Implementation of Competitive Bidding for Commercial Broadcast and Instructional Television Fixed Service Licenses

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 73 and 74

[MM Docket No. 97-234, GC Docket No. 92-52, and GEN Docket No. 90-264;

FCC 98-194]

Implementation of Competitive Bidding for Commercial Broadcast

and Instructional Television Fixed Service Licenses

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This First Report and Order (First R&O) implements the Federal

Communications Commission's amended auction authority. Specifically,

the First R&O adopts rules and procedures for auctioning pending and

future mutually exclusive applications for construction permits in the

various commercial broadcast services; determines that competing

Instructional Television Fixed Service (ITFS) applications are subject

to auction; and adopts procedures for resolving pending broadcast

comparative renewal cases, in which the Commission is not authorized to

use auctions. To further the goals of the designated entity provisions

of the Commission's auction authority, the First R&O adopts a tiered

``new entrant'' bidding credit for entities with controlling interests

in either no, or less than four, other media entities. The First R&O

notes that the Commission intends to continue its review of the

barriers to entry or growth that may exist for small, minority- and

women-owned businesses in broadcasting, and to make adjustments to its

designated entity provisions, as appropriate, in light of these

studies.

EFFECTIVE DATE: November 10, 1998.

FOR FURTHER INFORMATION CONTACT: Jerianne Timmerman, Video Services

Division, Mass Media Bureau at (202) 418-1600; Lisa Scanlan, Audio

Services Division, Mass Media Bureau at (202) 418-2720; Lee Martin,

Office of General Counsel at (202) 418-1720.

SUPPLEMENTARY INFORMATION:

Summary

This First R&O implements: (1) amended Section 309(j) of the

Communications Act (Act), which requires that the Commission use

auctions to select from among virtually all mutually exclusive

applications for initial licenses and construction permits, including

broadcast construction permits, and (2) new Section 309(l) of the Act,

which

[[Page 48616]]

authorizes auctions to resolve pending comparative licensing cases

involving applications for full-service commercial radio or television

stations filed before July 1, 1997. As proposed in this proceeding, the

First R&O amends the disparate application procedures for the various

broadcast services to establish a uniform window filing approach that

should facilitate the determination of mutually exclusive groups of

applications for auction purposes, and also establishes rules and

procedures for auctioning mutually exclusive applications for broadcast

construction permits that follow, as closely as possible, the

Commission's general part 1 auction rules.

General Authority to Use Competitive Bidding to Award Secondary and

Primary Commercial Broadcast Licenses

2. Under amended Section 309(j)(1), the Commission found that

auctions are mandatory for all secondary commercial broadcast services

(e.g., LPTV, FM translator and television translator services).

Similarly, the Commission found that, except for certain pending

applications that are subject to new Section 309(l), its auction

authority is mandatory, rather than permissive, for all full power

commercial radio and analog television stations. Nothing in the

statutory language or in the accompanying legislative history indicates

that the requirement to use competitive bidding for ``any initial

license or construction permit'' is limited to full power radio and

analog television stations, or that Congress intended such a

limitation. Nor are secondary commercial broadcast service licenses

exempted from the auction requirement under Section 309(j)(2), which

enumerates the certain types of spectrum licenses that are not subject

to competitive bidding.

3. The Commission stated further that all pending mutually

exclusive applications for these secondary broadcast services must be

resolved through a system of competitive bidding. Nothing in Section

309(j)(1) suggests that the requirement to use auctions applies only to

applications filed in the future. The only statutory reference to

pending applications is contained in Section 309(l), and the Commission

determined that Congress did not intend to include pending secondary

broadcast applications within Section 309(l).

Statutory Authority to Use Competitive Bidding for Modification

Applications

4. The Commission concluded that it is not precluded by the terms

of Section 309(j) from auctioning mutually exclusive modification

applications. The Commission recognized, however, that competing major

modification applications can often be resolved by changes to the

engineering proposals submitted by applicants and may raise special

considerations where settlements are particularly appropriate. The

Commission will therefore allow applicants who have, under the window

filing procedures adopted in the First R&O for new station applications

and major modification applications, filed either competing major

modification applications, or competing major modification and new

station applications, to resolve their mutual exclusivities by means of

engineering solutions or settlements during a limited period after the

filing of short-form applications but before the start of the auction.

The Commission stated that it would apply competitive bidding

procedures to resolve mutual exclusivities among major modification

applications and between major modification and initial applications,

if the parties are unable to resolve their mutual exclusivities during

a limited period, as established by public notice, following the filing

of short-form applications.

5, The Commission determined that it would not, however, generally

subject competing minor modification applications to auction

procedures. Given the infrequency with which minor modification

applications are mutually exclusive and the less significant changes

usually proposed in minor modification applications, the Commission

will encourage parties ``to use engineering solutions, negotiation * *

* and other means'' to resolve any mutual exclusivities. 47 U.S.C.

309(j)(6)(E).

Statutory Exemption for Noncommercial Educational and Public

Broadcast Stations

6. The Commission determined that it had not received sufficiently

focused comment to finally resolve in this proceeding the issues

relating to noncommercial educational and public broadcast stations.

While the exemption in Section 309(j)(2)(C) for noncommercial

educational broadcasters clearly precludes the Commission from using

competitive bidding to award broadcast station licenses on the reserved

noncommercial frequencies, there are difficult issues as to how the

Commission should apply this provision when noncommercial educational

and public broadcasters apply for frequencies in the commercial band.

The Commission found that its decision on these issues would be aided

by a further round of comment. Therefore, the Commission stated that it

would not proceed to auction at this time any pending cases where both

noncommercial and commercial applicants have filed competing

applications for nonreserved channels; these cases will be resolved

following the release of a report and order in our noncommercial

proceeding, MM Docket No. 95-31.

Discretion to Use Auctions in Pending Cases Involving pre-July 1,

1997 Applications

7. The Commission found that it has discretion under new Section

309(l) to resolve comparative licensing proceedings that involve pre-

July 1, 1997 applications for full service commercial radio and

television stations by either competitive bidding procedures or through

the comparative hearing process. The explicit language of Section

309(l)(1) provides that the Commission ``shall have the authority to

conduct a competitive bidding proceeding,'' in contrast to the

mandatory language of Section 309(j)(1) providing that ``the Commission

shall grant the license . . . through a system of competitive

bidding.'' The Commission concluded that the language of Section 309(l)

unambiguously addresses a situation in which auctions are permissible,

but are not required.

Public Interest Considerations Favoring Resolution of Pending Cases

by Competitive Bidding

8. The Commission stated that auctions will generally be fairer and

more expeditious than deciding the pending mutually exclusive

applications filed before July 1, 1997 through the comparative hearing

process. Auctions will generally expedite service and better serve the

public interest in these cases, because competitive bidding is a more

efficient and cost-effective method of assigning spectrum in cases of

mutual exclusivity than any previously employed method. The Commission

concluded that there is no inherent unfairness in using auctions,

rather than comparative hearings, to resolve mutual exclusivity among

these pre-July 1, 1997 applications, as most of these applicants filed

after Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993), which made it clear

that some change in the existing selection criteria was inevitable. The

Commission also found that changing the selection process for pending

applications filed before July 1, 1997 is not impermissibly retroactive

or

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otherwise unlawful. The pre-July 1, 1997 applicants, whether their

applications are pending on the processing line or have been designated

for hearing, have no vested right to a comparative hearing that is

abridged by the Commission's decision to award such authorizations by a

system of competitive bidding. The Commission moreover noted that the

impact of this regulatory change is ameliorated somewhat by the

statutory requirement that auctions to resolve these pre-July 1 pending

cases be closed to other participants.

Treatment of Pending Hearing Cases

9. The Commission concluded that, even for the small number of

pending cases involving pre-July 1, 1997 applications that have

progressed at least through an Initial Decision by an Administrative

Law Judge, auctions better serve the public interest than comparative

hearings. While these pending applicants have spent considerable time

and money prosecuting their applications and have experienced

significant delays in obtaining a final decision as to the selection of

the licensee, these circumstances do not, the Commission determined,

outweigh the additional delays, uncertainty and administrative costs

that would be incurred by resolving these cases through the comparative

hearing process.

Scope of Section 309(l)

10. The Commission found that, where post-June 30th applications

are mutually exclusive with two or more pre-July 1, 1997 applications,

it is compelled by the express language of Section 309(l)(2) to dismiss

them and conduct a competitive bidding procedure that is restricted to

the pre-July 1, 1997 applications. The Commission also stated that,

given the express reference to ``competing applications'' in Section

309(l), this provision does not apply to a single pre-July 1, 1997

application. Under Section 309(l)(2), the Commission is statutorily

precluded from permitting post-June 30th applicants to participate as

qualified bidders in a competitive bidding procedure conducted to

resolve mutual exclusivity among two or more pre-July 1, 1997 competing

applications. The First R&O notes that the practical effect of this

distinction between applications filed before July 1st and after June

30th will be limited, as the Commission believes that settlement

agreements have been filed in connection with the small number of cases

involving post-June 30th applications mutually exclusive with two or

more pre-July 1, 1997 applications.

Pending Applications Not Subject to Section 309(l)

11. The most significant issue with regard to the pending

applications falling outside the scope of Section 309(l) concerns the

pool of bidders who will be eligible for any auction of these mutually

exclusive applications. Specifically, the Commission has the discretion

to restrict the class of eligible bidders to those with applications

already filed, or to reopen the filing period for additional applicants

that would be eligible to participate in the auction. The Commission

concluded that, in cases of pending mutually exclusive applications not

subject to Section 309(l) where the relevant period or window for

filing applications under the existing procedures has expired, the

public interest would not be served by reopening the filing period for

additional mutually exclusive applications. The Commission found no

compelling reason to reopen filing windows that have already expired to

permit the filing of additional applications by applicants who failed

to file during the Commission's previously clearly delineated filing

periods.

12. The Commission noted, however, that there are pending a number

of broadcast applications (primarily AM and FM translator) that have

never been subjected to competition because periods or windows for the

filing of competing applications have not yet been opened by the

Commission. Rather than open individual filing windows or issue

individual cut-off lists for each of these pending broadcast

applications, the Commission decided that it would be more efficient to

simply include these applications in the first general auction

conducted for new applicants in the relevant service.

Competitive Bidding Design

13. The Commission announced that it would conduct all auctions of

mutually exclusive broadcast applications in conformity with the

general competitive bidding rules set forth in part 1 of the

Commission's rules. However, because the same type of auction

methodology may not be appropriate for all mutually exclusive broadcast

and secondary broadcast applications, different approaches may be

warranted to resolve mutual exclusivity among certain categories of

broadcast applications and for ``daisy chain'' situations. The

Commission concluded that the appropriate auction design will vary

depending on the type of service involved, the number of construction

permits at stake, how many bidders are likely to participate, and the

degree to which interdependence may be important to those likely to bid

on a particular type of permit. The Commission delegated authority to

the Mass Media Bureau and the Wireless Telecommunications Bureau (the

Bureaus) to seek comment on and establish an appropriate auction design

methodology prior to the start of each broadcast auction or group of

broadcast auctions. The Commission also delegated to the Bureaus

authority to seek comment on and, as appropriate, to establish upfront

payments, minimum opening bids and/or reserve prices for each broadcast

auction or group of broadcast auctions.

Auction Application Procedures

14. The Commission will follow for all broadcast service auctions

the procedural and payment rules set forth in the general part 1

auction rules, with certain modifications. Specifically, the First R&O

replaces the Commission's disparate filing procedures for the various

broadcast services with a specific time period, or auction window,

during which all applicants seeking to participate in an auction must

file their applications for new broadcast facilities or for major

changes to existing facilities. Applicants will be required to submit

only a short-form application (FCC Form 175) prior to any auction, and

only winning bidders will need to file complete long-forms (FCC Form

301 for AM, FM and television stations, FCC Form 346 for LPTV and

television translators, or FCC Form 349 for FM translators).

Specifically, in response to a public notice announcing a window for

the filing of broadcast and/or secondary broadcast applications for new

stations and for major changes to existing facilities, applicants will

be required to file a short-form application, along with any

engineering data necessary to determine mutual exclusivity in a

particular service. The Commission stated that, prior to auction, it

would examine the engineering data submitted by applicants for the non-

table services (AM, LPTV, and television and FM translators) only to

the extent necessary to determine the mutually exclusive groups of

applications for auction purposes. Applicants for FM stations need not

submit any engineering data in addition to their FCC Form 175

applications, as such data is not needed to make determinations of

mutual exclusivity in the FM service.

15. The Commission determined to follow the general auction rule

mandating electronic filing, and will

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require all applicants for broadcast auctions to file their FCC Form

175 applications electronically beginning January 1, 1999, unless it is

not operationally feasible. Applicants for non-table services, who must

submit engineering information with their short-forms, will be required

to file the engineering section of the electronic versions of the FCC

Forms 301, 346 and 349, which are currently being developed.

16. Consistent with the part 1 anti-collusion rule, the Commission

announced that applicants in broadcast auctions will be required to

identify on their short-form applications any parties with whom they

have entered into any consortium arrangements, joint ventures,

partnerships or other agreements or understandings which relate in any

way to the competitive bidding process. In addition, applicants will be

required to certify on their short-form applications that they have not

entered into any explicit or implicit agreements, arrangements or

understandings of any kind with any parties, other than those

identified, regarding the amount of their bids, bidding strategies, or

the particular construction permits on which they will or will not bid.

After short-form applications are filed and prior to the time that the

winning bidder has made its required down payment, all bidders will be

prohibited from cooperating, collaborating, discussing or disclosing in

any manner the substance of their bids or bidding strategies with other

bidders that have applied to bid in the same geographic license area,

unless such bidders are members of a bidding consortium or other joint

bidding arrangement identified on the bidder's short-form application.

17. The Commission also determined to follow in broadcast auctions

the general part 1 auction rules with regard to post-auction

procedures, including the payment by winning bidders of their bids and

the withdrawal, default and disqualification of winning bidders. The

First R&O additionally adopted a shortened 10-day period for the filing

of petitions to deny against the long-form applications filed by

auction winners.

Designated Entities

18. Due to the insufficiency of the record in this proceeding, the

First R&O does not make a final determination regarding the adoption of

bidding credits or other special measures to enhance participation by

various designated entities, including small, minority- and women-owned

businesses, in broadcast service and ITFS auctions. The First R&O does

adopt a tiered new entrant bidding credit to further the goals of the

designated entity provisions of Section 309(j); specifically,

applicants with no controlling interests in any media outlets will

receive a 35% bidding credit, and applicants with controlling interests

in no more than three media outlets, none of which serve the same area

as the proposed station, will receive a 25% bidding credit. Following

the completion of certain pending evidentiary studies, the Commission

anticipates the release of a further report and order in this

proceeding addressing designated entity issues in the broadcast

context. If additional or alternative designated entity measures are

ultimately adopted in this further order following the completion of

the Commission's evidentiary studies, then any such measures will be

applicable to the auction of any broadcast and ITFS applications then

on file with the Commission. To prevent any unjust enrichment by

designated entities utilizing the new entrant bidding credit, we will

follow the general part 1 auction rules in requiring, under certain

circumstances involving assignments or transfers, the reimbursement of

bidding credits utilized in obtaining broadcast licenses via auction.

Auction Authority for Instructional Television Fixed Service

19. The Commission determined that, because Section 309(j)

generally requires the use of competitive bidding to resolve mutually

exclusive applications with only certain specified exemptions, it does

not have the discretion to create another exemption from competitive

bidding for ITFS. When Congress explicitly enumerates certain

exceptions to a general requirement, additional exceptions should not

be implied, and the list of exemptions from the Commission's general

auction authority set forth in Section 309(j)(2) is clearly exhaustive,

rather than merely illustrative, of the types of licenses or permits

that may not be awarded through a system of competitive bidding.

Because ITFS is not one of the services exempted from competitive

bidding in Section 309(j)(2), the First R&O concludes that competing

ITFS applications must be subjected to competitive bidding procedures.

The Commission declined to interpret the exemption from competitive

bidding for noncommercial educational broadcast stations contained in

Section 309(j)(2)(C) to include ITFS. As the Commission has stated and

the courts have recognized, ITFS is not a broadcast service, and

therefore it does not fall within the scope of the Section 309(j)(2)(C)

exemption from competitive bidding for noncommercial broadcasters.

20. The Commission stated, however, that it will request that

Congress amend Section 309(j) so that the statute clearly reflects its

intent with regard to ITFS. Absent a clear statement from Congress that

it means to exempt ITFS from competitive bidding, then the Commission

will proceed with the auction of mutually exclusive ITFS applications.

The Commission stated that it will not commence ITFS auctions

immediately so as to allow sufficient time to obtain Congressional

guidance.

21. The Commission found that pending ITFS applications are outside

the scope of new Section 309(l) of the Act, which provides that the

Commission has discretion regarding the resolution of pending

comparative licensing proceedings involving pre-July 1, 1997

applications for commercial radio and television stations. Accordingly,

pending mutually exclusive ITFS applications must be resolved by

competitive bidding pursuant to Section 309(j)(1). However, the

Commission determined that it would not serve the public interest to

accept additional competing ITFS applications despite its authority to

do so; thus, the eligible bidders in any auction of the pending ITFS

applications will be limited to those with applications already on

file.

Resolution of Pending Comparative Renewal Proceedings

22. With regard to the very small number of pending comparative

renewal proceedings, the Commission determined that the most equitable

and expeditious approach would be simply to permit the renewal

applicants and their challengers, within the confines of the generally

phrased standard comparative issue, to present the factors and evidence

they believe most appropriate. If the renewal applicant can demonstrate

substantial performance and thus an entitlement to a renewal

expectancy, this will continue to be the most important factor and can

be expected in most cases to outweigh other considerations in favor of

the challenger.

23. The complete text of this First R&O, including any statements,

is available for inspection and copying during normal business hours in

the Federal Communications Commission Reference Center (Room 239), 1919

M Street, N.W., Washington, D.C., and it may be purchased from the

Commission's copy contractor, International Transcription Service,

[[Page 48619]]

Inc., 1231 20th Street, N.W., Washington, D.C. 20036, (202)857-3800.

Final Regulatory Flexibility Analysis (FRFA)

Summary

24. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.

603, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated

in the Notice of Proposed Rulemaking (NPRM) in this proceeding. The

Commission sought written public comments on the proposals in the NPRM,

including on the IRFA. The Commission's Final Regulatory Flexibility

Analysis (FRFA) in this First R&O conforms to the RFA, as amended by

the Contract With America Advancement Act of 1996, Public Law 104-121,

110 Stat. 847 (1996).

Need For and Objectives of Action

25. This First R&O adopts rules to implement the Balanced Budget

Act of 1997 (Budget Act), Public Law 105-33, 111 Stat. 251 (1997),

which amended Section 309(j) and adopted new Section 309(l) of the

Communications Act to expand the Commission's competitive bidding

authority to include, inter alia, the commercial broadcast and

secondary broadcast services.

Significant Issues Raised by the Public in Response to the Initial

Analysis

26. No comments were received specifically in response to the IRFA

contained in the NPRM. However, some comments did address certain small

business issues. A number of commenters called for the adoption of

bidding credits for small businesses to ensure their participation in

broadcast spectrum auctions. To promote diversification of ownership of

broadcast stations, a number of commenters also supported the adoption

of bidding credits for non-group owners, who would likely be small

businesses. Some commenters argued that upfront payments should be

small enough to allow small businesses to compete effectively.

Commenters generally opposed the use of competitive bidding for

selecting among mutually exclusive Instructional Television Fixed

Service (ITFS) applicants, who are primarily educational institutions

and governmental educational entities.

27. Small business-related issues were also raised by commenters

more indirectly. A small number of commenters opposed requiring

prospective bidders in broadcast auctions to file their short-form

applications (FCC Form 175) electronically, contending that electronic

filing would be a barrier to participation by those not computer

literate or by low power television (LPTV) and translator applicants

(many of whom are small businesses). Several commenters also asked the

Commission to reconfirm its support for certain previously-adopted

special measures to protect LPTV and television translator stations

that are displaced during the transition to digital television. A small

number of commenters additionally contended that it was unfair or

inequitable to auction secondary broadcast services (LPTV and

television and FM translators), the licensees of which tend to be small

businesses.

Description and Number of Small Entities Involved

28. Under the RFA, small entities include small organizations,

small businesses, and small governmental jurisdictions. 5 U.S.C.

601(6). The RFA, 5 U.S.C. 601(3), defines the term ``small business''

as having the same meaning as the term ``small business concern'' under

the Small Business Act. See 15 U.S.C. 632. A small business concern is

one which: (1) is independently owned and operated; (2) is not dominant

in its field of operation; and (3) satisfies any additional criteria

established by the Small Business Administration (SBA). Pursuant to the

RFA, the statutory definition of a small business applies when

considering the impact of an agency's action(s) ``unless an agency

after consultation with the Office of Advocacy of the SBA and after

opportunity for public comment, established one or more definitions of

such term which are appropriate to the activities of the agency and

publishes such definition(s) in the Federal Register.''

29. In the NPRM we stated that we tentatively believe that the

SBA's definition of ``small business'' greatly overstates the number of

radio and television broadcast stations that are small businesses and

is not particularly suitable for the Commission's purposes, and we

sought comment on how we should define small business for this purpose.

While we utilized the SBA's definition to determine the number of small

businesses to which any auction procedures would apply, we reserved the

right to adopt a more suitable definition of ``small business'' as

applied to radio and television broadcast stations. We received no

comment in response to the IRFA on how to define radio and television

broadcast ``small businesses.'' Therefore, we will continue to utilize

the SBA's definitions for the purposes of this FRFA.

30. Radio Broadcasting Stations. The SBA defines a radio

broadcasting station that has no more than $5 million in annual

receipts as a small business. A radio broadcasting station is an

establishment primarily engaged in broadcasting aural programs by radio

to the public. Included in this industry are commercial, religious,

educational, and other radio stations. Radio broadcasting stations

which primarily are engaged in radio broadcasting and which produce

radio program materials are similarly included. Official Commission

records indicate that 11,334 individual radio stations were operating

in 1992. The 1992 Census indicates that 96 percent of radio station

establishments (5,861 of 6,127) produced less than $5 million in

revenue in 1992. As of May 31, 1998, official Commission records

indicate that 4,724 AM radio stations, 7,595 FM radio stations and

3,011 FM translator/booster stations were licensed. We conclude a

similarly high percentage (96 percent) of current radio broadcasting

licensees are small entities.

31. Television Broadcasting Stations. The SBA defines a television

broadcasting station that is independently owned and operated, is not

dominant in its field of operation, and has no more than $10.5 million

in annual receipts as a small business. Television broadcasting

stations consist of establishments primarily engaged in broadcasting

visual programs by television to the public, except cable and other pay

television services. Included in this industry are commercial,

religious, educational, and other television stations. Also included

are establishments primarily engaged in television broadcasting and

which produce taped television program materials. There were 1,509

television stations operating in the nation in 1992. In 1992, there

were 1,155 television station establishments that produced less than

$10.0 million in revenue (76.5 percent). As of May 31, 1998, official

Commission records indicate that 1,579 full power television stations,

2089 low power television stations, and 4924 television translator

stations were licensed. We conclude that a similarly high percentage of

current television broadcasting licensees are small entities (76.5

percent).

32. ITFS. In addition, there are presently 2032 ITFS licensees. All

but 100 of these licenses are held by educational institutions.

Educational institutions may be included in the definition of a small

entity. ITFS is a non-pay, non-commercial educational microwave service

that, depending on

[[Page 48620]]

SBA categorization, has, as small entities, entities generating either

$10.5 million or less, or $11.0 million or less, in annual receipts.

However, we do not collect, nor are we aware of other collections of,

annual revenue data for ITFS licensees. Thus, we conclude that up to

1932 of these licensees are small entities.

33. Pending and Future Applicants Affected by Rulemaking. The

auction procedures set forth in the First R&O will affect pending and

future competing applicants for the various commercial broadcast

services and for ITFS. We estimate that, as of the adoption date of the

First R&O, there are approximately: (1) 700 mutually exclusive pending

applications for commercial radio stations; (2) 200 pending competing

applications for full power commercial analog television stations; (3)

100 mutually exclusive pending applications for low power television

stations and television translator stations; (4) 30 competing

applications for FM translator stations; and (5) 200 or more mutually

exclusive pending applications for ITFS stations. The Commission has no

data on file as to whether entities with pending permit applications,

which are subject to the new auction rules adopted for the broadcast

services, meet the SBA's definition of a small business concern.

However, we conclude that, given the smaller size of the markets at

issue in the pending applications, most of the entities with pending

applications for a permit to construct a new primary or secondary

broadcast station are small entities, as defined by the SBA rules. It

is not possible, at this time, to estimate the number of markets for

which mutually exclusive applications will be received in the future,

nor the number of entities that in the future may seek a construction

permit for a new broadcast station. Given the fact that fewer new

stations (particularly fewer analog television stations) will be

licensed in the future and that these stations generally will be

located in smaller, more rural areas, we conclude that most of the

entities applying for these stations will be small entities, as defined

by the SBA rules.

Summary of Projected Reporting, Recordkeeping and Other Compliance

Requirements

34. The First R&O adopts a number of rules that include reporting,

recordkeeping, and compliance requirements. These requirements will

apply to all applicants subject to the new competitive bidding

procedures, as more fully detailed in the First R&O (referred to in

this section more generally as ``applicants'').

35. Applicants will be required to submit a short-form application

(FCC Form 175) prior to any auction. Only winning bidders will need to

file complete long-forms (FCC Form 301 for AM, FM and television

stations, FCC Form 346 for LPTV and television translators, or FCC Form

349 for FM translators). Specifically, in response to a public notice

announcing a window for the filing of broadcast and/or secondary

broadcast applications for new stations and for major changes in

existing facilities, applicants will be required to file a short-form

application, along with any engineering data necessary to determine

mutual exclusivity in a particular service. Applicants for broadcast

auctions will be required to follow the general auction rules, 47 CFR

1.2105, with regard to completion of the short form and exhibits to be

submitted with the short form. Also consistent with the Commission's

general part 1 auction rules, all applicants for broadcast auctions

must file their FCC Form 175 applications electronically beginning

January 1, 1999.

36. Applicants may be subject to upfront payments, minimum opening

bids and/or reserve prices in order to participate in broadcast service

auctions. The Mass Media Bureau in conjunction with the Wireless

Telecommunications Bureau shall seek public comment on and, as

appropriate, shall establish these mechanisms for each auction, or

group of auctions, in the broadcast services.

37. Following the close of bidding in an auction, winning bidders

will be required to submit a down payment, file an appropriate long-

form application for each construction permit for which it was the high

bidder, and pay the balance of their winning bids in a timely manner.

Broadcast auction participants will also be subject to the bid

withdrawal, default and disqualification payments set forth in the

general part 1 auction rules.

38. A licensee, or holder of a construction permit, who utilized a

new entrant bidding credit will be required to reimburse the government

for the amount of the bidding credit, plus interest, as a condition for

Commission approval of the assignment or transfer of the license or

permit to an entity that would not have qualified for the new entrant

credit, as generally provided in the Commission's part 1 rules.

Steps Taken to Minimize Significant Economic Impact on Small Entities,

and Significant Alternatives Considered

39. Due to the insufficiency of the record in this proceeding, the

First R&O does not make a final determination regarding the adoption of

bidding credits or other special measures to enhance participation by

various designated entities, including small businesses, in broadcast

service and ITFS auctions. Such measures will be considered in a

further report and order to be issued at a later time. For all auctions

held prior to ultimate resolution of the designated entity issue, the

First R&O adopts a tiered new entrant bidding credit for entities with

controlling interests in either no, or less than four, other media

entities so as to enhance participation by small businesses and other

designated entities, including small businesses owned by women and

minority group members. Following the completion of certain pending

evidentiary studies, the Commission may, in a further report and order

in this proceeding, adopt additional or alternative bidding credits or

other measures that more directly alleviate any adverse impact on small

businesses (including those owned by women or by minority group

members) of the requirement to participate in an auction to obtain a

construction permit to provide commercial broadcast service. If

additional or alternative designated entity measures are ultimately

adopted, then any such measures will be applicable to the auction of

any broadcast and ITFS applications then on file with the Commission.

40. Moreover, even if further special measures are not ultimately

adopted, we believe that some of the competitive bidding procedures

adopted in this First R&O reduce the time and cost of securing

commercial broadcast and ITFS licenses to the ultimate benefit of small

businesses. For example, entities interested in bidding for broadcast

station permits will not be required to submit a long-form application

prior to auction. We will require only that a short-form application be

submitted prior to auction, although applicants in the non-table

services will be required to submit the engineering data necessary to

make determinations of mutual exclusivity. The procedures adopted here

further expedite service to the public, thereby reducing the cost to

small entities of participating in these auctions, by limiting our pre-

auction application processing to what is necessary to determine mutual

exclusivity.

[[Page 48621]]

41. After careful consideration and in light of Congress' directive

in the Budget Act, we found that a shortened period of 10 days is

appropriate for the filing of petitions to deny against the long-form

applications filed by broadcast auction winners. We have also

eliminated the requirement that applicants affirmatively certify their

financial qualifications and the availability of their proposed tower

locations in their applications.

42. We recognize that, despite the efficiency of auctions and the

resulting reduction in the costs associated with filing an application,

having to participate in an auction may limit the opportunities

available to small businesses. However, except for certain commercial

broadcast applications filed before July 1, 1997, Section 309(j)(1)

requires that the Commission use competitive bidding procedures to

award virtually all construction permits for commercial broadcast

stations where mutually exclusive applications are filed. After

carefully considering the comments, we determined that auctions are

statutorily required to resolve mutually exclusive secondary broadcast

service applications, as nothing in the statute or in the legislative

history reflects an intention to limit Section 309(j)(1) to full power

radio and television applications.

43. Relying on the fact that the exemption from competitive bidding

set forth in Section 309(j)(2) is expressly limited to noncommercial

educational and public broadcast stations, we also determined that the

exemption does not apply to ITFS, which is a non-broadcast service.

Thus, although we agreed with commenters that ITFS is similar to

noncommercial educational broadcast service and that Section 309(j) may

not reflect on its face Congress's intent regarding the treatment of

competing ITFS applications, we found that auctions are statutorily

required to resolve all pending and future mutually exclusive ITFS

applications. However, we will request that Congress amend Section

309(j) so that the statute clearly reflects its intent with regard to

ITFS. Absent a clear statement from Congress that it means to exempt

ITFS from competitive bidding, we will proceed to auction mutually

exclusive ITFS applications. ITFS auctions will not commence

immediately, however, in order to allow sufficient time for the

Commission to obtain Congressional guidance.

44. We also determined to use competitive bidding to resolve

mutually exclusive major modification applications. Although some

commenters opposed the auctioning of modification applications,

commenters did not suggest another method of resolving mutually

exclusive major modification applications that is as efficient as

competitive bidding. We will, however, allow applicants who have filed

competing major modification applications, or competing major

modification and new station applications, to resolve their mutual

exclusivity by means of engineering solutions or settlement before

proceeding to auction. We saw less utility to be gained from subjecting

minor change applications to competitive bidding procedures; thus, in

accord with the comments, the parties will be expected to work together

to resolve any mutual exclusivities between minor modification

applications.

45. Section 309(l) governs the resolution of approximately 130

pending comparative licensing proceedings involving pre-July 1, 1997,

applications for new commercial radio or television stations that did

not settle within the 180-day waiver period prescribed by Congress. For

settlements executed within that period, we waived our settlement

rules, including the prohibition against ``white knight'' settlement

agreements where a full-market settlement was involved. Based upon the

express language of Section 309(l), we concluded that in cases that did

not settle, we have discretion to resolve applications subject to that

provision by either auction or comparative hearings. Some commenters

favored the use of comparative hearings for these pending pre-July 1,

1997 cases and expressed concern that the switch to auctions would

detrimentally affect the quality of broadcast service. We found that

Congress itself has made the judgment that auctions are generally

preferable to comparative hearings, and concluded that, by providing us

with the discretion to determine whether or not to use auctions in

pending pre-July 1st cases, Congress intended the Commission to focus

on any special circumstances in these cases that would tip the policy

balance in favor of comparative hearings, not to re-visit the general

congressional determination that broadcast auctions serve the public

interest.

46. In exercising this discretion, we concluded that, even for the

few pre-July 1, 1997 cases that had already progressed through an

Initial Decision by an Administrative Law Judge, auctions will

generally be fairer and more expeditious than deciding these pending

cases through the comparative hearing process, particularly since the

court's invalidation of the key comparative criterion prevents us from

deciding any of these cases according to the applicants' reasonable

expectation when they filed their applications. We found that for the

Commission's Administrative Law Judges to adjudicate and decide the

approximately 130 pending proceedings would take many years while

auctions can be carried out much more quickly.

47. We rejected arguments raised by commenters that changing the

selection process for pending applications filed before July 1, 1997 is

impermissibly retroactive or otherwise unlawful. We found that none of

the pre-July 1, 1997 applicants subject to the new Section 309(l) have

a vested right to a comparative hearing that is abridged by our

decision to resolve such applications by competitive bidding. And, in

any event, the economic impact of this regulatory change is ameliorated

somewhat by the statutory requirement that auctions to decide these

pending cases be closed to other participants.

48. Based upon the express language of Section 309(l)(2), we found

that, where post-June 30, 1997 applications are mutually exclusive with

two or more pre-July 1, 1997 applications, we must dismiss them and

conduct a competitive bidding procedure that is restricted to the pre-

July 1, 1997 applications. We rejected arguments by some commenters

that the distinction between pre-July 1st and post June 30th

applications is arbitrary. We found that Congress adopted a bright line

distinction and that this distinction operates to exclude some

applicants but to include others does not make it unlawful. Moreover,

the practical effect of this bright line distinction will be limited,

as we believe that settlement agreements have been filed in connection

with the small number of cases involving post-June 30th applications

mutually exclusive with two or more pre-July 1st applications.

49. Except for applications subject to Section 309(l), there is no

statutory bar to reopening new filing periods for applications that

would be mutually exclusive with pending applications. We agreed with

commenters that reopening already closed filing periods would not serve

the public interest since it would delay, rather than expedite, the

resolution of the pending applications, and would defeat the reasonable

expectations of applicants who timely filed long-form applications.

50. As a matter of fairness to pending applicants, we determined to

refund all hearing and certain filing fees paid by all pending

applicants. But we declined the suggestion of various commenters

[[Page 48622]]

that we also reimburse the legitimate and prudent expenses of pending

pre-July 1st applicants subject to the comparative freeze, who either

do not participate in the auction or are outbid in the auction. We are

aware of no legal authority to make such additional reimbursement and

concluded we have no obligation to do so.

51. We concluded that, consistent with our approach in most of the

Commission's previous auctions, broadcast and ITFS applicants should be

required to submit upfront payments with their short-form applications

prior to auction. We also reserved the right to adopt minimum opening

bid and/or reserve prices for each license. Establishing upfront

payments, minimum opening bid and/or reserve prices may have a

significant economic impact on small businesses interested in applying

for commercial broadcast and ITFS licenses. However, upfront payments

have been required in our general part 1 auction rules since they were

first promulgated, and Congress has directed us to prescribe minimum

opening bids or reserve prices unless we specifically determine that

this will not serve the public interest. While we were unpersuaded by

generalized assertions that reserve prices or minimum opening bids

would contravene the public interest, we directed the staff to seek

comment on, and as appropriate, establish upfront payments, opening

bids and/or reserve prices for each auction or group auctions.

52. A number of commenters opposed our proposal to apply the anti-

collusion rule to broadcast service auctions, believing instead that

auction applicants should be permitted to conclude settlement

agreements following the short-form filing deadline with those

applicants with whom they are mutually exclusive. We noted that we

adopted the anti-collusion rule to both prevent and to facilitate the

detection of collusive conduct, thereby enhancing the competitiveness

of the auction process and the post-auction market structure. We found

that the rule has proven effective in the numerous spectrum auctions

conducted to date, and concluded to apply the rule to broadcast

auctions, although a limited exception to the anti-collusion rule will

be made, as discussed above, in the context of mutually exclusive major

modification applications.

53. For the pending comparative renewal proceedings (which may not

be resolved by auction), we determined that the most equitable and

expeditious approach would be simply to permit the renewal applicants

and their challengers, within the confines of the generally phrased

standard comparative issues, to present whatever factors and evidence

they believe most appropriate.

Report to Congress

54. The Commission will send a copy of the First R&O, including

this FRFA, in a report to be sent to Congress pursuant to the Small

Business Regulatory Enforcement Fairness Act of 1996. 3See 5 U.S.C.

801(a)(1)(A). In addition, the Commission will send a copy of the First

R&O, including the FRFA, to the Chief Counsel for Advocacy of the Small

Business Administration.

55. Authority for issuance of this First R&O is contained in

Sections 4(i) and (j), 301, 303(f), 303(g), 303(h), 303(j), 303(r),

307(c), 308(b), 309(j), 309(l) and 403 of the Communications Act of

1934, as amended, 47 U.S.C. 154(i), 154(j), 301, 303(f), 303(g),

303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403.

List of Subjects in 47 CFR parts 1, 73 and 74

Radio broadcasting, Reporting and recordkeeping requirements,

Television broadcasting.

Federal Communications Commission.

William F. Caton,

Deputy Secretary.

Rule Changes

Parts 1, 73 and 74 of Chapter 1 of Title 47 of the Code of Federal

Regulations are amended as follows:

PART 1--PRACTICE AND PROCEDURE

1. The authority for part 1 continues to read as follows:

Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154(j),

155, 225, and 303(r).

2. Section 1.65 is amended by revising paragraphs (a) and (b) to

read as follows:

Sec. 1.65 Substantial and significant changes in the information

furnished by applicants to the Commission.

(a) Each applicant is responsible for the continuing accuracy and

completeness of information furnished in a pending application or in

Commission proceedings involving a pending application. Whenever the

information furnished in the pending application is no longer

substantially accurate and complete in all significant respects, the

applicant shall as promptly as possible and in any event within 30

days, unless good cause is shown, amend or request the amendment of his

application so as to furnish such additional or corrected information

as may be appropriate. Whenever there has been a substantial change as

to any other matter which may be of decisional significance in a

Commission proceeding involving the pending application, the applicant

shall as promptly as possible and in any event within 30 days, unless

good cause is shown, submit a statement furnishing such additional or

corrected information as may be appropriate, which shall be served upon

parties of record in accordance with Sec. 1.47. Where the matter is

before any court for review, statements and requests to amend shall in

addition be served upon the Commission's General Counsel. For the

purposes of this section, an application is ``pending'' before the

Commission from the time it is accepted for filing by the Commission

until a Commission grant or denial of the application is no longer

subject to reconsideration by the Commission or to review by any court.

(b) Applications in ITFS and broadcast services subject to

competitive bidding will be subject to the provisions of

Secs. 1.2105(b), 73.5002 and 73.3522 regarding the modification of

their applications.

* * * * *

3. Section 1.1601 is amended by reserving paragraph (a) to read as

follows:

Sec. 1.1601 Scope.

* * * * *

(a) [Reserved]

* * * * *

4. Section 1.604 is amended by revising paragraph (a) to read as

follows:

Sec. 1.1604 Post-selection hearings.

(a) Following the random selection, the Commission shall announce

the ``tentative selectee'' and, where permitted by Sec. 73.3584 invite

Petitions to Deny its application.

* * * * *

PART 73--RADIO BROADCAST SERVICES

5. The authority for part 73 is revised to read as follows:

Authority: 47 U.S.C. 154, 303, 334 and 336.

6. Section 73.1010 is amended by adding paragraph (a)(8) to read as

follows:

Sec. 73.1010 Cross reference to rules in other parts.

* * * * *

(a) * * *

(8) Subpart Q, ``Competitive Bidding Proceedings'' (Secs. 1.2101-

1.2112).

* * * * *

7. Section 73.3500 is amended by adding the following new entry in

numerical order to read as follows:

[[Page 48623]]

Sec. 73.3500 Application and report forms.

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

Form number Title

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

175............................... Application to Participate in an FCC

Auction

* * * * *

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

8. Section 73.3522 is revised to read as follows:

Sec. 73.3522 Amendment of applications.

(a) Broadcast services subject to competitive bidding. (1)

Applicants in all broadcast services subject to competitive bidding

will be subject to the provisions of Secs. 73.5002 and 1.2105(b)

regarding the modification of their short-form applications.

(2) Subject to the provision of Sec. 73.5005, if it is determined

that a long form application submitted by a winning bidder or a non-

mutually exclusive applicant for a new station or a major change in an

existing station in all broadcast services subject to competitive

bidding is substantially complete, but contains any defect, omission,

or inconsistency, a deficiency letter will be issued affording the

applicant an opportunity to correct the defect, omission or

inconsistency. Amendments may be filed pursuant to the deficiency

letter curing any defect, omission or inconsistency identified by the

Commission, or to make minor modifications to the application, or

pursuant to Sec. 1.65. Such amendments should be filed in accordance

with Sec. 73.3513. If a petition to deny has been filed, the amendment

shall be served on the petitioner.

(3) Subject to the provisions of Secs. 73.3571, 73.3572 and

73.3573, deficiencies, omissions or inconsistencies in long-form

applications may not be cured by major amendment. The filing of major

amendments to long-form applications is not permitted. An application

will be considered to be newly filed if it is amended by a major

amendment.

(4) Paragraph (a) of this section is not applicable to applications

for minor modifications of facilities in the non-reserved FM broadcast

service, nor to any application for a reserved band FM station.

(b) Reserved band FM and reserved noncommercial educational

television stations.--(1) Predesignation amendments. Subject to the

provisions of Secs. 73.3525, 73.3572, 73.3573 and 73.3580, mutually

exclusive broadcast applications for reserved band FM stations and

television stations on a reserved channel may be amended as a matter of

right by the date specified (not less than 30 days after issuance) in

the FCC's Public Notice announcing the acceptance for filing of the

last-filed mutually exclusive application. Subsequent amendments prior

to designation of the proceeding for hearing will be considered only

upon a showing of good cause for late filing or pursuant to Sec. 1.65

or Sec. 73.3514. Unauthorized or untimely amendments are subject to

return by the FCC's staff without consideration.

(2) Postdesignation amendments. (i) Except as provided in paragraph

(ii) of this section, requests to amend an application after it has

been designated for hearing will be considered only upon written

petition properly served upon the parties of record in accordance with

Sec. 1.47 and, where applicable, compliance with the provisions of

Sec. 73.3525, and will be considered only upon a showing of good cause

for late filing. In the case of requests to amend the engineering

proposal (other than to make changes with respect to the type of

equipment specified), good cause will be considered to have been shown

only if, in addition to the usual good cause consideration, it is

demonstrated:

(A) That the amendment is necessitated by events which the

applicant could not reasonably have foreseen (e.g., notification of a

new foreign station or loss of transmitter site by condemnation); and

(B) That the amendment does not require an enlargement of issues or

the addition of new parties to the proceeding.

(ii) In comparative broadcast cases (including comparative renewal

proceedings), amendments relating to issues first raised in the

designation order may be filed as a matter of right within 30 days

after that Order or a summary thereof is published in the Federal

Register, or by a date certain to be specified in the Order.

(iii) Notwithstanding the provisions of paragraphs (b)(2)(i) and

(b)(2)(ii) of this section, and subject to compliance with the

provisions of Sec. 73.3525, a petition for leave to amend may be

granted, provided it is requested that the application as amended be

removed from the hearing docket and returned to the processing line.

(c) Minor modifications of facilities in the non-reserved FM broadcast

service.

(1) Subject to the provisions of Secs. 73.3525, 73.3573, and

73.3580, for a period of 30 days following the FCC's issuance of a

Public Notice announcing the tender of an application for minor

modification of a non-reserved band FM station, (other than Class D

stations), minor amendments may be filed as a matter of right.

(2) For applications received on or after August 7, 1992, an

applicant whose application is found to meet minimum filing

requirements, but nevertheless is not complete and acceptable, shall

have the opportunity during the period specified in the FCC staff's

deficiency letter to correct all deficiencies in the tenderability and

acceptability of the underlying application, including any deficiency

not specifically identified by the staff. [For minimum filing

requirements see Sec. 73.3564(a). Examples of tender defects appear at

50 FR 19936 at 19945-46 (May 13, 1985), reprinted as Appendix D, Report

and Order, MM Docket No. 91-347, 7 FCC Rcd 5074, 5083-88 (1992). For

examples of acceptance defects, see 49 FR 47331.] Prior to the end of

the period specified in the deficiency letter, a submission seeking to

correct a tender and/or acceptance defect in an application meeting

minimum filing requirements will be treated as an amendment for good

cause if it would successfully and directly correct the defect. Other

amendments submitted prior to grant will be considered only upon a

showing of good cause for late filing or pursuant to Sec. 1.65 or

Sec. 73.3514.

(3) Unauthorized or untimely amendments are subject to return by

the Commission without consideration. However, an amendment to a non-

reserved band application will not be accepted if the effect of such

amendment is to alter the proposed facility's coverage area so as to

produce a conflict with an applicant who files subsequent to the

initial applicant but prior to the amendment application. Similarly, an

applicant subject to ``first come/first serve'' processing will not be

permitted to amend its application and retain filing priority if the

result of such amendment is to alter the facility's coverage area so as

to produce a conflict with an applicant which files subsequent to the

initial applicant but prior to the amendment.

Note 1 to Sec. 73.3522: When two or more broadcast applications

are tendered for filing which are mutually exclusive with each other

but not in conflict with any previously filed applications which

have been accepted for filing, the FCC, where appropriate, will

announce acceptance of the earliest tendered application and place

the later filed application or applications on a subsequent public

notice of acceptance for filing in order to establish a deadline for

the filing of amendments as a matter of right for all applicants in

the group.

9. Section 73.3525 is amended by revising paragraphs (c) and (d)

and adding paragraph (l) to read as follows:

[[Page 48624]]

Sec. 73.3525 Agreements for removing application conflicts.

* * * * *

(c) Except where a joint request is filed pursuant to paragraph (a)

of this section, any applicant filing an amendment pursuant to

Secs. 73.3522(b)(1) and (c), or a request for dismissal pursuant to

Secs. 73.3568(b)(1) and (c), which would remove a conflict with another

pending application; or a petition for leave to amend pursuant to

Sec. 73.3522(b)(2) which would permit a grant of the amended

application or an application previously in conflict with the amended

application; or a request for dismissal pursuant to Sec. 73.3568(b)(2),

shall file with it an affidavit as to whether or not consideration

(including an agreement for merger of interests) has been promised to

or received by such applicant, directly or indirectly, in connection

with the amendment, petition or request.

(d) Upon the filing of a petition for leave to amend or to dismiss

an application for broadcast facilities which has been designated for

hearing or upon the dismissal of such application on the FCC's own

motion pursuant to Sec. 73.3568, each applicant or party remaining in

hearing, as to whom a conflict would be removed by the amendment or

dismissal shall submit for inclusion in the record of that proceeding

an affidavit stating whether or not he has directly or indirectly paid

or promised consideration (including an agreement for merger of

interests) in connection with the removal of such conflict.

* * * * *

(l) The prohibition of collusion as set forth in Secs. 1.2105(c)

and 73.5002 of this section, which becomes effective upon the filing of

short-form applications, shall apply to all broadcast services subject

to competitive bidding.

10. Section 73.3564 is revised to read as follows:

Sec. 73.3564 Acceptance of applications.

(a)(1) Applications tendered for filing are dated upon receipt and

then forwarded to the Mass Media Bureau, where an administrative

examination is made to ascertain whether the applications are complete.

Except for applications for minor modifications of facilities in the

non-reserved FM band, as defined in Sec. 73.3573(a)(2), long form

applications subject to the provisions of Sec. 73.5005 found to be

complete or substantially complete are accepted for filing and are

given file numbers. In the case of minor defects as to completeness, a

deficiency letter will be issued and the applicant will be required to

supply the missing or corrective information. Applications that are not

substantially complete will not be considered and will be returned to

the applicant.

(2) In the case of minor modifications of facilities in the non-

reserved FM band, applications will be placed on public notice if they

meet the following two-tiered minimum filing requirement as initially

filed in first come/first served proceedings:

(i) The application must include:

(A) Applicant's name and address,

(B) Applicant's original signature,

(C) Principal community,

(D) Channel or frequency,

(E) Class of station, and

(F) Transmitter site coordinates; and

(ii) The application must not omit more than 3 of the second tier

items specified in appendix C, Report and Order, MM Docket No. 91-347,

FCC 92-328, 7 FCC Rcd 5074 (1992). Applications found not to meet

minimum filing requirements will be returned to the applicant.

Applications found to meet minimum filing requirements, but that

contain deficiencies in tender and/or acceptance information, shall be

given an opportunity for corrective amendment pursuant to Sec. 73.3522.

Applications found to be substantially complete and in accordance with

the Commission's core legal and technical requirements will be accepted

for filing. Applications with uncorrected tender and/or acceptance

defects remaining after the opportunity for corrective amendment will

be dismissed with no further opportunity for corrective amendment.

(b) Acceptance of an application for filing merely means that it

has been the subject of a preliminary review by the FCC's

administrative staff as to completeness. Such acceptance will not

preclude the subsequent dismissal of the application if it is found to

be patently not in accordance with the FCC's rules.

(c) At regular intervals, the FCC will issue a Public Notice

listing all long form applications which have been accepted for filing.

Pursuant to Secs. 73.3571(h), 73.3572, and 73.3573(f), such notice

shall establish a cut-off date for the filing of petitions to deny.

With respect to reserved band FM applications, the Public Notice shall

also establish a cut-off date for the filing of mutually exclusive

applications pursuant to Sec. 73.3573(e). However, no application will

be accepted for filing unless certification of compliance with the

local notice requirements of Sec. 73.3580(h) has been made in the

tendered application.

(d) The FCC will specify by Public Notice, pursuant to

Sec. 73.5002, a period for filing applications for new stations or for

major modifications in the facilities of an existing station. Except

for reserved band FM stations and TV stations on reserved noncommercial

educational channels, applications for new and major modifications in

facilities will be accepted only during these window filing periods

specified by the Commission.

(e) Applications for minor modification of facilities may be

tendered at any time, unless restricted by the FCC. These applications

will be processed on a ``first come/first served'' basis and will be

treated as simultaneously tendered if filed on the same day. Any

applications received after the filing of a lead application will be

grouped according to filing date, and placed in a queue behind the lead

applicant. The FCC will periodically release a Public Notice listing

those minor modification of facilities applications accepted for

filing.

(f) If a non-reserved band FM channel allotment becomes vacant,

after the grant of a construction permit becomes final, because of a

lapsed construction permit or for any other reason, the FCC will, by

Public Notice, announce a subsequent filing window for the acceptance

of new applications for such channels.

(g) Applications for operation in the 1605-1705 kHz band will be

accepted only if filed pursuant to the terms of Sec. 73.30(b).

11. Section 73.3568 is revised to read as follows:

Sec. 73.3568 Dismissal of applications.

(a) (1) Failure to prosecute an application, or failure to respond

to official correspondence or request for additional information, will

be cause for dismissal.

(2) Applicants in all broadcast services subject to competitive

bidding will be subject to the provisions of Secs. 73.5002 and

1.2105(b) regarding the dismissal of their short-form applications.

(3) Applicants in all broadcast services subject to competitive

bidding will be subject to the provisions of Secs. 73.5004, 73.5005 and

1.2104(g) regarding the dismissal of their long-form applications and

the imposition of applicable withdrawal, default and disqualification

payments.

(b) (1) Subject to the provisions of Sec. 73.3525, dismissal of

applications for channels reserved for noncommercial educational use

will be without prejudice where an application has not yet been

designated for hearing, but may

[[Page 48625]]

be made with prejudice after designation for hearing.

(2) Subject to the provisions of Sec. 73.3525, requests to dismiss

an application for a channel reserved for noncommercial educational

use, without prejudice, after it has been designated for hearing, will

be considered only upon written petition properly served upon all

parties of record. Such requests shall be granted only upon a showing

that the request is based on circumstances wholly beyond the

applicant's control which preclude further prosecution of his

application.

(c) Subject to the provisions of Secs. 73.3523 and 73.3525, any

application for minor modification of facilities may, upon request of

the applicant, be dismissed without prejudice as a matter of right.

(d) An applicant's request for the return of an application that

has been accepted for filing will be regarded as a request for

dismissal.

12. Section 73.3571 is revised to read as follows:

Sec. 73.3571 Processing of AM broadcast station applications.

(a) Applications for AM broadcast facilities are divided into three

groups.

(1) In the first group are applications for new stations or for

major changes in the facilities of authorized stations. A major change

for an AM station authorized under this part is any increase in power,

except where accompanied by a complimentary reduction of antenna

efficiency which leads to the same amount, or less, radiation in all

directions (in the horizontal and vertical planes when skywave

propagation is involved, and in the horizontal plane only for daytime

considerations), relative to the presently authorized radiation levels,

or any change in frequency, hours of operation, or community of

license. A major change in ownership is a situation where the original

party or parties to the application do not retain more than 50%

ownership interest in the application as originally filed.

(2) The second group consists of applications for licenses and all

other changes in the facilities of authorized stations.

(3) The third group consists of applications for operation in the

1605-1705 kHz band which are filed subsequent to FCC notification that

allotments have been awarded to petitioners under the procedure

specified in Sec. 73.30.

(b)(1) The FCC may, after acceptance of an application for

modification of facilities, advise the applicant that such application

is considered to be one for a major change and therefore is subject to

the provisions of Secs. 73.3522, 73.3580 and 1.1111 of this chapter

pertaining to major changes. Such major modification applications will

be dismissed as set forth in paragraph (h)(1)(i) of this section.

(2) An amendment to an application which would effect a major

change, as defined in paragraph (a)(1) of this section, will not be

accepted except as provided for in paragraph (h)(1)(i) of this section.

(c) An application for changes in the facilities of an existing

station will continue to carry the same file number even though

(pursuant to FCC approval) an assignment of license or transfer of

control of said licensee or permittee has taken place if, upon

consummation, the application is amended to reflect the new ownership.

(d) If, upon examination, the FCC finds that the public interest,

convenience and necessity will be served by the granting of an

application, the same will be granted. If the FCC is unable to make

such a finding and it appears that a hearing may be required, the

procedure set forth in Sec. 73.3593 will be followed.

(e) Applications proposing to increase the power of an AM station

are subject to the following requirements:

(1) In order to be acceptable for filing, any application which

does not involve a change in site must propose at least a 20% increase

in the station's nominal power.

(2) Applications involving a change in site are not subject to the

requirements in paragraph (e)(1) of this section.

(3) Applications for nighttime power increases for Class D stations

are not subject to the requirements of this section and will be

processed as minor changes.

(4) The following special procedures will be followed in

authorizing Class II-D daytime-only stations on 940 and 1550 kHz, and

Class III daytime-only stations on the 41 regional channels listed in

Sec. 73.26(a), to operate unlimited-time.

(i) Each eligible daytime-only station in the foregoing categories

will receive an Order to Show Cause why its license should not be

modified to specify operation during nighttime hours with the

facilities it is licensed to start using at local sunrise, using the

power stated in the Order to Show Cause, that the Commission finds is

the highest nighttime level--not exceeding 0.5 kW--at which the station

could operate without causing prohibited interference to other domestic

or foreign stations, or to co-channel or adjacent channel stations for

which pending applications were filed before December 1, 1987.

(ii) Stations accepting such modification shall be reclassified.

Those authorized in such Show Cause Orders to operate during nighttime

hours with a power of 0.25 kW or more, or with a power that, although

less than 0.25 kW, is sufficient to enable them to attain RMS field

strengths of 141 mV/m or more at 1 kilometer, shall be redesignated as

Class II-B stations if they are assigned to 940 or 1550 kHz, and as

unlimited-time Class III stations if they are assigned to regional

channels.

(iii) Stations accepting such modification that are authorized to

operate during nighttime hours at powers less than 0.25 kW, and that

cannot with such powers attain RMS field strengths of 141 mV/m or more

at 1 kilometer, shall be redesignated as Class II-S stations if they

are assigned to 940 or 1550 kHz, and as Class III-S stations if they

are assigned to regional channels.

(iv) Applications for new stations may be filed at any time on 940

and 1550 kHz and on the regional channels. Also, stations assigned to

940 or 1550 kHz, or to the regional channels, may at any time,

regardless of their classifications, apply for power increases up to

the maximum generally permitted. Such applications for new or changed

facilities will be granted without taking into account interference

caused to Class II-S or Class III-S stations, but will be required to

show interference protection to other classes of stations, including

stations that were previously classified as Class II-S or Class III-S,

but were later reclassified as Class II-B or Class III unlimited-time

stations as a result of subsequent facilities modifications that

permitted power increases qualifying them to discontinue their ``S''

subclassification.

(f) Applications for minor modifications for AM broadcast stations,

as defined in paragraph (a)(2) of this section, may be filed at any

time, unless restricted by the FCC, and, generally will be processed in

the order in which they are tendered. The FCC will periodically release

a Public Notice listing those applications accepted for filing. Any

such applications found to be mutually exclusive must be resolved

through settlement or technical amendment.

(g) Applications for change of license to change hours of operation

of a Class C AM broadcast station, to decrease hours of operation of

any other class of station, or to change station location involving no

change in transmitter site will be considered without reference to the

processing line.

[[Page 48626]]

(h) Processing new and major AM broadcast station applications.

(1)(i) The FCC will specify by Public Notice, pursuant to Sec. 73.5002,

a period for filing AM applications for a new station or for major

modifications in the facilities of an authorized station. AM

applications for new facilities or for major modifications will be

accepted only during these specified periods. Applications submitted

prior to the appropriate filing period or ``window'' opening date

identified in the Public Notice will be returned as premature.

Applications submitted after the specified deadline will be dismissed

with prejudice as untimely.

(ii) Such AM applicants will be subject to the provisions of

Secs. 1.2105 and 73.5002 regarding the submission of the short-form

application, FCC Form 175, and all appropriate certifications,

information and exhibits contained therein. To determine which AM

applications are mutually exclusive, AM applicants must submit the

engineering data contained in FCC Form 301 as a supplement to the

short-form application. Such engineering data will not be studied for

technical acceptability, but will be protected from subsequently filed

applications as of the close of the window filing period.

Determinations as to the acceptability or grantability of an

applicant's proposal will not be made prior to an auction.

(iii) AM applicants will be subject to the provisions of

Secs. 1.2105 and 73.5002 regarding the modification and dismissal of

their short-form applications.

(2) Subsequently, the FCC will release Public Notices:

(i) identifying the short-form applications received during the

window filing period which are found to be mutually exclusive;

(ii) establishing a date, time and place for an auction;

(iii) providing information regarding the methodology of

competitive bidding to be used in the upcoming auction, bid submission

and payment procedures, upfront payment procedures, upfront payment

deadlines, minimum opening bid requirements and applicable reserve

prices in accordance with the provisions of Sec. 73.5002;

(iv) identifying applicants who have submitted timely upfront

payments and, thus, are qualified to bid in the auction.

(3) If, during the window filing period, the FCC receives non-

mutually exclusive AM applications, a Public Notice will be released

identifying the non-mutually exclusive applicants, who will be required

to submit the appropriate long form application within 30 days of the

Public Notice and pursuant to the provisions of Sec. 73.5005(d). These

non-mutually exclusive applications will be processed and the FCC will

periodically release a Public Notice listing such non-mutually

exclusive applications determined to be acceptable for filing and

announcing a date by which petitions to deny must be filed in

accordance with the provisions of Secs. 73.5006 and 73.3584. If the

applicant is duly qualified, and upon examination, the FCC finds that

the public interest, convenience and necessity will be served by the

granting of the non-mutually exclusive long form application, the same

will be granted.

(4)(i) The auction will be held pursuant to the procedures set

forth in Secs. 1.2101 et seq. and 73.5000 et seq. Subsequent to the

auction, the FCC will release a Public Notice announcing the close of

the auction and identifying the winning bidders. Winning bidders will

be subject to the provisions of Secs. 1.2107 and 73.5003 regarding down

payments and will be required to submit the appropriate down payment

within 10 business days of the Public Notice. Pursuant to Secs. 1.2107

and 73.5005, a winning bidder that meets its down payment obligations

in a timely manner must, within 30 days of the release of the Public

Notice announcing the close of the auction, submit the appropriate

long-form application for each construction permit for which it was the

winning bidder. Long-form applications filed by winning bidders shall

include the exhibits identified in Sec. 73.5005(a).

(ii) These applications will be processed and the FCC will

periodically release a Public Notice listing such applications that

have been accepted for filing and announcing a date by which petitions

to deny must be filed in accordance with the provisions of

Secs. 73.5006 and 73.3584. If the applicant is duly qualified, and upon

examination, the FCC finds that the public interest, convenience and

necessity will be served by the granting of the winning bidder's long-

form application, a Public Notice will be issued announcing that the

construction permit is ready to be granted. Each winning bidder shall

pay the balance of its winning bid in a lump sum within 10 business

days after release of the Public Notice, as set forth in

Secs. 1.2109(a) and 73.5003. Construction permits will be granted by

the Commission following the receipt of the full payment.

(iii) All long-form applications will be cutoff as of the date of

filing with the FCC and will be protected from subsequently filed long-

form applications. Applications will be required to protect all

previously filed commercial and noncommercial applications. Winning

bidders filing long-form applications may change the technical

proposals specified in their previously submitted short-form

applications, but such change may not constitute a major change. If the

submitted long-form application would constitute a major change from

the proposal submitted in the short-form application, the long-form

application will be returned pursuant to paragraph (h)(1)(i) of this

section.

(i) In order to grant a major or minor change application made

contingent upon the grant of another licensee's request for a facility

modification, the Commission will not consider mutually exclusive

applications by other parties that would not protect the currently

authorized facilities of the contingent applicants. Such major change

applications remain, however, subject to the provisions of

Secs. 73.3580 and 1.1111. The Commission shall grant contingent

requests for construction permits for station modifications only upon a

finding that such action will promote the public interest, convenience

and necessity.

13. Section 73.3572 is revised to read as follows:

Sec. 73.3572 Processing of TV broadcast, low power TV, TV translator

and TV booster station applications.

(a) Applications for TV stations are divided into two groups:

(1) In the first group are applications for new stations or major

changes in the facilities of authorized stations. A major change for TV

broadcast stations authorized under this part is any change in

frequency or community of license which is in accord with a present

allotment contained in the Table of Allotments (Sec. 73.606). Other

requests for change in frequency or community of license for TV

broadcast stations must first be submitted in the form of a petition

for rulemaking to amend the Table of Allotments. In the case of low

power TV, TV translator, and TV booster stations authorized under part

74 of this chapter, a major change is any change in:

(i) Frequency (output channel) assignment (does not apply to TV

boosters);

(ii) Transmitting antenna system including the direction of the

radiation, directive antenna pattern or transmission line;

(iii) Antenna height;

(iv) Antenna location exceeding 200 meters; or

(v) Authorized operating power.

(2) However, if the proposed modification of facilities, other than

a

[[Page 48627]]

change in frequency, will not increase the signal range of the low

power TV, TV translator or TV booster station in any horizontal

direction, the modification will not be considered a major change.

(i) Provided that in the case of an authorized low power TV, TV

translator or TV booster which is predicted to cause or receive

interference to or from an authorized TV broadcast station pursuant to

Sec. 74.705 or interference with broadcast or other services under

Sec. 74.703 or Sec. 74.709, that an application for a change in output

channel, together with technical modifications which are necessary to

avoid interference (including a change in antenna location of less than

16.1 km), will not be considered as an application for a major change

in those facilities.

(ii) Provided further, that a low power TV, TV translator or TV

booster station: authorized on a channel from channel 60 to 69, or

which is causing or receiving interference or is predicted to cause or

receive interference to or from an authorized DTV station pursuant to

Sec. 74.706, or which is located within the distances specified below

in paragraph (iii) of this section to the coordinates of co-channel DTV

authorizations (or allotment table coordinates if there are no

authorized facilities at different coordinates), may at any time file a

displacement relief application for a change in output channel,

together with any technical modifications which are necessary to avoid

interference or continue serving the station's protected service area.

Such an application will not be considered as an application for a

major change in those facilities. Where such an application is mutually

exclusive with applications for new low power TV, TV translator or TV

booster stations, or with other nondisplacement relief applications for

facilities modifications, priority will be afforded to the displacement

application(s) to the exclusion of the other applications.

(iii)(A) The geographic separations to co-channel DTV facilities or

allotment reference coordinates, as applicable, within which to qualify

for displacement relief are the following:

(1) Stations on UHF channels: 265 km (162 miles)

(2) Stations on VHF channels 2-6: 280 km (171 miles)

(3) Stations on VHF channels 7-13: 260 km (159 miles)

(B) Engineering showings of predicted interference may also be

submitted to justify the need for displacement relief.

(iv) Provided further, that the FCC may, within 15 days after

acceptance of any other application for modification of facilities,

advise the applicant that such application is considered to be one for

a major change and therefore subject to the provisions of

Secs. 73.3522, 73.3580, and 1.1111 of this chapter pertaining to major

changes. Such major modification applications filed for low power TV,

TV translator, TV booster stations, and for a non-reserved television

allotment, are subject to competitive bidding procedures and will be

dismissed if filed outside a specified filing period. See 47 CFR

73.5002(a).

(b) A new file number will be assigned to an application for a new

station or for major changes in the facilities of an authorized

station, when it is amended so as to effect a major change, as defined

in paragraph (a)(1) of this section, or result in a situation where the

original party or parties to the application do not retain more than

50% ownership interest in the application as originally filed and

Sec. 73.3580 will apply to such amended application. An application for

change in the facilities of any existing station will continue to carry

the same file number even though (pursuant to FCC approval) an

assignment of license or transfer of control of such licensee or

permittee has taken place if, upon consummation, the application is

amended to reflect the new ownership.

(c) Amendments to low power TV, TV translator, TV booster stations,

or non-reserved television applications, which would require a new file

number pursuant to paragraph (b) of this section, are subject to

competitive bidding procedures and will be dismissed if filed outside a

specified filing period. See 47 CFR 73.5002(a). When an amendment to an

application for a reserved television allotment would require a new

file number pursuant to paragraph (b) of this section, the applicant

will have the opportunity to withdraw the amendment at any time prior

to designation for a hearing if applicable; and may be afforded,

subject to the discretion of the Administrative Law Judge, an

opportunity to withdraw the amendment after designation for a hearing.

(d) Applications for TV stations on reserved noncommercial

educational channels will be processed as nearly as possible in the

order in which they are filed. Such applications will be placed in the

processing line in numerical sequence, and will be drawn by the staff

for study, the lowest file number first. In order that those

applications which are entitled to be grouped for processing may be

fixed prior to the time processing of the earliest filed application is

begun, the FCC will periodically release a Public Notice listing

applications which have been accepted for filing and announcing a date

(not less than 30 days after issuance) on which the listed applications

will be considered available and ready for processing and by which all

mutually exclusive applications and petitions to deny the listed

applications must be filed.

(e)(1) The FCC will specify by Public Notice, pursuant to

Sec. 73.5002, a period for filing applications for a new non-reserved

television, low power TV and TV translator stations or for major

modifications in the facilities of such authorized station.

(2) Such applicants shall be subject to the provisions of

Secs. 1.2105 and competitive bidding procedures. See 47 CFR 73.5000 et

seq.

(f) Applications for minor modifications for television broadcast,

low power television and TV translator stations, as defined in

paragraph (a)(2) of this section, may be filed at any time, unless

restricted by the FCC, and, generally, will be processed in the order

in which they are tendered.

(g) TV booster station applications may be filed at any time.

Subsequent to filing, the FCC will release a Public Notice accepting

for filing and proposing for grant those applications which are not

mutually exclusive with any other TV translator, low power TV, or TV

booster application, and providing for the filing of Petitions To Deny

pursuant to Sec. 73.3584.

14. Section 73.3573 is revised to read as follows:

Sec. 73.3573 Processing FM broadcast station applications.

(a) Applications for FM broadcast stations are divided into two

groups:

(1) In the first group are applications for new stations or for

major changes in the facilities of authorized stations. A major change

for an FM station authorized under this part is any change in frequency

or community of license which is in accord with a present allotment

contained in the Table of Allotments (Sec. 73.202(b)). A licensee or

permittee may seek the higher or lower class adjacent channel,

intermediate frequency or co-channel or the same class adjacent channel

of its existing FM broadcast station authorization by filing a minor

change application. Other requests for change in frequency or community

of license for FM stations must first be submitted in the form of a

petition for rulemaking to amend the Table of Allotments. Long-form

applications submitted pursuant to Sec. 73.5005 for a new FM broadcast

service may propose a higher or lower class adjacent channel,

intermediate frequency or co-channel. For

[[Page 48628]]

noncommercial educational FM stations, a major change is any change in

frequency or community of license or any change in power or antenna

location or height above average terrain (or combination thereof) which

would result in a change of 50% or more in the area within the

station's predicted 1 mV/m field strength contour. (A change in area is

defined as the sum of the area gained and the area lost as a percentage

of the original area.) A major change in ownership is a situation where

the original party or parties to the application do not retain more

than 50% ownership interest in the application as originally filed.

(2) The second group consists of applications for licenses and all

other changes in the facilities of authorized stations.

(b)(1) The FCC may, after the acceptance of an application for

modification of facilities, advise the applicant that such application

is considered to be one for a major change and therefore subject to the

provisions of Secs. 73.3522, 73.3580 and 1.1111 of this chapter

pertaining to major changes. Such major modification applications in

the non-reserved band will be dismissed as set forth in paragraph

(f)(2)(i) of this section.

(2) An amendment to a non-reserved band application which would

effect a major change, as defined in paragraph (a)(1) of this section,

will not be accepted, except as provided for in paragraph (f)(2)(i) of

this section.

(3) A new file number will be assigned to a reserved band

application for a new station or for major changes in the facilities of

an authorized station, when it is amended so as to effect a major

change, as defined in paragraph (a)(1) of this section. Where an

amendment to a reserved band application would require a new file

number, the applicant will have the opportunity to withdraw the

amendment at any time prior to designation for hearing, if applicable;

and may be afforded, subject to the discretion of the Administrative

Law Judge, an opportunity to withdraw the amendment after designation

for hearing.

(c) An application for changes in the facilities of any existing

station will continue to carry the same file number even though

(pursuant to FCC approval) an assignment of license or transfer of

control of such licensee or permittee has taken place if, upon

consummation, the application is amended to reflect the new ownership.

(d) If, upon examination, the FCC finds that the public interest,

convenience and necessity will be served by the granting of an

application for FM broadcast facilities, the same will be granted. If

the FCC is unable to make such a finding and it appears that a hearing

may be required, the procedure given in Sec. 73.3593 will be followed.

(e) Applications for reserved band and Class D FM broadcast

stations will be processed as nearly as possible in the order in which

they are filed. Such applications will be placed in the processing line

in numerical sequence, and will be drawn by the staff for study, the

lowest file number first. In order that those applications which are

entitled to be grouped for processing may be fixed prior to the time

processing of the earliest filed application is begun, the FCC will

periodically release a Public Notice listing applications which have

been accepted for filing and announcing a date (not less than 30 days

after publication) on which the listed applications will be considered

available and ready for processing and by which all mutually exclusive

applications and/or petitions to deny the listed applications must be

filed.

(f) Processing non-reserved FM broadcast station applications. (1)

Applications for minor modifications for non-reserved FM broadcast

stations, as defined in paragraph (a)(2) of this section, may be filed

at any time, unless restricted by the FCC, and, generally, will be

processed in the order in which they are tendered. The FCC will

periodically release a Public Notice listing those applications

accepted for filing. Processing of these applications will be on a

``first come/first serve'' basis with the first acceptable application

cutting off the filing rights of subsequent applicants. All

applications received on the same day will be treated as simultaneously

tendered and, if they are found to be mutually exclusive, must be

resolved through settlement or technical amendment. Applications

received after the tender of a lead application will be grouped,

according to filing date, behind the lead application in a queue. The

priority rights of the lead applicant, as against all other applicants,

are determined by the date of filing, but the filing date for

subsequent applicants for that channel and community only reserves a

place in the queue. The rights of an applicant in a queue ripen only

upon a final determination that the lead applicant is unacceptable and

if the queue member is reached and found acceptable. The queue will

remain behind the lead applicant until a construction permit is finally

granted, at which time the queue dissolves.

(2) (i) The FCC will specify by Public Notice, pursuant to

Sec. 73.5002(a), a period for filing non-reserved band FM applications

for a new station or for major modifications in the facilities of an

authorized station. FM applications for new facilities or for major

modifications will be accepted only during the appropriate filing

period or ``window.'' Applications submitted prior to the window

opening date identified in the Public Notice will be returned as

premature. Applications submitted after the specified deadline will be

dismissed with prejudice as untimely.

(ii) Such FM applicants will be subject to the provisions of

Secs. 1.2105 and 73.5002 regarding the submission of the short-form

application, FCC Form 175, and all appropriate certifications,

information and exhibits contained therein. FM applicants may submit a

set of preferred site coordinates as a supplement to the short-form

application. Any specific site indicated by FM applicants will not be

studied for technical acceptability, but will be protected from

subsequently filed applications as a full-class facility as of the

close of the window filing period. Determinations as to the

acceptability or grantability of an applicant's proposal will not be

made prior to an auction.

(iii) FM applicants will be subject to the provisions of

Secs. 1.2105 and 73.5002(c) regarding the modification and dismissal of

their short-form applications.

(3) Subsequently, the FCC will release Public Notices:

(i) identifying the short-form applications received during the

window filing period which are found to be mutually exclusive;

(ii) establishing a date, time and place for an auction;

(iii) providing information regarding the methodology of

competitive bidding to be used in the upcoming auction, bid submission

and payment procedures, upfront payment procedures, upfront payment

deadlines, minimum opening bid requirements and applicable reserve

prices in accordance with the provisions of Sec. 73.5002;

(iv) identifying applicants who have submitted timely upfront

payments and, thus, are qualified to bid in the auction.

(4) If, after the close of the appropriate window filing period, a

non-reserved FM allotment remains vacant, the window remains closed

until the FCC, by Public Notice, specifies a subsequent period for

filing non-reserved band FM applications for a new station or for major

modifications in the facilities of an authorized station pursuant to

paragraph (f)(2)(i) of this section. If,

[[Page 48629]]

during the window filing period, the FCC receives only one application

for any non-reserved FM allotment, a Public Notice will be released

identifying the non-mutually exclusive applicant, who will be required

to submit the appropriate long-form application within 30 days of the

Public Notice and pursuant to the provisions of Sec. 73.5005. These

non-mutually exclusive applications will be processed and the FCC will

periodically release a Public Notice listing such non-mutually

exclusive applications determined to be acceptable for filing and

announcing a date by which petitions to deny must be filed in

accordance with the provisions of Secs. 73.5006 and 73.3584 of this

chapter. If the applicant is duly qualified, and upon examination, the

FCC finds that the public interest, convenience and necessity will be

served by the granting of the non-mutually exclusive long-form

application, it will be granted.

(5)(i) The auction will be held pursuant to the procedures set

forth in Secs. 1.2101 et seq. and 73.5000 et seq. Subsequent to the

auction, the FCC will release a Public Notice announcing the close of

the auction and identifying the winning bidders. Winning bidders will

be subject to the provisions of Secs. 1.2107 and 73.5003 regarding down

payments and will be required to submit the appropriate down payment

within 10 business days of the Public Notice. Pursuant to Secs. 1.2107

and 73.5005, a winning bidder that meets its down payment obligations

in a timely manner must, within 30 days of the release of the public

notice announcing the close of the auction, submit the appropriate

long-form application for each construction permit for which it was the

winning bidder. Long-form applications filed by winning bidders shall

include the exhibits identified in Sec. 73.5005(a).

(ii) These applications will be processed and the FCC will

periodically release a Public Notice listing such applications that

have been accepted for filing and announcing a date by which petitions

to deny must be filed in accordance with the provisions of

Secs. 73.5006 and 73.3584 of this chapter. If the applicant is duly

qualified, and upon examination, the FCC finds that the public

interest, convenience and necessity will be served by the granting of

the winning bidder's long-form application, a Public Notice will be

issued announcing that the construction permit is ready to be granted.

Each winning bidder shall pay the balance of its winning bid in a lump

sum within 10 business days after release of the Public Notice, as set

forth in Secs. 1.2109(a) and 73.5003(c). Construction permits will be

granted by the Commission following the receipt of the full payment.

(iii) All long-form applications will be cut-off as of the date of

filing with the FCC and will be protected from subsequently filed long-

form applications and rulemaking petitions. Applications will be

required to protect all previously filed commercial and noncommercial

applications. Winning bidders filing long-form applications may change

the technical proposals specified in their previously submitted short-

form applications, but such change may not constitute a major change.

If the submitted long-form application would constitute a major change

from the proposal submitted in the short-form application or the

allotment, the long-form application will be returned pursuant to

paragraph (f)(2)(i) of this section.

Note 1 to Sec. 73.3573: Applications to modify the channel and/

or class of an FM broadcast station to an adjacent channel,

intermediate frequency (IF) channel, or co-channel shall not require

any other amendments to the Table of Allotments. Such applications

may resort to the provisions of the Commission's Rules permitting

short spaced stations as set forth in Sec. 73.215 as long as the

applicant shows by separate exhibit attached to the application the

existence of an allotment reference site which meets the allotment

standards, the minimum spacing requirements of Sec. 73.207 and the

city grade coverage requirements of Sec. 73.315. This exhibit must

include a site map or, in the alternative, a statement that the

transmitter will be located on an existing tower. Examples of

unsuitable allotment reference sites include those which are

offshore, in a national or state park in which tower construction is

prohibited, on an airport, or otherwise in an area which would

necessarily present a hazard to air navigation.

Note 2 to Sec. 73.3573: Processing of applications for new low

power educational FM applications: Pending the Commission's restudy

of the impact of the rule changes pertaining to the allocations of

10-watt and other low power noncommercial educational FM stations,

applications for such new stations, or major changes in existing

ones, will not be accepted for filing. Exceptions are: (1) In

Alaska, applications for new Class D stations or major changes in

existing ones are acceptable for filing; and (2) applications for

existing Class D stations to change frequency are acceptable for

filing. In (2), upon the grant of such application, the station

shall become a Class D (secondary) station. (See First Report and

Order, Docket 20735, FCC 78-386, 43 FR 25821, and Second Report and

Order, Docket 20735, FCC 78-384, 43 FR 39704.) Effective date of

this FCC imposed ``freeze'' was June 15, 1978. Applications which

specify facilities of at least 100 watts effective radiated power

will be accepted for filing.

Note 3 to Sec. 73.3573: For rules on processing FM translator

and booster stations, see Sec. 74.1233 of this chapter.

15. Add Subpart I, which includes Secs. 73.5000 through 73.5009, to

read as follows:

PART 73--RADIO BROADCAST SERVICES

Subpart I--Competitive Bidding Procedures

Sec.

73.5000 Services subject to competitive bidding.

73.5001 Competitive bidding procedures.

73.5002 Bidding application and certification procedures;

prohibition of collusion.

73.5003 Submission of upfront payments, down payments and full

payments.

73.5004 Bid withdrawal, default and disqualification.

73.5005 Filing of long-form applications.

73.5006 Filing of petitions to deny against long-form applications.

73.5007 Designated entity provisions.

73.5008 Definitions applicable for designated entity provisions.

73.5009 Assignment or transfer of control.

Subpart I--Competitive Bidding Procedures

Sec. 73.5000 Services subject to competitive bidding.

(a) Mutually exclusive applications for new facilities and for

major changes to existing facilities in the following broadcast

services are subject to competitive bidding: AM; FM; FM translator;

analog television; low power television; and television translator.

Mutually exclusive applications for new facilities and for major

changes to existing facilities in the Instructional Television Fixed

Service (ITFS) are also subject to competitive bidding. The general

competitive bidding procedures found in 47 CFR Part 1, Subpart Q will

apply unless otherwise provided in 47 CFR Part 73 and Part 74.

(b) Mutually exclusive applications for broadcast channels in the

reserved portion of the FM band (Channels 200-220) and for television

broadcast channels reserved for noncommercial educational use are not

subject to competitive bidding procedures.

Sec. 73.5001 Competitive bidding procedures.

(a) Specific competitive bidding procedures for broadcast service

and ITFS auctions will be set forth by public notice prior to any

auction. The Commission may also design and test alternative

procedures, including combinatorial bidding and real time bidding. See

47 CFR 1.2103 and 1.2104.

(b) The Commission may utilize the following competitive bidding

mechanisms in broadcast service and ITFS auctions:

[[Page 48630]]

(1) Sequencing. The Commission will establish and may vary the

sequence in which broadcast service construction permits and ITFS

licenses will be auctioned.

(2) Grouping. In the event the Commission uses either a

simultaneous multiple round competitive bidding design or combinatorial

bidding in broadcast service or ITFS auctions, the Commission will

determine which construction permits or licenses will be auctioned

simultaneously or in combination.

(3) Reservation price. The Commission may establish a reservation

price, either disclosed or undisclosed, below which a broadcast

construction permit or ITFS license subject to auction will be not

awarded.

(4) Minimum and maximum bid increments. The Commission may, by

announcement before or during broadcast service or ITFS auctions,

require minimum bid increments in dollar or percentage terms. The

Commission may, by announcement before or during broadcast service or

ITFS auctions, establish maximum bid increments in dollar or percentage

terms.

(5) Minimum opening bids. The Commission may establish a minimum

opening bid for each broadcast construction permit or ITFS license

subject to auction.

(6) Stopping rules. The Commission will establish stopping rules

before or during multiple round broadcast service or ITFS auctions in

order to terminate the auction within a reasonable time.

(7) Activity rules. The Commission will establish activity rules

which require a minimum amount of bidding activity. In the event that

the Commission establishes an activity rule in connection with a

simultaneous multiple round auction, each bidder will be entitled to

request and will be automatically granted a certain number of waivers

of such rule during the auction.

Sec. 73.5002 Bidding application and certification procedures;

prohibition of collusion.

(a) Prior to any broadcast service or ITFS auction, the Commission

will issue a public notice announcing the upcoming auction and

specifying the period during which all applicants seeking to

participate in an auction must file their applications for new

broadcast or ITFS facilities or for major changes to existing

facilities. Broadcast service or ITFS applications for new facilities

or for major modifications will be accepted only during these specified

periods. This initial and other public notices will contain information

about the completion and submission of applications to participate in

the broadcast or ITFS auction, any materials that must accompany the

applications, and any filing fee that must accompany the applications

or any upfront payments that will need to be submitted. Such public

notices will also, in the event mutually exclusive applications are

filed for broadcast construction permits or ITFS licenses, contain

information about the method of competitive bidding to be used and more

detailed instructions on submitting bids and otherwise participating in

the auction. In the event applications are submitted that are not

mutually exclusive with any other application in the same service, such

applications will be identified by public notice and will not be

subjected to auction.

(b) To participate in broadcast service or ITFS auctions, all

applicants must timely submit short-form applications (FCC Form 175),

along with all required certifications, information and exhibits,

pursuant to the provisions of 47 CFR 1.2105(a) and any Commission

public notices. So determinations of mutual exclusivity for auction

purposes can be made, applicants for non-table broadcast services or

for ITFS must also submit the engineering data contained in the

appropriate FCC form (FCC Form 301, FCC Form 346, FCC Form 349 or FCC

Form 330). Beginning January 1, 1999, all short-form applications must

be filed electronically.

(c) Applicants in all broadcast service or ITFS auctions will be

subject to the provisions of 47 CFR 1.2105(b) regarding the

modification and dismissal of their short-form applications.

Notwithstanding the general applicability of Section 1.2105(b) to

broadcast and ITFS auctions, applicants who file mutually exclusive

major modification applications, or mutually exclusive major

modification and new station applications, will be permitted to make

amendments to their engineering submissions following the filing of

their short-form applications so as to resolve their mutual

exclusivity.

(d) The prohibition of collusion set forth in 47 CFR 1.2105(c),

which becomes effective upon the filing of short-form applications,

shall apply to all broadcast service or ITFS auctions. Notwithstanding

the general applicability of Section 1.2105(c) to broadcast and ITFS

auctions, applicants who file mutually exclusive major modification

applications, or mutually exclusive major modifications and new station

applications, will be permitted to resolve their mutual exclusivities

by means of engineering solutions or settlements during a limited

period after the filing of short-form applications. Such period will be

further specified by Commission public notices.

Sec. 73.5003 Submission of upfront payments, down payments and full

payments.

(a) To be eligible to bid, each bidder in every broadcast service

or ITFS auction shall submit an upfront payment prior to the

commencement of bidding, as set forth in any public notices and in

accordance with 47 CFR 1.2106.

(b) Within ten (10) business days following the close of bidding

and notification to the winning bidders, each winning bidder in every

broadcast service or ITFS auction shall make a down payment in an

amount sufficient to bring its total deposits up to twenty (20) percent

of its high bid(s), as set forth in 47 CFR 1.2107(b).

(c) Each winning bidder in every broadcast service or ITFS auction

shall pay the balance of its winning bid(s) in a lump sum within ten

(10) business days after release of a public notice announcing that the

Commission is prepared to award the construction permit(s) or

license(s), as set forth in 47 CFR 1.2109(a). If a winning bidder fails

to pay the balance of its winning bid in a lump sum by the applicable

deadline as specified by the Commission, it will be allowed to make

payment within ten (10) business days after the payment deadline,

provided that it also pays a late fee equal to five (5) percent of the

amount due. Broadcast construction permits and ITFS licenses will be

granted by the Commission following the receipt of full payment.

Sec. 73.5004 Bid withdrawal, default and disqualification.

(a) The Commission shall impose the bid withdrawal, default and

disqualification payments set forth in 47 CFR 1.2104(g) upon bidders

who withdraw high bids during the course, or after the close, of any

broadcast service or ITFS auction, who default on payments due after an

auction closes, or who are disqualified. Bidders who are found to have

violated the antitrust laws or the Commission's rules in connection

with their participation in the competitive bidding process may also be

subject to the remedies set forth in 47 CFR 1.2109(d).

(b) In the event of a default by or the disqualification of a

winning bidder in any broadcast service or ITFS auction, the Commission

will follow the procedures set forth in 47 CFR 1.2109

[[Page 48631]]

(b)-(c) regarding the reauction of the construction permit(s) or

license(s) at issue.

Sec. 73.5005 Filing of long-form applications.

(a) Within thirty (30) days following the close of bidding and

notification to the winning bidders, each winning bidder must submit an

appropriate long-form application (FCC Form 301, FCC Form 346, FCC Form

349 or FCC Form 330) for each construction permit or license for which

it was the high bidder. Long-form applications filed by winning bidders

shall include the exhibits required by 47 CFR 1.2107(d) (concerning any

bidding consortia or joint bidding arrangements); Sec. 1.2110(i)

(concerning designated entity status, if applicable); and Sec. 1.2112

(a) and (b) (concerning disclosure of ownership and real party in

interest information, and, if applicable, disclosure of gross revenue

information for small business applicants).

(b) The long-form application should be submitted pursuant to the

rules governing the service in which the applicant is a high bidder and

according to the procedures for filing such applications set out by

public notice. When electronic procedures become available for the

submission of long-form applications, the Commission may require all

winning bidders to file their long-form applications electronically.

(c) An applicant that fails to submit the required long-form

application under this section, and fails to establish good cause for

any late-filed submission, shall be deemed to have defaulted and shall

be subject to the payments set forth in 47 CFR 1.2104(g).

(d) An applicant whose short-form application, submitted pursuant

to 47 CFR 73.5002(b), was not mutually exclusive with any other short-

form application in the same service and was therefore not subject to

auction, shall submit an appropriate long-form application within

thirty (30) days following release of a public notice identifying any

such non-mutually exclusive applicants. The long-form application

should be submitted pursuant to the rules governing the relevant

service and according to any procedures for filing such applications

set out by public notice. The long-form application filed by a non-

mutually exclusive applicant need not contain the additional exhibits,

identified in Sec. 73.5005(a), required to be submitted with the long-

form applications filed by winning bidders. When electronic procedures

become available, the Commission may require any non-mutually exclusive

applicants to file their long-form applications electronically.

Sec. 73.5006 Filing of petitions to deny against long-form

applications.

(a) As set forth in 47 CFR 1.2108, petitions to deny may be filed

against the long-form applications filed by winning bidders in

broadcast service or ITFS auctions and against the long-form

applications filed by applicants whose short-form applications to

participate in a broadcast or ITFS auction were not mutually exclusive

with any other applicant.

(b) Within ten (10) days following the issuance of a public notice

announcing that a long-form application has been accepted for filing,

petitions to deny that application may be filed. Any such petitions

must contain allegations of fact supported by affidavit of a person or

persons with personal knowledge thereof.

(c) An applicant may file an opposition to any petition to deny,

and the petitioner a reply to such opposition. Allegations of fact or

denials thereof must be supported by affidavit of a person or persons

with personal knowledge thereof. The time for filing such oppositions

shall be five (5) days from the filing date for petitions to deny, and

the time for filing replies shall be five (5) days from the filing date

for oppositions.

(d) If the Commission denies or dismisses all petitions to deny, if

any are filed, and is otherwise satisfied that an applicant is

qualified, a public notice will be issued announcing that the broadcast

construction permit(s) or ITFS license(s) is ready to be granted, upon

full payment of the balance of the winning bid(s). See 47 CFR

73.5003(c). Construction of broadcast stations or ITFS facilities shall

not commence until the grant of such permit or license to the winning

bidder.

Sec. 73.5007 Designated entity provisions.

New entrant bidding credit. A winning bidder that qualifies as a

``new entrant'' may use a bidding credit to lower the cost of its

winning bid on any broadcast construction permit. A thirty-five (35)

percent bidding credit will be given to a winning bidder if it and/or

its owners have no recognizable interest (more than fifty (50) percent

or de facto control) in the aggregate, in any other media of mass

communications. A twenty-five (25) percent bidding credit will be given

to a winning bidder if it and/or its owners, in the aggregate, have a

recognizable interest in no more than three mass media facilities. No

bidding credit will be given if any of the commonly owned mass media

facilities serves the same area as the proposed broadcast station, or

if the winning bidder and/or its owners have recognizable interests in

more than three mass media facilities.

(a) The new entrant bidding credit is not available to applicants

that control, or whose owners control, in the aggregate, more than

fifty (50) percent of any other media of mass communications in the

same area as the proposed broadcast facility. The facilities will be

considered in the ``same area'' if the following defined areas wholly

encompass, or are encompassed by, the proposed broadcast or secondary

broadcast facility's relevant contour:

(1) AM broadcast station--predicted or measured 2mV/m groundwave

contour (see 47 CFR 73.183 or 73.186);

(2) FM broadcast or FM translator station--predicted 1.0 mV/m

contour (see 47 CFR 73.313);

(3) Television broadcast station--Grade A contour (see 47 CFR

73.684);

(4) Low power television or television translator station--the

predicted, protected contour (see 47 CFR 74.707(a));

(5) Cable television system--the franchised community of a cable

system;

(6) Daily newspaper--community of publication; and

(7) Multipoint Distribution Service station--protected service area

(see 47 CFR 21.902(d) or 21.933).

(b) Unjust enrichment. If a licensee or permittee that utilizes a

new entrant bidding credit under this subsection seeks to assign or

transfer control of its license or construction permit to an entity not

meeting the eligibility criteria for the bidding credit, the licensee

or permittee must reimburse the U.S. Government for the amount of the

bidding credit, plus interest based on the rate for ten-year U.S.

Treasury obligations applicable on the date the construction permit was

originally granted, as a condition of Commission approval of the

assignment or transfer. If a licensee or permittee that utilizes a new

entrant bidding credit seeks to assign or transfer control of a license

or construction permit 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, plus interest based on the rate for ten-year U.S.

Treasury obligations applicable on the date the construction permit was

originally granted, must be paid to the U.S. Government as a condition

of Commission approval of the assignment or transfer. The amount of the

[[Page 48632]]

reimbursement payments will be reduced over time. An assignment or

transfer in the first two years after issuance of the construction

permit to the winning bidder will result in a forfeiture of one hundred

(100) percent of the value of the bidding credit; during year three, of

seventy-five (75) percent of the value of the bidding credit; in year

four, of fifty (50) percent; in year five, twenty-five (25) percent;

and thereafter, no payment. If a licensee or permittee who utilized a

new entrant bidding credit in obtaining a broadcast license or

construction permit acquires within this five-year reimbursement period

an additional broadcast facility or facilities, such that the licensee

or permittee would not have been eligible for the new entrant credit,

the licensee or permittee will not be required to reimburse the U.S.

Government for the amount of the bidding credit.

Sec. 73.5008 Definitions applicable for designated entity provisions.

(a) Scope. The definitions in this section apply to 47 CFR 73.5007,

unless otherwise specified in that section.

(b) A medium of mass communications means a daily newspaper; a

cable television system; or a license or construction permit for a

television station, a low power television or television translator

station, an AM, FM or FM translator broadcast station, a direct

broadcast satellite transponder, or a Multipoint Distribution Service

station.

(c) The owners of a winning bidder shall include the winning

bidder, in the case of a sole proprietor; partner, including limited or

``silent'' partners, in the case of a partnership; the beneficiaries,

in the case of a trust; any member, in the case of a nonstock

corporation or unincorporated association with members; any member of

the governing board (including executive boards, boards of regents,

commissions, or similar governmental bodies where each member has one

vote), in the case of nonstock corporation or unincorporated

association without members; and owners of voting shares, in the case

of stock corporations.

Sec. 73.5009 Assignment or transfer of control.

(a) The reporting requirement contained in 47 CFR 1.2111(a) shall

apply to an applicant seeking approval for a transfer of control or

assignment of a broadcast construction permit or license within three

years of receiving such permit or license by means of competitive

bidding.

(b) The ownership disclosure requirements contained in 47 CFR

1.2112(a) shall apply to an applicant seeking consent to assign or

transfer control of a broadcast construction permit or license awarded

by competitive bidding.

PART 74--EXPERIMENTAL RADIO, AUXILIARY, SPECIAL BROADCAST AND OTHER

PROGRAM DISTRIBUTIONAL SERVICES

16. The authority for part 74 continues to read as follows:

Authority: 47 U.S.C. 154, 303, 307, and 554.

17. Section 74.910 is amended by adding the two new entries in

numerical order to read as follows:

Sec. 74.910 Part 73 application requirements pertaining to ITFS

stations.

* * * * *

Sec. 73.3522(a) Amendment of applications.

* * * * *

Sec. 73.5000-73.5006 Competitive Bidding Procedures.

* * * * *

18. Section 74.911 is amended by revising paragraph (c) and

removing paragraph (d) to read as follows:

Sec. 74.911 Processing of ITFS station applications.

* * * * *

(c)(1)(i) The FCC will specify by Public Notice, pursuant to

Sec. 73.5002, a period for filing ITFS applications for a new station

or for major modifications in the facilities of an authorized station.

(ii) Such ITFS applicants shall be subject to the provisions of

Secs. 1.2105 and the ITFS competitive bidding procedures. See 47 CFR

73.5000 et seq.

(2) [Reserved]

Sec. 74.912 [Removed]

19. Section 74.912 is removed.

Sec. 74.913 [Removed]

20. Section 74.913 is removed.

21. Section 74.1233 is revised to read as follows:

Sec. 74.1233 Processing FM translator and booster station

applications.

(a) Applications for FM translator and booster stations are divided

into two groups:

(1) In the first group are applications for new stations or for

major changes in the facilities of authorized stations. In the case of

FM translator stations, a major change is any change in frequency

(output channel), or change (only the gain should be included in

determining amount of change) or increase (but not decrease) in area to

be served greater than ten percent of the previously authorized 1 mV/m

contour. All other changes will be considered minor. All major changes

are subject to the provisions of Secs. 73.3580 and 1.1104 of this

chapter pertaining to major changes.

(2) In the second group are applications for licenses and all other

changes in the facilities of the authorized station.

(b) Applications for booster stations and reserved-band FM

translator stations will be processed as nearly as possible in the

order in which they are filed. Such applications will be placed in the

processing line in numerical sequence, and will be drawn by the staff

for study, the lowest file number first. In order that those

applications which are entitled to be grouped for processing may be

fixed prior to the time processing of the earliest filed application is

begun, the FCC will periodically release a Public Notice listing

reserved-band applications that have been accepted for filing and

announcing a date (not less than 30 days after publication) on which

the listed applications will be considered available and ready for

processing and by which all mutually exclusive applications and/or

petitions to deny the listed applications must be filed.

(c) In the case of an application for an instrument of

authorization, other than a license pursuant to a construction permit,

grant will be based on the application, the pleadings filed, and such

other matters that may be officially noticed. Before a grant can be

made it must be determined that:

(1) There is not pending a mutually exclusive application filed in

accordance with paragraph (b) of this section.

(2) The applicant is legally, technically, financially and

otherwise qualified;

(3) The applicant is not in violation of any provisions of law, the

FCC rules, or established policies of the FCC; and

(4) A grant of the application would otherwise serve the public

interest, convenience and necessity.

(d) Processing non-reserved band FM translator applications. (1)

Applications for minor modifications for non-reserved FM translator

stations, as defined in paragraph (a)(2) of this section, may be filed

at any time, unless restricted by the FCC, and, generally, will be

processed in the order in which they are tendered. The FCC will

periodically release a Public Notice listing those applications

accepted for filing. All minor modification applications found to be

mutually

[[Page 48633]]

exclusive, must be resolved through settlement or technical amendment.

(2)(i) The FCC will specify by Public Notice, pursuant to

Sec. 73.5002(a), a period for filing non-reserved band FM translator

applications for a new station or for major modifications in the

facilities of an authorized station. FM translator applications for new

facilities or for major modifications will be accepted only during

these specified periods. Applications submitted prior to the window

opening date identified in the Public Notice will be returned as

premature. Applications submitted after the specified deadline will be

dismissed with prejudice as untimely.

(ii) Such FM translator applicants will be subject to the

provisions of Secs. 1.2105 and 73.5002(a) regarding the submission of

the short-form application, FCC Form 175, and all appropriate

certifications, information and exhibits contained therein. To

determine which FM translator applications are mutually exclusive, FM

translator applicants must submit the engineering data contained in FCC

Form 349 as a supplement to the short-form application. Such

engineering data will not be studied for technical acceptability, but

will be protected from subsequently filed applications as of the close

of the window filing period. Determinations as to the acceptability or

grantability of an applicant's proposal will not be made prior to an

auction.

(iii) FM translator applicants will be subject to the provisions of

Sec. 1.2105 regarding the modification and dismissal of their short-

form applications.

(iv) Consistent with Sec. 1.2105(a), beginning January 1, 1999, all

short-form applications must be filed electronically.

(3) Subsequently, the FCC will release Public Notices:

(i) identifying the short-form applications received during the

appropriate filing period or ``window'' which are found to be mutually

exclusive;

(ii) establishing a date, time and place for an auction;

(iii) providing information regarding the methodology of

competitive bidding to be used in the upcoming auction, bid submission

and payment procedures, upfront payment procedures, upfront payment

deadlines, minimum opening bid requirements and applicable reserve

prices in accordance with the provisions of Sec. 73.5002;

(iv) identifying applicants who have submitted timely upfront

payments and, thus, are qualified to bid in the auction.

(4) If, during the window filing period, the FCC receives non-

mutually exclusive applications for a non-reserved FM translator

station, a Public Notice will be released identifying the non-mutually

exclusive applicants, who will be required to submit the appropriate

long form application within 30 days of the Public Notice and pursuant

to the provisions of Sec. 73.5005. These non-mutually exclusive

applications will be processed and the FCC will periodically release a

Public Notice listing such non-mutually exclusive applications

determined to be acceptable for filing and announcing a date by which

petitions to deny must be filed in accordance with the provisions of

Secs. 73.5006 and 73.3584 of this chapter. If the applicants are duly

qualified, and upon examination, the FCC finds that the public

interest, convenience and necessity will be served by the granting of

the non-mutually exclusive long-form application, the same will be

granted.

(5)(i) The auction will be held pursuant to the procedures set

forth in Sec. 1.2101. Subsequent to the auction, the FCC will release a

Public Notice announcing the close of the auction and identifying the

winning bidders. Winning bidders will be subject to the provisions of

Sec. 1.2107 regarding down payments and will be required to submit the

appropriate down payment within 10 business days of the Public Notice.

Pursuant to Sec. 1.2107, a winning bidder that meets its down payment

obligations in a timely manner must, within 30 days of the release of

the public notice announcing the close of the auction, submit the

appropriate long-form application for each construction permit for

which it was the winning bidder. Long-form applications filed by

winning bidders shall include the exhibits identified in Sec. 73.5005.

(ii) These applications will be processed and the FCC will

periodically release a Public Notice listing such applications that

have been accepted for filing and announcing a date by which petitions

to deny must be filed in accordance with the provisions of Sec. 73.3584

of this chapter. If the applicants are duly qualified, and upon

examination, the FCC finds that the public interest, convenience and

necessity will be served by the granting of the winning bidder's long-

form application, a Public Notice will be issued announcing that the

construction permit is ready to be granted. Each winning bidder shall

pay the balance of its winning bid in a lump sum within 10 business

days after release of the Public Notice, as set forth in

Sec. 1.2109(a). Construction permits will be granted by the Commission

following the receipt of the full payment.

(iii) All long-form applications will be cut-off as of the date of

filing with the FCC and will be protected from subsequently filed long-

form translator applications. Applications will be required to protect

all previously filed applications. Winning bidders filing long-form

applications may change the technical proposals specified in their

previously submitted short-form applications, but such change may not

constitute a major change. If the submitted long-form application would

constitute a major change from the proposal submitted in the short-form

application or the allotment, the long-form application will be

returned pursuant to paragraph (d)(2)(i) of this section.

(e) Selection of mutually exclusive reserved band FM translator

applications.

(1) Applications for FM translator stations proposing to provide

fill-in service (within the primary station's protected contour) of the

commonly owned primary station will be given priority over all other

applications.

(2) Where applications for FM translator stations are mutually

exclusive and do not involve a proposal to provide fill-in service of

commonly owned primary stations, the FCC may stipulate different

frequencies as necessary for the applicants.

(3) Where there are no available frequencies to substitute for a

mutually exclusive application, the FCC will base its decision on the

following priorities:

(i) first-full-time aural services;

(ii) second full-time aural services; and

(iii) other public interest matters including, but not limited to

the number of aural services received in the proposed service area, the

need for or lack of public radio service, and other matters such as the

relative size of the proposed communities and the growth rate.

(4) Where the procedures in paragraphs (e)(1), (e)(2) and (e)(3) of

this section fail to resolve the mutual exclusivity, the applications

will be processed on a first-come-first-served basis.

[FR Doc. 98-23963 Filed 9-10-98; 8:45 am]

BILLING CODE 6712-01-P