees. Likewise, the size data provided by SBA do not enable us to

make a meaningful estimate of the number of cable and pay television

providers which are small entities because it combines all such

providers with revenues of $11 million or less. We therefore use the

1992 Census of Transportation, Communications, and Utilities (Table

2D), conducted by the Bureau of the Census, which is the most recent

information available. This document shows that only 36 of 1,788 firms

providing cable and pay television service have a revenue of greater

than $10 million. Therefore, the majority of LMDS entities to provide

video distribution and telecommunications services may be small

businesses under SBA's definition.

26. The Commission has not developed a definition of small entities

applicable to LMDS licensees, which is a new service being licensed in

the Order. The RFA amendments were not in effect until shortly before

the Fourth Notice of Proposed Rulemaking (Fourth NPRM) was released,

and no data has been received establishing the number of small

businesses associated with LMDS. However, in the Third Notice of

Proposed Rulemaking (Third NPRM) we proposed to auction the spectrum

for assignment and requested information regarding the potential number

of small businesses interested in obtaining LMDS spectrum, in order to

determine their eligibility for special provisions such as bidding

credits and installment payments to facilitate participation of small

entities in the auction process. In the Order we adopt criteria for

defining small businesses for purposes of determining such eligibility.

We will use this definition for estimating the potential number of

entities applying for auctionable spectrum that are small businesses.

27. As discussed in Section II.D.2.e of the Order, we adopt

criteria for defining small businesses and other eligible entities for

purposes of defining eligibility for bidding credits and installment

payments. We define a small business as an entity that, together with

affiliates and controlling principals, has average gross revenues not

exceeding $40 million for the three preceding years (paras. 345 and 348

of the Order). Additionally, bidding credits and installment payments

are available to applicants that, together with affiliates and

controlling principals, have average gross revenues for the three

preceding years of more than $40 million but not more than $75 million

(paras. 349 and 358 of the Order).

28. SBREFA was not in effect until the record in the Third NPRM

closed, and we did not seek comment on the potential number of

prospective applicants for LMDS that might qualify as small businesses.

Therefore, we are unable to predict accurately the number of applicants

for LMDS that would fit the definition of a small business for

competitive bidding purposes. However, using the definition of small

business we adopted for auction eligibility, we can estimate the number

of applicants

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that are small businesses by examining the number of applicants in

similar services that qualified as small businesses. For example, MDS

authorizes non-common carrier services similar to what may be developed

through LMDS. The MDS rules provide a similar definition of a small

business as an entity that, together with its affiliates, has annual

gross revenues for the three proceeding years not in excess of $40

million. A total of 154 applications were received in the MDS auction,

of which 141, or 92 percent, qualified as small businesses.

29. We plan to issue 2 licenses for each of the 492 BTAs, excluding

New York, that are the geographic basis for licensing LMDS. Thus, 984

licenses will be made available for authorization in the LMDS auction.

Inasmuch as 92 percent of the applications were received in the MDS

auction were from entities qualifying as small businesses, we

anticipate receiving at least the same from LMDS applicants interested

in providing non-common carrier services.

30. There is only one company, CellularVision, that is currently

providing LMDS video services. Although the Commission does not collect

data on annual receipts, we assume that CellularVision is a small

business under both the SBA definition and our proposed auction rules.

31. Reporting, Recordkeeping, and Other Compliance Requirements:

Under the proposal contained in the Fifth NPRM: (1) acquisitions by

partitioning or disaggregation will be treated as assignments of a

license and will require the parties to seek prior approval of the

Commission; (2) the parties will be required to identify which of them

will be responsible for complying with the construction requirements

set forth in the Second Report and Order we have adopted today, and to

submit a certification to that effect, signed by both parties, (3)

parties failing to meet their construction requirement obligations will

be subject to forfeiture of their license; and (4) licensees afforded

bidding preferences and other benefits available to small entities will

be subject to the Commission's unjust enrichment rules should they

partition or disaggregate to entities that are not small businesses. If

adopted, this proposal would apply to all LMDS licensees and all

entities that attempt to acquire an LMDS license by means of

partitioning or disaggregation. We request comment on how these

requirements can be modified to reduce the burden on small entities and

still meet the objectives of the proceeding.

32. Significant Alternatives Minimizing the Significant Economic

Impact on a Substantial Number of Small Entities Consistent with the

Stated Objectives: We have not identified any significant alternatives

that would minimize the significant economic impact on small entities

that are consistent with the stated objectives to allow a flexible

approach to partitioning and disaggregation of LMDS. We tentatively

conclude that a flexible approach affords providers, including small

businesses, the ability to respond to market forces and demands for

service relevant to their particular locations and service offerings.

The regulatory burdens we have imposed on LMDS licensees with

respect to assignments and buildout certifications, as well as unjust

enrichment, are necessary in order to ensure that the public receives

the benefits of innovative new services in a prompt and efficient

manner. We seek comment on any significant alternatives that are

consistent with the objectives in the NPRM.

33. Federal Rules That Overlap, Duplicate, or Conflict with These

Proposed Rules: None.

List of Subjects in 47 CFR Part 101

Communications common carriers, Radio, Reporting and recordkeeping

requirements.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97-8775 Filed 4-4-97; 8:45 am]

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