# Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Services Licensees; and Implementation of Section 257 of the Communications Act; Elimination of Market Entry Barriers > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A97-99 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** January 6, 1997 - **Citation:** 62 FR 696 ## Text FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 22 and 26 [WT Docket No. 96-148; GN Docket No. 96-113; FCC 96-474] Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Services Licensees; and Implementation of Section 257 of the Communications Act; Elimination of Market Entry Barriers AGENCY: Federal Communications Commission. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: In this Further Notice of Proposed Rulemaking in WT Docket No. 96-148, the Commission proposes modifications to the cellular and General Wireless Communications Services (GWCS) rules to expand geographic partitioning and spectrum disaggregation provisions. The Commission solicits comment on certain issues relating to these rules. DATES: Comments must be filed on or before February 10, 1997. Reply comments must be filed on or before February 25, 1997. ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554. FOR FURTHER INFORMATION CONTACT: Shaun A. Maher, Commercial Wireless Division, Wireless Telecommunications Bureau at (202) 418-0620. SUPPLEMENTARY INFORMATION: This Further Notice of Proposed Rulemaking in WT Docket No. 96-148 and GN Docket No. 96-113, adopted on December 13, 1996, and released December 20, 1996, is available for inspection and copying during normal business hours in the FCC Reference Center, Room 234, 1919 M Street, N.W., Washington, D.C. The complete text may also be purchased from the Commission's copy contractor, International Transcription Service, Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037, (202) 857-3800. Synopsis of Further Notice of Proposed Rulemaking I. Introduction 1. There are Commercial Mobile Radio Services (CMRS) in which partitioning and disaggregation have either not been proposed or have been adopted on a more limited basis than the rules adopted for broadband PCS. For example, while partitioning is allowed for cellular licensees, there are no rules on disaggregation. Similarly, General Wireless Communications Service (GWCS) licensees are permitted to partition only to rural telcos and currently there is no rule for GWCS disaggregation. 2. The Commission believes that it is appropriate at this time to consider whether to permit full partitioning and disaggregation in cellular, GWCS and any other services that are licensed on a geographic area basis, or in spectrum blocks of sufficient size to make disaggregation practical. Therefore, the Commission seeks comment on whether these benefits similarly justify extension of partitioning and disaggregation to other services. II. Discussion A. Partitioning and Disaggregation for Cellular and GWCS Services 3. Cellular. The Commission seeks comment as to whether to permit cellular disaggregation. Commenters should address whether there are technical or other constraints, unique to the cellular service, that would make disaggregation either impractical or administratively burdensome. Commenters should address whether regulatory or technological changes expected in the near future may provide the opportunity for cellular licensees to disaggregate portions of their licensed spectrum to other parties. The Commission seeks comment as to whether such regulatory changes may create a demand for cellular disaggregation and whether, in anticipation of such changes, the Commission should adopt interim disaggregation rules for cellular. 4. GWCS. The Commission seeks comment as to whether open partitioning of GWCS licenses should be permitted similar to the proposal for open partitioning the Commission has adopted for broadband Personal Communications Service (PCS) licensees. In addition, the Commission seeks comment as to whether GWCS licensees should be permitted to disaggregate their spectrum. The Commission also seeks comment as to whether there are technical or regulatory constraints unique to the GWCS service that would render disaggregation impractical or administratively burdensome. Further, the Commission recognizes that there are special competitive bidding issues, similar to those raised in the broadband PCS context, that must be resolved if it permits open partitioning and disaggregation for GWCS. B. Available License Area 5. Section 22.947(b) of the rules, 47 CFR 22.947(b), provides that a cellular licensee may partition portions of its cellular market to other eligible parties. The parties are free to define the license area or ``CGSA'' of the new partitioned cellular system. Because the cellular partitioning rule is sufficiently flexible to permit parties to freely define the partitioned license area, the Commission does not propose to modify the cellular rules at this time. 6. GWCS service areas are based on Economic Areas. Similar to the former rule for broadband PCS partitioning, GWCS licensees must partition along an established geopolitical boundary, such as county lines, the partitioned area must include the wireline service area [[Page 697]] of a rural telephone company (rural telco) and it must be reasonably related to the rural telco's wireline service area. The Commission seeks comment on whether and how its existing partitioning rule for GWCS, which requires partitioning along established geopolitical boundaries and along an area that is reasonably related to a rural telco's wireline service area, should be modified, if it chooses to open partitioning of GWCS licenses to entities other than rural telcos. The Commission tentatively concludes that a more flexible approach, similar to the one it adopted for broadband PCS, is appropriate for GWCS. Partitioning of GWCS licenses would be permitted based on any license area defined by the parties. The Commission seeks comment on whether this proposal is consistent with the licensing of GWCS based on Economic Areas and whether there are any technical or other issues unique to GWCS that might impede the adoption of a flexible approach to defining the partitioned license area. C. Amount of Spectrum To Disaggregate 7. The Commission seeks comment as to whether minimum disaggregation standards are necessary for cellular and GWCS. The Commission seeks to determine whether technological and administrative considerations warrant the adoption of such standards. Cellular licenses are currently issued for a 25 MHz block of spectrum and GWCS licenses for 5 MHz blocks. GWCS licensees are also permitted to obtain multiple 5 MHz blocks and are subject to a 15 MHz GWCS spectrum aggregation limit. The Commission finds that any such standard it adopts should be sufficiently flexible so as to encourage disaggregation while providing a standard which is consistent with the technical rules and by which the Commission will be able to track disaggregated spectrum and review disaggregation proposals in an expeditious fashion. D. Combined Partitioning and Disaggregation 8. The Commission seeks comment as to whether combined partitioning and disaggregation should be permitted for cellular and GWCS services. The Commission tentatively concludes that it should permit such combinations to provide parties the flexibility they need to respond to market forces and demands for service relevant to their particular locations and service offerings. E. Construction Requirements 9. Cellular. While the Commission does not propose to modify the existing cellular build-out procedures, it seeks comment as to whether the cellular partitioning rule is sufficiently flexible to increase the viability and value of partitioned cellular licenses and to facilitate cellular partitioning while preventing circumvention of the cellular build-out procedures. The Commission invites comment as to whether the existing cellular rules might be amended to further facilitate cellular partitioning and what types of alternative partitioning mechanisms might be adopted. 10. In addition, the Commission seeks comment as to whether it should adopt a disaggregation certification procedure similar to the type adopted for broadband PCS. The Commission proposes requiring parties seeking Commission approval of a cellular disaggregation agreement to include a certification as to which party will be responsible for building out the remainder of the market. Should that party fail to build out, the Commission proposes that the unserved portion of the market would be subject to Phase II or unserved area applications. The Commission seeks comment as to whether such an approach is feasible for cellular disaggregation given the distinctive nature of the cellular build-out rules. 11. GWCS. The Commission seeks comment as to whether it should amend its existing partitioning rule for GWCS to allow dual construction options for GWCS partitioning and adopt a certification procedure for GWCS disaggregation similar to the procedure it has adopted for broadband PCS. 12. For example, under the first construction option for GWCS partitioning, the partitionee would certify that it will satisfy the same construction requirement as the original GWCS licensee for its partitioned license area. Under the second construction option, the original GWCS licensee may certify that it has or will meet its five- year construction requirement and that it will meet the ten-year construction requirement for the entire license area. Since the original GWCS licensee retains responsibility for meeting the construction requirements, the Commission believes that the partitionee should be permitted to meet a less substantial construction requirement. The Commission seeks comment as to what lesser construction requirement would be appropriate. 13. As for GWCS disaggregation, the Commission proposes adopting a procedure similar to the one adopted for broadband PCS and proposed for cellular. Under such an approach, the disaggregating parties would be required to submit a certification, signed by both the disaggregator and disaggregatee, as to which of the parties will retain responsibility for meeting the five and ten-year construction requirements for the GWCS market. The parties would be permitted to share responsibility for meeting the construction requirements. The party or parties taking responsibility for meeting the construction requirements would be subject to license forfeiture for failing to meet the construction requirements. F. License Term 14. The Commission seeks comment as to whether the cellular and GWCS rules should be amended to provide that parties obtaining partitioned cellular or GWCS licenses or disaggregated spectrum hold their license for the remainder of the original licensee's ten-year license term. In addition, the Commission seeks comment as to whether GWCS partitionees and disaggregatees should be afforded the same renewal expectancy as other GWCS licensees. The Commission tentatively concludes 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. G. GWCS Competitive Bidding Issues 15. The Commission tentatively concludes that GWCS partitionees and disaggregatees that would qualify as designated entities should be permitted to pay their pro rata share of the remaining government obligation via installment payments. The Commission seeks 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 the GWCS service more difficult than for broadband PCS. Since GWCS service areas are allotted on a geographic basis, similar to broadband PCS, the Commission proposes 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. 16. The Commission seeks comment on whether to apply unjust enrichment rules to designated entity GWCS licensees that partition or disaggregate to non-designated entities. Commenters [[Page 698]] 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. The Commission further seeks comment as to how to enforce unjust enrichment payments for designated entity GWCS licensees paying via installment payments and those that were awarded bidding credits that partition or disaggregate to non-designated entities. The Commission tentatively proposes using methods similar to those adopted for broadband PCS for calculating the amount of the unjust enrichment payments that must be paid in those circumstances. H. Licensing Issues 17. Partial assignment procedures are not used for cellular partitioning. Instead, whenever a cellular licensee enters into a partitioning agreement, the partitionee must file an application (FCC Form 600) for a new cellular system covering the partitioned market. Since this procedure provides the appropriate level of review of the partitioning transaction, the Commission proposes no modification at this time. However, should the Commission permit cellular disaggregation, it seeks comment on the method it should devise for reviewing cellular disaggregation transactions. 18. Since there are existing partial assignment rules for both cellular and GWCS, the Commission proposes utilizing partial assignment procedures, similar to those adopted for broadband PCS, to review cellular disaggregation and GWCS partitioning and disaggregation transactions. Partial assignment applications would be placed on public notice and subject to petitions to deny. The parties would be required to submit an FCC Form 490, an FCC Form 600 and, if necessary, an FCC Form 430, together as one package under cover of the FCC Form 490. The Commission invites comment whether any additional procedures are necessary for reviewing these applications. III. Procedural Matters and Ordering Clauses A. Regulatory Flexibility Act Summary As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C. 603, the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small entities of the policies and rules proposed in this Further Notice of Proposed Rulemaking (FNPRM). Reason for Action This rulemaking proceeding was initiated to secure comment on proposals to modify our cellular and General Wireless Communications Service (GWCS) rules to permit partitioning and disaggregation for all licensees in those services. The proposals advanced in the FNPRM are also designed to implement Congress' goal of giving small businesses the opportunity to participate in the provision of spectrum-based services in accordance with Sections 257 and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 257, 309(j) (the Communications Act). Objectives The Commission proposes to change its rules for cellular and GWCS to facilitate the efficient use of cellular and GWCS spectrum, increase competition, and expedite the provision of cellular and GWCS services in the near term. These proposals seek to increase the level of small business participation in the provision of cellular and GWCS services. The Commission considers whether to modify the existing cellular rules to provide for more flexible partitioning and to allow disaggregation of cellular spectrum for the first time. In addition, the Commission proposes to allow GWCS licensees to partition and disaggregate to entities that are eligible for GWCS licenses. Designated entity GWCS licensees will be allowed to partition or disaggregate to non- designated entities, subject to unjust enrichment payments. Entities that qualify for installment payments will be permitted to pay their pro rata share of the remaining government obligation via installment payments. The Commission proposes to establish license terms that permit cellular and GWCS partitionees to hold partitioned licenses and disaggregatees to hold disaggregated spectrum for the remaining duration of the original ten-year license term. The Commission also proposes to establish construction requirements for GWCS partitioning to ensure expedient access to GWCS service in partitioned areas, to ensure coverage and to increase spectrum efficiency. Finally, the Commission proposes to allow combined partitioning and disaggregation for cellular and GWCS services and to follow the existing partial assignment procedures for cellular and GWCS. Legal Basis The proposed action is authorized under Sections 4(i), 257, 303(r) and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 257, 303(r), and 309(j). Reporting, Recordkeeping, and Other Compliance Requirements The proposals under consideration in this FNPRM include the possibility of imposing reporting and recordkeeping requirements on small businesses seeking licenses through the proposed partitioning and disaggregation rules. The information requirements would be used to determine whether the licensee was qualified to obtain a partitioned license or disaggregated spectrum. This information will be a one-time filing by an applicant requesting cellular disaggregation or GWCS partitioning or disaggregation. This information will be submitted on FCC Forms 490 (and 430 and/or 600 filed as one package under cover of the Form 490) which are currently in use and have already received OMB clearance. We estimate that the average burden on the applicant is three hours for the information necessary to complete these forms. We estimate that 75 percent of the respondents (which may include small businesses) will contract out the burden of responding. We estimate that it will take approximately 30 minutes to coordinate information with those contractors. The remaining 25 percent of respondents (which may include small businesses) are estimated to employ in-house staff to provide the information. Federal Rules Which Overlap, Duplicate or Conflict With These Rules None. Description, Potential Impact, and Number of Small Entities Involved The rule changes proposed in this proceeding will affect all small businesses which avail themselves of these rule changes, including small businesses currently holding cellular licenses who choose to partition and/or disaggregate, and small businesses who may acquire licenses through partitioning and/or disaggregation. The Commission is required to estimate in its Final Regulatory Flexibility Analysis the number of small entities to which a rule will apply, provide a description of such entities, and assess the impact of the rule on such entities. To assist the Commission in this analysis, commenters are requested to provide information regarding how many total cellular and GWCS entities, existing and potential, would be affected by the proposed rules in the FNPRM. In particular, we seek estimates of how many cellular and GWCS entities, existing or potential, will be considered small businesses. Small business is [[Page 699]] defined here as a firm that has revenues of less than $40 million in each of the last three calendar years. This definition was adopted for the GWCS service. We seek comment as to whether this definition is appropriate in this context. Additionally, we request each commenter to identify whether it is a small business under this definition. If the commenter is a subsidiary of another entity, this information should be provided for both the subsidiary and the parent corporation or entity. The Commission anticipates that a total of 8,465 cellular licensees or potential licensees could take the opportunity to partition or disaggregate a license or obtain a license through partitioning and/or disaggregation. This estimate is based upon the current number of existing cellular licensees (1,693) and our estimate that each license would probably not be partitioned and/or disaggregated to more than five parties. However, we estimate that a significant number of the cellular and GWCS licensees and potential licensees who take the opportunity to partition and/or disaggregate a license or who could obtain a license through partitioning and/or disaggregation will be small businesses. SBA has not developed a definition of small entities specifically applicable to cellular. The closest applicable definition under SBA rules is radiotelephone (wireless) companies. According to SBA's definition, a small business radiotelephone company is one employing fewer than 1,500 persons. According to our most recent data, there are 1,693 existing cellular licensees. We are unable at this time to estimate the number of cellular service carriers that would qualify as small business concerns under SBA's definition. We estimate that fewer than 1,693 small entity cellular service carriers may be affected by the decisions and rules adopted in this FNPRM. Significant Alternatives Minimizing the Impact on Small Entities Consistent With the Stated Objectives The proposals advanced in the FNPRM are designed to implement Congress' goal of giving small businesses, as well as other entities, the opportunity to participate in the provision of spectrum-based services. The impact on small entities in the proposals in the FNPRM is the opportunity to enter the cellular and GWCS market through partitioning and disaggregation. With more open partitioning and disaggregation, additional entities, including small businesses, may participate in the provision of cellular and GWCS services without needing to acquire wholesale an existing license (with all of the bundle of rights currently associated with the existing license). Acquiring ``less'' than the current license will presumably be a more flexible and less expensive alternative for entities desiring to enter these services. The rule changes proposed in the FNPRM by the Commission are consistent with the Communications Act's mandate to identify and eliminate market entry barriers for small business in the provision and ownership of telecommunications services, and the mandate under Section 309(j) of the Communications Act, 47 U.S.C. 309(j), to utilize auctions to ensure that small, minority and women-owned businesses and rural telcos have an opportunity to participate in the provision of spectrum- based services. The proposals in the FNPRM, if implemented, will facilitate market entry by parties, including small businesses, that may lack the financial resources for participation in cellular and GWCS services. The alternative is to continue to allow GWCS partitioning only for rural telcos. Limiting GWCS partitioning to rural telcos would not permit other small businesses to obtain partitioned licenses or to partition to other parties, and thus would not promote the participation of small business in the provision of GWCS service. In the FNPRM, the Commission proposes facilitating GWCS partitioning by offering a choice between two different build-out options, which could be negotiated by the parties. The Commission tentatively concludes that these proposed flexible build-out requirements, if adopted, will encourage partitioning to entities that have a sincere interest in providing GWCS service and will thereby expedite the provision of service to geographic areas that otherwise may not receive it as quickly. This FNPRM solicits comments on a variety of proposals discussed herein. Any significant alternatives presented in the comments will be considered. B. Paperwork Reduction Act The Further Notice of Proposed Rulemaking (FNPRM) contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget to take this opportunity to comment on the information collections contained in this FNPRM, as required by the Paperwork Reduction Act of 1995, Public Law No. 104-13. Public and agency comments are due at the same time as other comments on this FNPRM; OMB comments are due March 7, 1997. 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 collection techniques or other forms of information technology. 19. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to both of the following: Dorothy Conway, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to [email protected] and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 20503 or via the Internet at [email protected]. For additional information regarding the information collections contained herein, contact Dorothy Conway above. C. Ex Parte Rules--Non-Restricted Proceedings This is a non-restricted notice and comment rule making proceeding. Ex parte presentations are permitted except during the Sunshine Agenda period, provided they are disclosed as provided in the Commission's rules, 47 CFR 1.1201, 1203, and 1.1206(a). D. Comment Period Pursuant to applicable procedures set forth in Secs. 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested parties may file comments to the Further Notice of Proposed Rulemaking on or before February 10, 1997, and reply comments on or before February 25, 1997. To file formally in this proceeding, you must file an original and four copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a 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 of the Federal Communications [[Page 700]] Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554. E. Authority Authority for issuance of this Further Notice of Proposed Rulemaking is contained in Sections 4(i), 257, 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 257, 303(r), and 309(j). F. Ordering Clauses Accordingly, It is ordered that, pursuant to the authority of Sections 4(i), 257, 303(g), 303(r), and 332(a) of the Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 257, 303(g), 303(r), and 332(a), a further notice of proposed rulemaking is hereby adopted. It is further ordered, that comments in WT Docket No. 96-148 will be due February 10, 1997, and reply comments will be due February 25, 1997. List of Subjects 47 CFR Part 22 Communications common carriers, Reporting and recordkeeping requirements. 47 CFR Part 26 Communications common carriers; Reporting and recordkeeping requirements. Federal Communications Commission. William F. Caton, Acting Secretary. [FR Doc. 97-99 Filed 1-3-97; 8:45 am] BILLING CODE 6712-01-P --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-99. Public record. Not legal advice.