# Interactive Video and Data Service (218-219 MHz Service)

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URL: https://www.frixlaw.com/law-library/documents/fr%3A98-26168

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** September 30, 1998
- **Citation:** 63 FR 52215

## Text

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 20 and 95

[WT Docket No. 98-169; WT Docket No. 95-47; FCC 98-228]

Interactive Video and Data Service (218-219 MHz Service)

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this Notice of Proposed Rule Making (``NPRM''), the
Commission examines ways to maximize the efficient and effective use of
the 218-219 MHz Service (formerly, Interactive Video and Data Service
(IVDS)), both on its own motion, and in response to issues raised in a
Petition for Rulemaking, RM-8951. The Commission also seeks comment on
whether any of the general competitive bidding rules would be
inappropriate for future auctions of 218-219 MHz Service licenses. The
Commission believes that these actions will result in a regulatory
framework that will promote efficient use of spectrum, foster
competition, and facilitate technological innovation in the 218-219 MHz
band.

DATES: Interested parties may file comments on or before October 30,
1998, and reply comments on or before November 25, 1998.

ADDRESSES: Federal Communications Commission, Room 222, 1919 M Street,
N.W., Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Bob Allen at (202) 418-0660 (Auctions
& Industry Analysis Division) or James Moskowitz at (202) 418-0680
(Public Safety & Private Wireless Division), Wireless
Telecommunications Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rule Making, WT Docket No. 98-169, RM-8951, adopted
September 15, 1998, released September 17, 1998. The full text of this
Notice of Proposed Rule Making is available for inspection and copying
during normal business hours in the FCC Dockets Branch, Room 230, 1919
M Street, N.W., Washington, D.C. The complete text may be purchased
from the Commission's copy contractor, International Transcription
Service, Inc., 1231 20th Street, N.W., Washington, D.C. 20036, (202)
857-3800.
1. As the agency charged with management of the non-government
radio frequency spectrum, the Commission continually seeks to improve
the efficiency of spectrum use, reduce the regulatory burden on
spectrum users, encourage competition and provide services to the
largest feasible number of users. The Commission believes its proposals
herein help further these goals. While its proposals are designed to
foster service in the 218-219 MHz band, the Commission makes no
representations or warranties about the use of this spectrum for
particular services. An FCC auction represents an opportunity to become
an FCC licensee in this service, subject to certain conditions and
regulations, and does not constitute an endorsement by the FCC of any
particular services, technologies or products, nor does an FCC license
constitute a guarantee of business success. Applicants for an auction
of FCC licenses should perform their individual due diligence before
proceeding as they would with any new business venture.
2. This NPRM revisits the regulatory status and permissible role of
licensee in the 218-219 MHz service. The Commission initiates this
rulemaking on its own motion and in response to the issues raised by
the Petitioners. In their September 4, 1996 filing, Petitioners request
that the Commission amend Sec. 95.811(d) of its rules to extend the
term of a 218-219 MHz Service station license from five to ten years.
Petitioners further request that the Commission allow 218-219 MHz
Service licensees that qualify for installment payments to extend the
installment payment period over the new ten-year license term.
3. In their January 28, 1997 amendment, Petitioners also request
the following: (1) a reamortization plan consisting of interest-only
payments for the first five years, followed by principal and interest
payments over the final five years; (2) elimination of the construction
benchmarks set forth in Sec. 95.833; (3) elimination of
Sec. 95.813(b)(1), which precludes one 218-219 MHz Service licensee
from having any financial interest in the other 218-219 MHz Service
license in the same market; (4) grant of the then-pending petition for
reconsideration of the Mobility Report and Order with regard to
elimination of the 100 milliwatt ERP limit on mobile response
transmitter unit (RTU) operation; (5) elimination of Sec. 95.863(a),
the duty cycle limitations; and (6) elimination of Sec. 95.859(a)(2),
the height and power limitations for cell transmitter station (CTS)
antennas located beyond a boundary line 10 miles outside the predicted
Grade B contour of a TV Channel 13 station.
4. Petitioners added three requests in their supplement filed on
February 26, 1997: (1) elimination of the prohibition on RTU-to-RTU
communications; (2) an additional spectrum allocation; and (3)
clarification of several engineering issues in demonstrating compliance
with construction benchmarks. Finally, Petitioners supplemented their
Petition for Rulemaking on March 13, 1998 with the following requests:
(1) clarification that one-way transmission from two or more RTUs to a
CTS is a permissible communication that would satisfy any construction
requirements; (2) modification of Sec. 95.855 to delete the word
``automatic'' from the power control rule; (3) clarification of

[[Page 52216]]

Sec. 95.861(c) concerning notification of potential interference from
218-219 MHz Service systems; and (4) the opportunity to choose among
``work out'' options for making installment payments that would include
an amnesty component.
5. The Commission's decision to postpone the February 1997 auction
of Rural Service Area (RSA) and defaulted Metropolitan Statistical Area
(MSA) licenses was guided by its concern that its assessment to date
regarding the principal uses and regulatory structure of the 218-219
MHz Service may not accurately reflect the breadth of services being
developed in the 218-219 MHz band. The Commission has observed the
evolution of the wireless telecommunications industry since our Report
and Order, 57 FR 8272 (March 9, 1992) (``1992 Allocation Report and
Order''), and the Commission agrees with Petitioners that it is
appropriate to reexamine the current and future uses of, and demand
for, the 218-219 MHz band, and to determine the appropriate regulatory
models to be used for future licensing and regulation of this spectrum.
Therefore, in this NPRM, the Commission seeks to examine its rules to
determine whether they should be modified to provide for maximum
flexibility for 218-219 MHz Service licensees, and a regulatory
structure that will enable these licensees to meet the public's current
and future needs through the most technically and economically
efficient use of this spectrum practicable.

A. Regulatory Status and Permissible Communications

6. In the 1992 Allocation Report and Order, the Commission
classified the 218-219 MHz band as a private radio service regulated
under Part 95 of our rules (i.e., Personal Radio Services), primarily
because the proposed uses were to provide services ``of a personal
nature and offered on a subscription basis.'' With the recent addition
of mobile services as permissible communications, licensees can provide
a variety of mobile, fixed, point-to-point, point-to-multipoint, and
multipoint-to-point services.
7. The Commission believes that in order to fully accommodate the
wide array of service offerings emerging in the 218-219 MHz Service,
and those contemplated for future development, the Commission should
change its approach to determining the regulatory status of 218-219 MHz
Service licensees. Specifically, the Commission proposes to redesignate
the 218-219 MHz Service from a strictly private radio service to a
service that can be used for both common carrier and private
operations, depending on the services offered by the licensee. This is
consistent with Commission precedent, in which the Commission has
concluded that authorizing a wide variety of services comports with our
statutory authority and serves the public interest by fostering the
provision of a mix of services. In its regulation of other bands
designated for both common carrier and private operations, the
Commission permits licensees to elect common carrier or private status
in a manner that allows for a broad range of uses. Similarly, for the
218-219 MHz Service, the Commission proposes to rely on applicants and
licensees to specifically identify the type of service or services they
intend to provide within the technical parameters of the spectrum
allocation, and to require that they include sufficient detail to
enable the Commission to determine whether the service will be offered
as commercial mobile radio services (CMRS), private mobile radio
services (PMRS), a common carrier fixed service, or a private fixed
service. The Commission proposes that 218-219 MHz Service mobile
service providers elect regulatory status as commercial mobile or
private land mobile based on the three-prong statutory definition of
CMRS, as interpreted by the Commission in the CMRS Second Report and
Order, 59 FR 18493 (April 19, 1994), (``CMRS Second Report and Order'')
and for fixed operations, elect common carrier or private status based
on the nature of their service offerings under the definitions set
forth in Section 3 of the Communications Act of 1934, as amended
(``Communications Act''). The regulatory status that the provider
elects would determine the extent to which the applicant or licensee is
subject to common carrier regulation. The Commission also proposes to
apply regulatory fees and license application requirements consistent
with the election of common carrier or private status made by the
licensee.
8. This approach should allow the Commission to carry out its
regulatory responsibilities without imposing an unnecessary regulatory
limitation upon licensees. The Commission notes that its final
determination of permissible communications in the 218-219 MHz Service
will depend on its conclusions after reviewing the record in this
proceeding. The Commission seeks comment on these proposals, or any
alternatives, that will ensure that licensees can design their service
offerings in response to market demand.

B. License Term

9. Under the Commission's current rules, the term of each system or
CTS licensed to operate in the 218-219 MHz Service is five years. The
Commission adopted this license term in the 1992 Allocation Report and
Order in the context of awarding licenses by lottery ``to reduce any
potential for trafficking in licenses by persons who have no real
interest in constructing,'' and as ``consistent with the license term
used in most other private radio services.'' To support their request
for a ten-year license term, Petitioners note that (1) in services with
similar technologies and market areas, the license term is ten years;
(2) the use of auctions to award licenses negates the original intent
of the five-year term (i.e., discouraging trafficking of lottery-won
licenses); and (3) awarding licenses by auction requires a longer
license term in which licensees (many of whom are small businesses) may
secure adequate financing, develop viable services, and eventually
recoup their initial investment. Petitioners also contend that the
extension of the license term would trigger a reamortization of the
installment payments over the longer license term, and request that the
Commission offer 218-219 MHz Service licensees a choice of (i)
fulfilling payment obligations with any changes thereto associated with
adjustments adopted through this NPRM; (ii) amnesty; or (iii) payment
through a royalty-based schedule as an alternative to auction payments.

i. Extension of the License Term

10. The Commission agrees with Petitioners that auctionable service
licensees should have consistent license terms. The Commission
continues to believe that licenses in the 218-219 MHz Service can
attract small businesses interested in opportunities to participate in
the provision of spectrum-based services. In this regard, a five-year
term is particularly burdensome on small businesses paying for licenses
using installment payments; to date, the Commission has held auctions
in four other wireless services in which certain designated entities
were eligible for installment payment plans, and each of those services
has a ten-year license term. Therefore, the Commission proposes to
amend Sec. 95.811(d) of the Commission's rules to extend the term of
218-219 MHz Service licenses to ten years from the date of license
grant. In doing so, the Commission notes that a ten-year license term
comports with its proposal to redesignate the 218-219 MHz Service from
a private radio

[[Page 52217]]

service (generally licensed for a five-year term) to a service that can
also provide common carrier services (generally licensed for a ten-year
term). Since all 218-219 MHz Service licensees will face the same
competitive setting and opportunity costs going forward under the
regulatory flexibility the Commission proposes today (irrespective of
whether they acquired their licenses by auction or lottery), the
Commission proposes to extend the license term of all licenses in the
218-219 MHz Service to ten years to ensure regulatory parity. The
Commission seeks comment on these proposals.

ii. Reamortization of Installment Payment Debt and Financing Options

11. The Commission also tentatively concludes that it is in the
public interest to permit reamortization of principal and interest
installment payments for non-defaulted 218-219 MHz Service licensees in
conjunction with the extension of the license term from five to ten
years, an approach that is consistent with our general auction rules.
Therefore, the Commission proposes reamortization of installment
payment terms for 218-219 MHz Service licensees to allow for two years
of interest-only payments, followed by payments consisting of interest
and principal over the remaining eight years of the license term, an
approach that is also consistent with the Commission's general auction
rules. Based on the Commission's structure of installment payment plans
in other services in which it has limited the interest-only period to
two years, the Commission believes that the two-year interest-only
period currently applicable to 218-219 MHz Service licensees provides
small businesses with the appropriate level of U.S. government assisted
financing. The Commission's proposal here is inextricably tied to the
requested extension of the license term from five to ten years, in
contrast to prior requests to extend payment terms beyond the five year
license term based on market considerations, which the Commission
denied.
12. To ensure that all 218-219 MHz Service licensees that are not
currently in default can take advantage of the proposed reamortization
of installment payments, the Commission proposes to grant all properly
filed grace period requests as of the effective date of reamortization.
At that time, the Commission would recalculate every non-defaulting
licensee's installment payment obligations as reamortized, and credit
all payments already received under the revised schedule, with any
additional funds held in reserve for application against future
payments. With regard to interest calculations for 218-219 MHz Service
licensees, the Commission notes that Sec. 95.816(d)(2) of its rules
require the fixing of such calculations at the time of licensing at a
rate equal to the rate for five-year U.S. Treasury obligations. If the
Commission adopts its proposal to reamortize the 218-219 MHz Service
installment payments over a ten-year license term, then it would impose
an interest rate for those plans based on the rate for ten-year U.S.
Treasury obligations at the time of licensing. All Suspension Interest
(i.e., interest payments back-due from September 30, 1995 and December
31, 1995) would be submitted in eight equal payments over a two-year
period, due and payable with each of the first eight scheduled
installment payments, as reamortized.
13. The Commission understands that this proposal may trigger the
payment of back due amounts, including accrued interest, earlier than
expected for some 218-219 MHz Service licensees. Therefore, the
Commission proposes to offer licensees two financing options, with such
election to be made on a license-by-license basis 90 days from the
release date of any Report and Order promulgating the proposed
reamortization. First, licensees may choose to continue making
installment payments by submitting a payment consisting of all accrued
interest and principal (as reamortized) due and owing as of that date.
At that time, if necessary, licensees would be able to utilize the 180-
day late payment period in the Commission's revised installment payment
rules, subject to the applicable late payment fees, before their
licenses would automatically cancel as being in default. Alternatively,
per Petitioners' request, licensees may surrender any licenses they
choose to the Commission for reauction and, in return, have all of the
outstanding debt on those licenses forgiven (i.e., an amnesty option
much like that offered to broadband personal communication services
(PCS) C block licensees). For each license returned under the amnesty
option, the licensee would choose either to (1) receive no credit for
its down payment but remain eligible to bid on the surrendered licenses
in the reauction, with no restriction on after-market acquisitions; or
(2) obtain credit for 70 percent of its down payment and forego for a
period of two years from the start date of the reauction eligibility to
reacquire the licenses surrendered through either reauction or any
other secondary market transaction. Under either option, all
installment payments made on surrendered licenses, plus the 70 percent
credit under the second option, would be applied to previously accrued
interest for retained markets, with any excess installment payments
(but not down payments) refunded, subject to applicable federal debt
collection laws. Every licensee electing to continue making installment
payments would be required to execute appropriate loan documentation,
that may include a note and security agreement, as a condition of the
reamortization of its installment payment plan under the revised ten-
year term, pursuant to Sec. 1.2110(f)(3) of the Commission's rules.
Licensees that fail to elect a financing option on a timely basis, and
licensees who do not complete the requisite loan documentation, would
be held to the original five-year payment schedule. The Commission
believes that providing this choice would substantially increase
licensees' flexibility to make market driven decisions regarding their
licenses and enable them to revise their business plans to make them
more attractive to lenders and investors. The Commission seeks comment
on these proposals.

C. Service and Construction Requirements

14. Section 95.831 of the Commission's rules provides that 218-219
MHz Service licensees make service available to at least 50 percent of
the population or land area located within the service area. To
accomplish this service level requirement, The Commission sets
construction benchmarks as follows: service to at least 10 percent of
the population or geographic area within the license service area
within one year of the grant of the license; 30 percent within three
years; and, 50 percent within five years. Under the Commission rules,
failure to meet these build-out requirements results in automatic
cancellation of the 218-219 MHz Service system license. For purposes of
this benchmark, service is provided by a CTS when two associated RTUs
are placed in operation. Each 218-219 MHz Service system licensee must
file a progress report at the conclusion of each benchmark period to
inform the Commission of the construction status of the system.
15. These rules were crafted in the 1992 Allocation Report and
Order in the context of awarding licenses by lottery, and were intended
``to reduce the filing of speculative applications by entities that
have no real intention of implementing [218-219 MHz Service] systems.''
The Commission eliminated the one-year construction benchmark in early
1996, at the request of several

[[Page 52218]]

licensees that won their licenses in the July 1994 auction. At that
time, the Commission stated that the use of auctions to award licenses
reduces the incentives for speculation, and therefore, concluded that
the one-year benchmark was unnecessary. The Commission further stated
that ``eliminating the one-year construction requirement will provide
licensees with greater flexibility in selecting service options,
obtaining financing, selecting equipment, and other considerations
related to construction of their systems.'' More recently, the Bureau
waived the three-year construction benchmark date for all licenses
because it would have been unreasonable and contrary to the public
interest to enforce the benchmark while relevant Commission policy was
subject to review in this rulemaking proceeding.
16. Section 309(j)(3) of the Communications Act states, in part,
that when designing competitive bidding systems, ``the Commission shall
include safeguards to protect the public interest in the use of the
spectrum * * *.'' In addition, Section 309(j)(4)(B) provides that the
Commission shall promote investment in, and rapid deployment of, new
technologies and services by means of performance requirements, such as
deadlines and penalties for performance failures. The Commission
previously found that these provisions could be satisfied through
construction requirements.
17. The Commission continues to seek to provide 218-219 MHz Service
licensees with optimal flexibility in selecting service options,
obtaining financing, selecting equipment, and other considerations
regarding construction of systems. This interest must be balanced,
however, by the mandate of Section 309(j) of the Communications Act.
Given the Commission's belief that many of the service offerings that
could be provided by 218-219 MHz Service licensees could also be
provided by licensees of other services, the Commission believes it is
appropriate to revisit the service and construction requirements in the
218-219 MHz Service to ensure that 218-219 MHz Service licensees are
subject to consistent policies. Although the Commission disagrees with
Petitioners that all construction benchmarks should be eliminated, the
Commission believes that strict construction requirements are not the
most suitable and effective means of addressing these statutory
obligations given that the 218-219 MHz Service spectrum may be used to
offer a variety of fixed and mobile services that may compete with
capabilities of other wireless services.
18. Balancing these factors, the Commission tentatively concludes
that 218-219 MHz Service licensees should be subject to construction
requirements consistent with those presently used in other services.
Specifically, the Commission proposes to eliminate the three-year and
five-year construction benchmarks currently provided in its rules, and
instead require that 218-219 MHz Service licensees provide
``substantial service'' to their service areas within five years of
license grant. In past Orders, the Commission has defined ``substantial
service'' as ``service that is sound, favorable, and substantially
above a level of mediocre service, which would barely warrant
renewal,'' and the Commission has provided safe harbor examples of
substantial service showings, such as licensees offering specialized or
technologically sophisticated service that does not require a high
level of coverage to be of benefit to customers, or licensees providing
a niche service to businesses or focusing on serving populations
outside of areas currently serviced by other licensees. The Commission
seeks comment on whether this definition or some other articulable
standard should be adopted to define substantial service for the 218-
219 MHz Service.
19. If the Commission amends its rules to extend 218-219 MHz
Service licenses to a ten-year term, it further proposes to require
that all 218-219 MHz Service licensees either make service available to
at least 20 percent of the population or land area, or demonstrate
substantial service, within ten years of license grant. Licensees would
demonstrate compliance with the construction requirements by basing
their calculations on signal field strengths that ensure reliable
service for the technology utilized, using any service radius contour
formula developed or generally used by industry, provided that such
formula is based on the technical characteristics of their systems. In
the alternative, under a ten-year license term scenario, the Commission
asks whether, in lieu of establishing benchmarks, it should require
licensees to provide substantial service to their service area within
ten years of license grant as a condition of renewal. Finally, under a
ten-year license term scenario, the Commission proposes to assess
compliance of incumbent 218-219 MHz Service licensees with the five-
year substantial service benchmark five years from the effective date
of such rules promulgated pursuant to this NPRM, and the ten-year
requirement at the end of their ten-year license term. Under any of
these proposals, licensees will be required to file supporting
documentation showing compliance with the construction requirements.
Failure to meet the benchmark would result in automatic termination of
the license, which is consistent with the Commissions current rules for
this service.
20. The Commission believes that a substantial service construction
requirement can promote efficient use of the spectrum and encourage
broad deployment of service. The Commission further believes that this
approach will permit a variety of service offerings, facilitate market
development, provide a clear and expeditious accounting of spectrum use
by licensees, and ensure that meaningful service is being provided
without unduly restricting service offerings. The Commission seeks
comment on these tentative conclusions and proposals, and any
alternatives thereto.

D. License Transferability

21. The Commission adopted a restriction on 218-219 MHz block
license transferability in the 1992 Allocation Report and Order as an
anti-trafficking rule governing the award of licenses by lottery. Under
the rule, 218-219 MHz Service licensees may not transfer, assign, sell,
or give the licenses to any other entity until the five year (50
percent coverage) construction benchmark has been met. In the Fourth
Report and Order, 59 FR 24947 (May 13, 1994), (``Competitive Bidding
Fourth Report and Order''), the Commission specifically amended the
rule to exclude its application to licenses acquired through auction.
Thus, the transferability restriction applies only to the 18 licenses
won in the September 1993 lottery. The Commission seeks comment on
whether this transfer restriction should be retained. Further, assuming
the rule is retained, the Commission seeks comment on determining
whether and when a lottery-won license may be transferred in light of
its proposed changes to the service and construction rules, and its
proposal to permit partitioning and disaggregation of 218-219 MHz
Service licenses.

E. Spectrum Aggregation

22. In establishing rules for the 218-219 MHz band, the Commission
concluded that the best way to promote competition in the developing
marketplace would be ``to make at least two facilities available in
each market.'' Therefore, the Commission's cross-ownership rule
prohibits an entity from

[[Page 52219]]

holding or having an interest in the licenses for both frequency
segment A (218.0-218.5 MHz) and frequency segment B (218.5-219 MHz) in
the same service area.
23. Petitioners seek elimination of the cross-ownership rule,
stating, inter alia, that competing services with larger bandwidth and
greater capitalization provide the necessary competition to alleviate
any concern that a 218-219 MHz Service licensee would exert monopoly
power by aggregating one megahertz of spectrum, and that a full one
megahertz of spectrum would enhance spectrum flexibility through
expanded applications and services. In 1996, the Commission denied a
request for rulemaking on this issue. In deciding not to grant the
petition for rulemaking, the Commission observed that the ``interactive
television marketplace is in a relatively early state of competition,''
and that ``allowing a single entity to acquire both licenses in a
service area would limit the opportunity for other potential
competitors to emerge.'' That notwithstanding, restricting the
competitive analysis of the 218-219 MHz band to the interactive
television marketplace is inconsistent with the myriad of services
evolving in the 218-219 MHz Service. The Commission believes that the
new regulatory environment it seeks to establish with its proposals in
this NPRM will broaden the field of potential competitors providing
services similar to those in the 218-219 MHz Service. Therefore, it is
now appropriate to reexamine the cross-ownership prohibition.
24. The Commission seeks comment on whether it should allow
licensees to aggregate spectrum in the 218-219 MHz Service without
restriction. Would removal of the current cross-ownership prohibition
pose a risk of significant competitive harm in some markets? The
Commission's goal in managing spectrum efficiently and fostering
competition is to license the maximum number of commercially viable
competitors per region. Commenters should address whether the 500
kilohertz spectrum capacity limit of one license per market renders
these licenses not commercially viable, and why. What other
technologies provide, or may in the future provide, comparable services
to those currently provided or proposed for this spectrum? The
Commission also seeks comment on whether it would be appropriate to
include 218-219 MHz in the calculation of spectrum aggregation limits,
given its proposal to expand service options to common carrier or CMRS
operations.

F. Partitioning and Disaggregation

25. In the Report and Order and Further Notice of Proposed
Rulemaking, 62 FR 653, 62 FR 696 (January 6, 1997), (``Partitioning
Report and Order''), the Commission expanded its rules to permit
geographic partitioning and spectrum disaggregation for broadband PCS
licensees. Consistent with these broadband PCS rules, the Commission
proposes to permit partitioning and disaggregation for the 218-219 MHz
Service. The Commission tentatively concludes that a flexible approach
to partitioned areas, similar to the one it adopted for broadband PCS,
is appropriate for the 218-219 MHz Service. The Commission therefore
proposes to permit partitioning of 218-219 MHz Service licenses based
on any area defined by the parties within the licensee's service area.
The Commission seeks comment on this proposal, and in particular on
whether there are any technical or other issues unique to the 218-219
MHz Service that might impede the adoption of such a flexible approach.
With regard to disaggregation, the Commission notes that even if it
permits ownership of both licenses in a market by one entity as
proposed above, there would still be only one megahertz of spectrum to
disaggregate. Given this relatively narrow frequency segment, and the
propagation and technological limitations of the 218-219 MHz band, the
Commission seeks comment on the feasibility of spectrum disaggregation
in the 218-219 MHz Service, and particularly, whether minimum
disaggregation standards are necessary. Commenters should provide
technical justifications and other relevant support in responding to
this issue. The Commission tentatively concludes that combined
partitioning and disaggregation should also be permitted for the 218-
219 MHz Service. This approach would afford parties optimal flexibility
to respond to market forces and demands for service relevant to their
particular locations and service offerings. Further, the Commission
proposes to authorize a partitionee and disaggregatee to hold its
license for the remainder of the original licensee's term, with renewal
expectancy. The Commission believes that this approach would prevent
licensees from using partitioning and disaggregation to circumvent our
established license term rules. Additionally, by limiting the license
term of the partitionee or disaggregatee, the Commission ensures that
there will be maximum incentive for parties to pursue available
spectrum as quickly as practicable, thus expediting the delivery of
service to the public. The Commission seeks comment on these proposals
and tentative conclusions.
26. In the Partitioning Report and Order, the Commission concluded
that allowing partitioning and disaggregation would help to (1) remove
potential barriers to entry, thereby increasing competition; (2)
encourage parties to use spectrum more efficiently; and (3) speed
service to unserved and underserved areas. Similarly, the Commission
believes that such an approach for the 218-219 MHz Service would result
in the same public interest benefits. The Commission notes that small
businesses may face certain barriers to entry into the provision of
spectrum-based services, which it believes may be addressed by its
partitioning and disaggregation proposals. Providing licensees with the
flexibility to partition and disaggregate would create smaller areas
that could be licensed to small businesses, including those entities
that previously may not have had the resources to participate
successfully in spectrum auctions. The Commission seeks comment on
these tentative conclusions. In particular, commenters are invited to
address whether partitioning and disaggregation will help eliminate
market entry barriers for small businesses consistent with Section 257
of the Communications Act. The Commission further invites comment as to
the exact mechanisms for apportioning and paying the remaining
government obligation between the parties, and whether there are any
unique circumstances that would make devising such a scheme for the
218-219 MHz Service more difficult than for broadband PCS.
27. In this NPRM, the Commission seeks comment on a new set of
construction requirements for 218-219 MHz Service licensees. In other
wireless services, the Commission has allowed licensees the flexibility
to negotiate which party will be responsible for meeting the applicable
construction requirements. In each of those cases, the Commission's
goals has been to ensure that licensees had the flexibility to
structure their business plans while ensuring that partitioning and
disaggregation not be used as a vehicle to circumvent the applicable
construction requirements, and that service be offered over the
relevant population, even if not on the entire spectrum. The Commission
proposes that parties to partitioning and disaggregation in the 218-219
MHz Service have comparable flexibility in meeting construction
requirements. Parties to partitioning would be allowed to choose
between both parties

[[Page 52220]]

satisfying build-out requirements within their respective service
areas, or having the partitionor build-out the entire market. Parties
to disaggregation would choose whether one or both parties would be
obligated to satisfy build-out requirements within the geographic
service area. Non-performing licensees' authorizations would be subject
to cancellation at the end of the license term. The Commission seeks
comment on these proposals.

G. Technical Standards

28. In light of the fact that the Commission's primary goal in this
rulemaking is to provide additional flexibility for 218-219 MHz Service
licensees, the Commission must also seek to reexamine the technical
restrictions currently applicable to the 218-219 MHz Service to
determine whether it can enhance the technical flexibility of these
licensees, particularly in light of the proposals contained in this
NPRM. The technical restrictions, including rules requiring automatic
power control capability, antenna height and transmitter power
limitations, duty cycle limitations, and other interference protection
standards, were based on an agreement between TV Answer and the
Association for Maximum Service Television that IVDS (as proposed by TV
Answer, now known as EON Corporation) and TV Channel 13 operations
could co-exist. Interference was of particular concern since the RTU
proposed for use by TV Answer was planned to be co-located with the
subscriber/viewer's television set. However, the potential applications
for the 218-219 MHz Service go far beyond the service envisioned by TV
Answer when these rules were designed. The Commission also notes that
other services are authorized to transmit in frequencies adjacent to or
nearby 218-219 MHz with higher power levels than allowed at 218-219 MHz
and no duty cycle restrictions, and that the Commission has not
received any complaints of interference to TV Channel 13 from any of
these operations.
29. These facts prompt the Commission to seek comment as to whether
it should relax some or all of the following technical restrictions, as
requested by Petitioners: (a) automatic power control in RTUs with
power in excess of 100 milliwatts; (b) limits on transmitter effective
radiated power, including the 100 milliwatt power limitation on mobile
RTUs; (c) CTS antenna height and transmitter power ratios, whether or
not the CTS is located beyond a boundary line 10 miles outside the
Grade B contour of a TV Channel 13 station; and (d) duty cycle
limitations. The Commission also notes that it has received various
requests for waiver of these technical standards that it choose to
address in the larger context of this rulemaking, and therefore invite
comment on these proposed operations in conjunction with the comments
addressing the issues raised in this NPRM. The Commission requests that
commenters provide empirical data and analysis of the expected effect
on interference of changes they recommend. Commenters suggesting
specific limits are urged to provide support for their choices,
recognizing that the Commission is seeking to provide technical
flexibility to coincide with the regulatory flexibility it proposes.
Alternatively, comments are sought on whether the interference
provisions of Sec. 95.861 of the Commission's rules, which require 218-
219 MHz Service licensees to resolve interference problems to
television broadcast reception or discontinue operation, are sufficient
to protect broadcast reception. The Commission tentatively concludes
that the evolution toward precise digital technology, both within the
evolving 218-219 MHz Service industry, and on the part of the broadcast
industry, will further reduce interference potential, and the
Commission seeks comment on this tentative conclusion. Commenters
should also address any other technical standards that could be
reexamined in this rulemaking that inhibit flexible use of the spectrum
and technological innovation.

H. Incorporation by Reference of Part 1 Standardized Auction Rules

30. In the Part 1 Third Report and Order, the Commission
streamlined its auction procedures by adopting general competitive
bidding rules applicable to all auctionable services. These procedures,
set forth in Part 1, subpart Q of the Commission's rules, supersede
previously-adopted service-specific rules, unless the Commission
determines that with regard to particular matters, the retention or
adoption of service-specific rules is warranted.
31. The Commission proposes to conduct all future auctions for
licenses in the 218-219 MHz Service (both auctions of initial licenses
and reauctions of defaulted licenses) in conformity with the general
competitive bidding rules set forth in Part 1, subpart Q of the
Commission's rules. Specifically, the Commission proposes to employ the
Part 1 rules governing designated entities, application issues, payment
issues, competitive bidding design, procedure and timing issues, and
anti-collusion. In this regard, consistent with the Commission's
decision in the Part 1 Third Report and Order, the Commission would no
longer offer installment payments as a means of financing small
business participation in the 218-219 MHz Service auction. Instead, the
Commission would retain the two tiers of small business size standards
currently set for 218-219 MHz Service licensees, and utilize the
standard schedule of bidding credits set forth in the Part 1 Third
Report and Order as applied to those two tiers of small businesses,
which would allow for somewhat higher bidding credits in light of the
suspension of installment payment financing. The Commission seeks
comment on these proposals and on whether any of our Part 1 rules would
be inappropriate in an auction for this service.
32. The Commission adopts this NPRM as part of its comprehensive
examination of regulations governing the licensing and use of
frequencies in the 218-219 MHz band. These actions are intended to
establish a flexible regulatory framework for the 218-219 MHz Service
that will encourage spectrum efficiency, technical innovation, and
competition by these licensees in the wireless marketplace, and serve
the ultimate goal of ensuring that the spectrum at 218-219 MHz provides
the greatest benefit to the public.

Procedural Matters and Ordering Clauses

I. Ex Parte Rules--Non-Restricted Proceeding

33. This is a non-restricted notice and comment rulemaking
proceeding. Ex Parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed as provided in
Commission rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).

B. Initial Regulatory Flexibility Analysis

34. As required by the Regulatory Flexibility Act of 1980, Public
Law 96-354, 94 Stat. 1164, as amended by the Contract with America
Advancement Act of 1996, Public Law 104-121, 110 Stat. 847, 5 U.S.C.
603, the Commission has prepared an Initial Regulatory Flexibility
Analysis (IRFA) of the possible impact on small entities of the
proposals suggested in this document. The IRFA is set forth immediately
below the Ordering Clause. Written public comments are requested with
respect to the IRFA. These comments must be filed

[[Page 52221]]

in accordance with the same filing deadlines for comments on the rest
of this NPRM, but they must have a separate and distinct heading,
designating the comments as responses to the IRFA. The Office of Public
Affairs, Reference Operations Division, shall send a copy of this NPRM,
including the IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration, in accordance with the Regulatory Flexibility
Act.

C. Initial Paperwork Reduction Act of 1995 Analysis

35. This NPRM contains either a proposed or modified information
collection. As part of the Commission's continuing effort to reduce
paperwork burdens, we invite the general public, the Office of
Management and Budget (OMB), and other agencies to take this
opportunity to comment on the information collections contained in this
NPRM, as required by the Paperwork Reduction Act of 1995, Public Law
104-13. Public and agency comments are due at the same time as other
comments on this NPRM; OMB comments are due November 30, 1998. Comments
should address: (a) whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology. In
addition to filing comments with the Secretary, a copy of any comments
on the information collections contained herein should be submitted to
both of the following: Judy Boley, Federal Communications Commission,
Room 234, 1919 M Street, N.W., Washington, D.C. 20554, or via the
Internet to [email protected], and Timothy Fain, OMB Desk Officer, 10236
NEOB, 725 17th Street, N.W., Washington, D.C. 20503, or via the
Internet to [email protected].

D. Notice and Comment Provisions

36. Pursuant to Secs. 1.415 and 1.419 of the Commission's rules, 47
CFR 1.415, 1.419, interested parties may file comments on or before
October 30, 1998, and reply comments on or before November 25, 1998.
Comments may be filed using the Commission's Electronic Comment Filing
System (ECFS) or by filing paper copies. See Electronic Filing of
Documents in Rulemaking Proceedings, 63 FR 24121 (May 1, 1998).
37. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send an e-mail to [email protected], and
should include the following words in the body of the message, ``get
form .'' A sample form and directions will be sent
in reply.
38. Parties who choose to file by paper must file an original and
four copies of each filing. If more than one docket or rulemaking
number appear in the caption of this proceeding, commenters must submit
two additional copies for each additional docket or rulemaking number.
All filings must be sent to the Commission's Secretary, Magalie Roman
Salas, Office of the Secretary, Federal Communications Commission, 1919
M St. N.W., Room 222, Washington, D.C. 20554. Comments and reply
comments will be available for public inspection during regular
business hours in the FCC Reference Center of the Federal
Communications Commission, Room 239, 1919 M Street, N.W., Washington,
DC 20554.
39. Authority for issuance of this Notice of Proposed Rulemaking is
contained in Sections 4(i), 257, 303(b), 303(g), 303(r), 309(j), and
332(a) of the Communications Act of 1934, as amended, 47 U.S.C.
Secs. 154(i), 257, 303(b), 303(g), 303(r), 309(j), and 332(a).
40. Accordingly, it is ordered that this Notice of Proposed
Rulemaking is adopted. It is further ordered that the Commission's
Office of Public Affairs, Reference Operations Division, shall send a
copy of this Notice of Proposed Rulemaking, including the IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration.
41. It is further ordered that notice is hereby given of the
proposed amendments to Parts 20 and 95 of the Commission's rules, 47
CFR Parts 20 and 95, in accordance with the proposals in this Notice of
Proposed Rulemaking, and that comment is sought regarding such
proposals. Pursuant to Secs. 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415, 1.419, interested parties may file comments on or before
October 30, 1998, and reply comments on or before November 25, 1998.
42. It is further ordered that the Petition for Rulemaking and
associated amendments filed is granted in part to the extent described
above and is denied in all other respects.

Initial Regulatory Flexibility Analysis (IRFA)

43. The Commission has prepared this IRFA of the possible
significant economic impact on small entities by the policies and rules
proposed in this Notice of Proposed Rulemaking, Amendment of Part 95 of
the Commission's Rules to Provide Regulatory Flexibility in the 218-219
MHz Service (Notice). Written public comments are requested on this
IRFA. Comments must be identified as responses to the IRFA and must be
filed by the deadline for comments on the NPRM, as described supra. The
Commission will send a copy of the NPRM, including this IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration (SBA).
See 5 U.S.C. 603(a).

I. Need for, and Objectives of, the Proposed Rules

44. This rulemaking proceeding was initiated to secure public
comment on proposals to maximize the efficient and effective use of
spectrum in the 218-219 MHz band, allocated in 1992 to the Interactive
Video and Data Service (IVDS) in the Personal Radio Services, now
redesignated as the 218-219 MHz Service. In attempting to maximize the
use of the 218-219 MHz band, the Commission continues its efforts to
improve the efficiency of spectrum use, reduce the regulatory burden on
spectrum users, facilitate technological innovation, and provide
opportunities for development of competitive new service offerings. The
proposals advanced in the NPRM are also designed to implement Congress'
goal of giving small businesses the opportunity to participate in the
provision of spectrum-based services in accordance with Section 309(j)
of the Communications Act of 1934, as amended (the Communications Act).

II. Legal Basis

45. This action, including publication of proposed rules, is
authorized under Sections 4(i), 257, 303(b), 303(g), 303(r), 309(j),
and 332(a) of the Communications Act, 47 U.S.C. 154(i), 257, 303(b),
303(g), 303(r), 309(j), and 332(a).

[[Page 52222]]

III. Description and Estimate of the Number of Small Entities to
which the Proposed Rules Will Apply

46. The Regulatory Flexibility Act directs agencies to provide a
description of and, where feasible, an estimate of the number of small
entities that may be affected by the proposed rules, if adopted. The
Regulatory Flexibility Act generally defines the term ``small entity''
as having the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction.'' In addition,
the term ``small business'' has the same meaning as the term ``small
business concern'' under the Small Business Act, unless the Commission
has developed one or more definitions that are appropriate for its
activities. 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 SBA. A small
organization is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
Nationwide, as of 1992, there were approximately 275,801 small
organizations. ``Small governmental jurisdiction'' generally means
``governments of cities, counties, towns, townships, villages, school
districts, or special districts, with a population of less than
50,000.'' As of 1992, there were approximately 85,006 such
jurisdictions in the United States. This number includes 38,978
counties, cities, and towns; of these, 37,566, or 96 percent, have
populations of fewer than 50,000. The Census Bureau estimates that this
ratio is approximately accurate for all governmental entities. Thus, of
the 85,006 governmental entities, we estimate that 81,600 (91 percent)
are small entities. Below, the Commission further describes and
estimate the number of small entity licensees and regulatees that may
be affected by the proposed rules, if adopted.
47. There are three ways that may be applicable to define small
entities for these proposed rules: (1) the U.S. Small Business
Administration's (SBA) size standards under the SBA's Standard
Industrial Classifications (SIC), 13 CFR 121.201; (2) the Small
Business Act's definition of small entities under 15 U.S.C. 632(a); and
(3) the Commission's refined definition of small business for a
particular service for the purposes of competitive bidding.
48. The proposals in the NPRM would affect a number of small
entities who are either licensees, or who may choose to become
applicants for licenses, in the 218-219 MHz Service. Such entities fall
into two categories: (1) those using the 218-219 MHz Service for
providing interactivity capabilities in conjunction with broadcast
services; and (2) those using the 218-219 MHz Service to operate other
types of wireless communications services with a wide variety of uses,
such as commercial data applications and two-way telemetry services.
Theoretically, an entity could fall into both categories. The spectrum
uses in the two categories differ markedly.
49. With respect to the first category, the provision of
interactivity capabilities in conjunction with broadcast services could
be described as a wireless provider of subscription television service.
The SBA's rules applicable to subscription television services define
small entities as those with annual gross revenues of $11 million or
less. In the Tenth Report and Order, 61 FR 60198 (November 27, 1996),
(``Competitive Bidding Tenth Report and Order''), the Commission
extended special competitive bidding provisions to small businesses
with annual gross revenues that are not more than $15 million, and
additional benefits to very small businesses with annual gross revenues
that are not more than $3 million. On January 6, 1998, the SBA approved
of the small business size standards established in the Competitive
Bidding Tenth Report and Order.
50. The Commission's estimate of the number of small business
entities operating in the 218-219 MHz band for interactivity
capabilities with television viewers begins with the 1992 Bureau of
Census report on businesses listed under SIC Code 4841, subscription
television services, which is the most recent information available.
The total number of entities under this category is 1,788. There are
1,463 companies in the 1992 Census Bureau report which are categorized
as small businesses providing cable and pay TV services. The Commission
knows that many of these businesses are cable and television service
businesses, rather than businesses operating in the 218-219 MHz band.
The Commission also knows that, to date, it has issued 612 licenses in
the 218-219 MHz Service. Therefore, the number of small entities
currently providing interactivity capability to television viewers in
the 218-219 MHz Service which will be subject to the rules will be less
than 612.
51. With respect to the second category, neither the Commission nor
the SBA has developed a specific definition of small entities
applicable to 218-219 MHz band licensees that would provide wireless
communications services other than that described above. Generally, the
applicable definition of a small entity in this instance appears to be
the definition under the SBA rules applicable to establishments
primarily engaged in furnishing telegraph and other message
communications, SIC Code 4822. This definition provides that a small
entity is an entity with annual receipts of $5 million or less. The
1992 Census data, which is the most recent information available,
indicates that of the 286 firms under this category, 247 had annual
receipts of $4.999 million or less. The Commission seeks comment on
whether the appropriate definition for such licensees in the 218-219
MHz Service is SIC Code 4822, or whether it should conclude, for
purposes of the Final Regulatory Flexibility Analysis (FRFA) in this
matter, that the appropriate definition for all providers of services
in the 218-219 MHz Service is the Commission's definition of small
businesses for the purposes of competitive bidding in this service.
52. The first auction of 218-219 MHz spectrum resulted in 170
entities winning licenses for 594 Metropolitan Statistical Area (MSA)
licenses. Of the 594 licenses, 557 were won by entities qualifying as a
small business. For that auction, the Commission defined a small
business as an entity, together with its affiliates, that has no more
than a $6 million net worth and, after federal income taxes (excluding
any carry over losses), has no more than $2 million in annual profits
each year for the previous two years. The Commission cannot estimate,
however, the number of licenses that will be won by entities qualifying
as small or very small businesses under its rules in future auctions of
218-219 MHz spectrum. Given the success of small businesses in the
previous auction, and the above discussion regarding the prevalence of
small businesses in the subscription television services and message
communications industries, the Commission assumes for purposes of this
IRFA that in future auctions, all of the licenses may be awarded to
small businesses, which would be affected by the rule changes it
proposes.

IV. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements

53. The proposed rules under consideration in this NPRM include the
possibility of altered reporting and recordkeeping requirements for a
number of small business entities. Specifically, under the proposals
contained in the NPRM: (1) 218-219 MHz Service licensees and applicants
will be required to elect regulatory status (common carrier, private,

[[Page 52223]]

commercial mobile radio service, private mobile radio service) and file
appropriate documentation coincident with the regulatory status
elected; (2) 218-219 MHz Service licensees will not be required to file
a license renewal application after five years from the date of grant
of the license, but will be required to file a license renewal
application after ten years after the date of grant of the license; (3)
non-defaulting 218-219 MHz Service licensees currently participating in
the installment payment plan will be required to elect either to
continue making payments as reamortized under the revised ten-year term
or surrender any licenses it chooses to the Commission for reauction;
(4) 218-219 MHz Service licensees electing to continue making
installment payments will be required to execute a note and security
agreement as a condition of the reamortization of its installment
payment plan under the revised ten-year term; (5) 218-219 MHz Service
licensees will not be required to file a construction report after the
third year of being licensed, but will be obligated to file
construction reports in accordance with the benchmarks to be adopted
under the proposals herein; and (6) acquisitions by partitioning or
disaggregation will be treated as assignments of a license and parties
will be required to comply with construction requirements, and to
submit a certification to that effect. The Commission requests comment
on how these requirements can be modified to reduce the burden on small
entities and still meet the objectives of the proceeding.

V. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered

54. The NPRM solicits comment on a variety of proposals, some of
which are described below. Rather than having a significant economic
impact on small entities, the NPRM is written toward maximizing
opportunities for participation by, and growth of, small businesses in
providing wireless services. The Commission has requested comment
regarding the appropriate definition of small business to be applied
under the expanded nature of the 218-219 MHz Service it proposes in the
NPRM. The Commission expects that its proposals in this NPRM regarding
extension of license terms from five to ten years, with a corresponding
reamortization of installment payment debt, and allowing partitioning
and disaggregation of licenses, will specifically assist small
businesses. The Commission also believes that its proposals regarding
permissible uses of 218-219 MHz Service, liberalization of construction
requirements and technical restrictions, and elimination of the cross-
ownership restriction, will make expansion of 218-219 MHz Service
operations easier, and this flexibility assists all licensees,
including small business licensees. The Commission tentatively
concludes that a flexible approach to regulation of the 218-219 MHz
Service will afford all providers, including small businesses, the
ability to respond to market forces and demands for service relevant to
their particular locations and service offerings. The regulatory
burdens the Commission proposes are necessary in order to ensure that
the public receives the benefits of innovative new services in a prompt
and efficient manner. The Commission seeks comment on, and will
consider, any significant alternatives that are consistent with the
objectives set forth in the NPRM.

VI. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules

None.

List of Subjects

47 CFR Part 20

Communications common carrier, Communications equipment, Radio.

47 CFR Part 95

Communications equipment, Penalties, Radio, Report and record
keeping requirements.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Proposed Rules

Parts 20 and 95 of Chapter I of Title 47 of the Code of Federal
Regulations are proposed to be amended as follows:

PART 20--COMMERCIAL MOBILE RADIO SERVICES

1. The authority citation for part 20 would be revised to read as
follows:

Authority: Secs. 4, 251, 252, 303, and 332, 48 Stat. 1066, 1082,
as amended; 47 U.S.C. 154, 251, 252, 303, and 332, unless otherwise
noted.

2. Section 20.9 would be amended by redesignating paragraphs
(a)(12) and (a)(13), as (a)(13) and (a)(14), and adding a new paragraph
(a)(12) to read as follows:

Sec. 20.9 Commercial mobile radio services.

(a) * * *
(12) Mobile operations in the 218-219 MHz Service (part 95, subpart
F of this chapter) that provide for-profit interconnected service to
the public;
* * * * *

PART 95--PERSONAL RADIO SERVICES

3. The authority citation for part 95 would be revised to read as
follows:

Authority: Secs. 4, 303, 48 Stat. 1066, 1082, as amended; 47
U.S.C. 154, 303, unless otherwise noted.

4. Section 95.1 would be amended by revising paragraph (b) to read
as follows:

Sec. 95.1 The General Mobile Radio Service (GMRS).

* * * * *
(b) The 218-219 MHz Service is a two-way radio service authorized
for system licensees to provide communication service to subscribers in
a specific service area. The rules for this service are contained in
subpart F of this part.
5. Section 95.803 would be amended by revising the section heading
and paragraphs (a) and (b) to read as follows:

Sec. 95.803 218-219 MHz Service description.

(a) The 218-219 MHz Service is a two-way radio service authorized
for system licensees to provide communication service to subscribers in
a specific service area.
(b) The components of each 218-219 MHz Service system are its
administrative apparatus, its response transmitter units (RTUs), and
one or more cell transmitter stations (CTSs). RTUs may be used in any
location within the service area.
* * * * *
6. Section 95.805 would be revised to read as follows:

Sec. 95.805 Permissible communications.

A 218-219 MHz Service system may provide any fixed or mobile
communications service to subscribers within its service area on its
assigned spectrum, consistent with the Commission's rules and the
regulatory status of the system to provide services on a common carrier
or private basis.
7. A new Sec. 95.807 would be added to read as follows:

Sec. 95.807 Requesting regulatory status.

(a) Authorizations for systems in the 218-219 MHz Service will be
granted to provide services on a common carrier basis or a private
basis, or on both a common carrier and private basis in a single
authorization.
(1) Initial applications. An applicant will specify on FCC Form 601
if it is requesting authorization to provide services on a common
carrier basis, a

[[Page 52224]]

private basis, or on both a common carrier and private basis.
(2) Amendment of pending applications. Any pending application may
be amended to: (i) change the carrier status requested; or (ii) add to
the pending request in order to obtain both common carrier and private
status in a single license.
(3) Modification of license. A licensee may modify a license to:
(i) change the carrier status authorized; or (ii) add to the status
authorized in order to obtain both common carrier and private status in
a single license. Applications to change, or add to, carrier status in
a license must be submitted on FCC Form 601 in accordance with
Sec. 1.1102 of this chapter.
(b) An applicant or licensee may submit a petition at any time
requesting clarification of the regulatory status required to provide a
specific communications service.
8. Section 95.811, would be amended by removing paragraph (d) and
revising paragraphs (b) and (c) to read as follows:

Sec. 95.811 License requirements.

* * * * *
(b) Each CTS that is in the vicinity of certain receiving locations
(see Sec. 1.923(f) of this chapter), or that may have significant
environmental effect (see part 1, subpart I of this chapter), or that
requires notification to the Federal Aviation Administration (see part
17, subpart B of this chapter), or that has an antenna that exceeds 6.1
meters (m) (20 feet) above ground or an existing man-made structure
(other than an antenna structure), must be individually licensed to the
218-219 MHz Service licensee for the service area in which the CTS is
located. All other CTSs are authorized under the 218-219 MHz Service
system license.
(c) Each component RTU in a 218-219 MHz Service system is
authorized under the system license or if associated with an
individually licensed CTS, under that CTS license.
9. A new Sec. 95.812 would be added to read as follows:

Sec. 95.812 License term.

(a) The term of each 218-219 MHz Service system license is ten
years from the date of original issuance or renewal.
(b) Licenses for individually licensed CTSs will be issued for a
period running concurrently with the license of the associated 218-219
MHz Service system with which it is licensed.
10. Section 95.813 would be amended by revising paragaph (b) and
removing paragraph (c) to read as follows:

Sec. 95.813 Eligibility.

* * * * *
(b) An entity that loses its 218-219 MHz Service authorization due
to failure to meet the construction requirements specified in
Sec. 95.833 may not apply for a 218-219 MHz Service system license for
three years from the date the Commission takes final action affirming
that the 218-219 MHz Service license has been canceled.
11. Section 95.815 would be amended by revising paragraph (a) to
read as follows:

Sec. 95.815 License application.

(a) In addition to the requirements of part 1, subpart F of this
chapter, each application for a 218-219 MHz Service system license must
include a plan showing how the applicant intends to minimize co-channel
interference and interference to adjacent channel users and a showing
that the proposed system will meet the service requirements set forth
in Sec. 95.831 of this part.
* * * * *
12. Section 95.816 would be amended by revising paragraphs (a),
(b), (c), (d) introductory text, (d)(1), (d)(2) and (d)(3) to read as
follows:

Sec. 95.816 Competitive bidding proceedings.

(a) Mutually exclusive initial applications for 218-219 MHz Service
system licenses are subject to competitive bidding. The procedures set
forth in part 1, subpart Q, of this chapter will apply unless otherwise
provided in this part.
(b) The Wireless Telecommunications Bureau will select competitive
bidding designs and mechanisms in accordance with Secs. 1.2103 and
1.2104 of this chapter.
(c) The specific procedures applicable to auctioning particular
218-219 MHz Service licenses will be set forth by Public Notice.
Generally, the following competitive bidding procedures will be used to
auction mutually exclusive 218-219 MHz Service licenses.
(1) Forms. (i) Short-form application. See Sec. 1.2105 of this
chapter.
(ii) Long-form application. See Sec. 1.2107 (c) and (d) of this
chapter.
(2) Upfront payments. Each applicant to participate in a 218-219
MHz Service auction will be required to submit an upfront payment of
$9,000 per Metropolitan Statistical Area license and $2,500 per Rural
Service Area license for the maximum number of licenses on which it
intends to bid pursuant to Sec. 1.2106 of this chapter and procedures
specified by Public Notice.
(3) Down payments. See Sec. 1.2107(b) of this chapter.
(4) Full payment. See Sec. 1.2109(a) of this chapter.
(5) Default or disqualification. See Secs. 1.2104(g)(2) of this
chapter.
(d) Designated entities. Designated entities are small businesses
and very small businesses, as defined in 95.816(d)(4) of this section,
and businesses owned by members of minority groups and/or women, as
defined in Sec. 1.2110(b) of this chapter.
(1) Bidding credits. (i) A winning bidder that qualifies as a small
business (as defined in 95.816(d)(4)(i) of this section) may use a
bidding credit of 25 percent to lower the cost of its winning bid.
(ii) A winning bidder that qualifies as a very small business (as
defined in 95.816(d)(4)(i)(ii) of this section) may use a bidding
credit of 35 percent to lower the cost of its winning bid.
(iii) The bidding credits referenced in paragraphs (1) and (2) of
this subsection are not cumulative.
(2) Installment payments. See Sec. 1.2110(f) of this chapter.

Note to paragraph (d)(2): Each 218-219 MHz Service system
licensee already utilizing an installment payment plan as of the
effective date of these rules will be notified by the Commission of
the revised terms of its installment payment plan. The Commission
may require that such licensee execute appropriate loan
documentation, that may include promissory notes, security
agreements, and other related agreements as a condition of the
revised installment payment plan.
(3) Audits. See Sec. 1.2110(l) of this chapter.
* * * * *
13. Section 95.819 would be revised to read as follows:

Sec. 95.819 License transferability.

(a) A 218-219 MHz Service system license acquired through
competitive bidding procedures (including licenses obtained in cases of
no mutual exclusivity), together with all of its component CTS
licenses, may be transferred, assigned, sold, or given away only in
accordance with the provisions and procedures set forth in Sec. 1.2111
of this chapter.
(b) A 218-219 MHz Service system license obtained through random
selection procedures, together with all of its component CTS licenses,
may be transferred, assigned, sold, or given away to any other entity
once the five year construction benchmark (substantial service) has
been met, in accordance with the provisions of Sec. 1.948 of this
chapter.
(c) If the transfer, assignment, sale, or gift of a license is
approved, the new licensee is held to the original construction
requirements set forth in Sec. 95.833 of this subpart.

[[Page 52225]]

14. A new Sec. 95.823 would be added to read as follows:

Sec. 95.823 Geographic partitioning and spectrum disaggregation.

(a) Eligibility. Parties seeking Commission approval of geographic
partitioning or spectrum disaggregation of 218-219 MHz Service system
licenses shall request an authorization for partial assignment of
license pursuant to Sec. 1.948 of this chapter.
(b) Technical standards.--(1) Partitioning. In the case of
partitioning, requests for authorization of partial assignment of a
license must include, as attachments, a description of the partitioned
service area and a calculation of the population of the partitioned
service area and the licensed geographic service area. The partitioned
service area shall be defined by coordinate points at every 3 seconds
along the partitioned service area unless an FCC-recognized service
area is utilized (i.e., Major Trading Area, Basic Trading Area,
Metropolitan Service Area, Rural Service Area, Economic Area) or county
lines are followed. The geographic coordinates must be specified in
degrees, minutes, and seconds, to the nearest second of latitude and
longitude, and must be based upon the 1927 North American Datum
(NAD27). Applicants may supply geographical coordinates based on the
1983 North American Datum (NAD83) in addition to those required
(NAD27). In the case where an FCC-recognized service area or county
lines are utilized, applicants need only list the specific area(s)
(through use of FCC designations or county names) that constitute the
partitioned area.
(2) Disaggregation. Spectrum maybe disaggregated in any amount.
(3) Combined partitioning and disaggregation. The Commission will
consider requests for partial assignments of licenses that propose
combinations of partitioning and disaggregation.
(c) Provisions applicable to designated entities.--(1) Unjust
Enrichment. See Sec. 1.2111(e) of this chapter.
(2) Parties not qualified for installment payment plans. (i) When a
winning bidder that elected to pay for its license through an
installment payment plan partitions its license or disaggregates
spectrum to another party that would not qualify for an installment
payment plan, or elects not to pay for its share of the license through
installment payments, the outstanding balance owed by the licensee
(including accrued and unpaid interest) shall be apportioned according
to Sec. 1.2111(e)(3) of this chapter.
(ii) The partitionee or disaggregatee shall, as a condition of the
approval of the partial assignment application, pay its entire pro rata
amount within 30 days of Public Notice conditionally granting the
partial assignment application. Failure to meet this condition will
result in cancellation of the grant of the partial assignment
application.
(iii) The partitionor or disaggregator shall be permitted to
continue to pay its pro rata share of the outstanding balance and shall
receive new financing documents (promissory note, security agreement)
with a revised payment obligation, based on the remaining amount of
time on the original installment payment schedule. These financing
documents will replace the partitionor's or disaggregator's existing
financing documents which shall be marked ``superseded'' and returned
to the licensee upon receipt of the new financing documents. The
original interest rate, established pursuant to Sec. 1.2110(f)(3)(i) of
this chapter at the time of the grant of the initial license in the
market, shall continue to be applied to the partitionor's or
disaggregator's portion of the remaining government obligation.
(iv) A default on the partitionor's or disaggregator's payment
obligation will affect only the partitionor's or disaggregator's
portion of the market.
(3) Parties qualified for installment payment plans. (i) Where both
parties to a partitioning or disaggregation agreement qualify for
installment payments, the partitionee or disaggregatee will be
permitted to make installment payments on its portion of the remaining
government obligation.
(ii) Each party will be required, as a condition to approval of the
partial assignment application, to execute separate financing documents
(promissory note, security agreement) agreeing to pay its pro rata
portion of the balance due (including accrued and unpaid interest), as
apportioned according to Sec. 1.2111(e)(3) of this chapter, based upon
the installment payment terms for which it qualifies under the rules.
The financing documents must be returned to the U.S. Treasury within
thirty (30) days of the Public Notice conditionally granting the
partial assignment application. Failure by either party to meet this
condition will result in the automatic cancellation of the grant of the
partial assignment application. The interest rate, established pursuant
to Sec. 1.2110(f)(3)(i) of this chapter at the time of the grant of the
initial license in the market, shall continue to be applied to both
parties' portion of the balance due. Each party will receive a license
for its portion of the partitioned market.
(iii) A default on an obligation will affect only that portion of
the market area held by the defaulting party.
(iv) Partitionees or disaggregatees that qualify for installment
payment plans may elect to pay some of their pro rata portion of the
balance due in a lump sum payment to the U.S. Treasury and to pay the
remainder in installments as set forth in Sec. 1.2110(f) of this
chapter.
(d) Construction Requirements.--(1) Partitioning. Partial assignors
and assignees for license partitioning have two options to meet
construction requirements. Under the first option, the partitionor and
partitionee would each certify that they will independently satisfy the
applicable construction requirements set forth in Sec. 95.833 for their
respective partitioned areas. If either licensee failed to meet its
Sec. 95.833 requirement, only the non-performing licensee's renewal
application would be subject to dismissal. Under the second option, the
partitionor certifies that it has met or will meet the Sec. 95.833
requirement for the entire market. If the partitionor fails to meet the
Sec. 95.833 requirement, however, only its renewal application would be
subject to forfeiture at renewal.
(2) Disaggregation. Partial assignors and assignees for license
disaggregation have two options to meet construction requirements.
Under the first option, the disaggregator and disaggregatee would
certify that they each will share responsibility for meeting the
applicable construction requirements set forth in Sec. 95.833 for the
geographic service area. If parties choose this option and either party
fails to do so, both licenses would be subject to forfeiture at
renewal. The second option would allow the parties to agree that either
the disaggregator or the disaggregatee would be responsible for meeting
the Sec. 95.833 requirement for the geographic service area. If parties
choose this option, and the party responsible for meeting the
construction requirement fails to do so, only the license of the
nonperforming party would be subject to forfeiture at renewal.
(3) All applications requesting partial assignments of license for
partitioning or disaggregation must include the above-referenced
certification as to which of the construction options is selected.
(4) Responsible parties must submit supporting documents showing
compliance with the respective construction requirements within the

[[Page 52226]]

appropriate construction benchmarks set forth in Sec. 95.833.
15. Section 95.831 would be revised to read as follows:

Sec. 95.831 Service requirements.

Subject to the initial construction requirements of Sec. 95.833 of
this subpart, each 218-219 MHz Service system licensee must either
demonstrate that it provides substantial service, or make service
available to at least 20 percent of the population or land area located
within the service area. ``Substantial service'' means service that is
sound, favorable, and substantially above a level of mediocre service
that would barely warrant renewal.
16. Section 95.833 would be revised to read as follows:

Sec. 95.833 Construction requirements.

(a) Each 218-219 MHz Service system licensee must demonstrate that
it provides substantial service to its service area within five years
of license grant.

Note to paragraph (a): Each 218-219 MHz Service system licensed
as of the effective date of these rules must demonstrate that it
provides substantial service to its service area within five years
of the effective date of these rules.

(b) Each 218-219 MHz Service system licensee must make service
available to at least 20 percent of the population or land area within
the service area within ten years of grant of the 218-219 MHz Service
system license. As an alternative to the coverage requirement of this
paragraph, the 218-219 MHz Service system licensee may demonstrate that
it provides substantial service to its service area within ten years of
license grant.
(c) In demonstrating compliance with the construction requirements
set forth in this section, licensees must base their calculations on
signal field strengths that ensure reliable service for the technology
utilized. Licensees may use any service radius contour formula
developed or generally used by industry, provided that such formula is
based on the technical characteristics of their system.
(d) Failure to meet the construction requirements set forth in this
section will result in automatic cancellation of the 218-219 MHz
Service system license, and will result in the licensee's ineligibility
to apply for 218-219 MHz Service licenses for three years from the date
the Commission takes final action affirming that the 218-219 MHz
Service license has been canceled. See 47 CFR Sec. 95.813(b). For the
purposes of this section, a CTS is not considered as providing service
unless that CTS and two associated RTUs are placed in operation.
(e) Each 218-219 MHz Service system licensee must file a progress
report at the conclusion of each of the two benchmark periods to inform
the Commission of the construction status of the system. The report
must include:
(1) A showing of how the system meets the benchmark; and
(2) A list, including addresses, of all component CTSs constructed.
17. Section 95.853 would be amended by adding a new first sentence
to paragraph (a) to read as follows:

Sec. 95.853 Frequency segments.

(a) There are two frequency segments available for assignment to
the 218-219 MHz Service in each service area. * * *
* * * * *
[FR Doc. 98-26168 Filed 9-29-98; 8:45 am]
BILLING CODE 6712-01-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-26168. Public record. Not legal advice.