Reconsideration of the Rules and Policies for Local Multipoint Distribution Service

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 101

[CC Docket No. 92-297; FCC 98-15]

Reconsideration of the Rules and Policies for Local Multipoint

Distribution Service

AGENCY: Federal Communications Commission.

ACTION: Final rule; petitions for reconsideration.

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SUMMARY: The Federal Communications Commission has adopted a Third

Order on Reconsideration (Third Reconsideration Order) in the Local

Multipoint Distribution Service (LMDS) proceeding, reaffirming its

commitment to the rapid implementation of LMDS and the broad range of

one-way and two-way voice, video, and data service capabilities that

LMDS offers. LMDS is a fixed, point-to-multipoint wireless service that

has the flexibility and potential to promote competition in the

telephony and cable distribution marketplaces, as well as to introduce

new and innovative services to the public. The action is taken to

resolve petitions for reconsideration of the service rules, except the

competitive bidding rules, adopted in the Second Report and Order,

Order on Reconsideration, and Fifth Notice of Proposed Rulemaking

(Second Report and Order) to implement LMDS in the 27.5-28.35 GHz,

29.1-29.25 GHz , and 31.0-31.3 GHz frequency bands. The limited

revisions to the Commission's rules adopted in this Third

Reconsideration Order will permit certain point-to-point operations on

a secondary basis to LMDS in the 31 GHz band under the previous service

rules replaced by LMDS without adversely affecting LMDS or the

initiation of the auction and licensing of LMDS under the LMDS service

rules.

EFFECTIVE DATE: April 27, 1998.

FOR FURTHER INFORMATION CONTACT: Barbara Reideler or Jay Whaley, Policy

Division, Wireless Telecommunications Bureau, (202) 418-1310.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Third

Reconsideration Order in CC Docket No. 92-297, FCC 98-15, adopted on

February 3, 1998, and released on February 11, 1998. The complete text

of this decision is available for inspection and copying during normal

business hours in the FCC Reference Center (Room 239), 1919 M Street,

N.W., Washington, D.C., and also may be purchased from the Commission's

copy contractor, International Transcription Service, (202) 857-3800,

1231 20th Street, N.W., Washington, DC 20036.

Synopsis of Third Reconsideration Order

1. On March 11, 1997, the Commission adopted a Second Report and

Order, Order on Reconsideration, and Fifth Notice of Proposed

Rulemaking (Second Report and Order) 1 in this proceeding,

which designated the 31.0-31.3 GHz frequency band (31 GHz band) for

Local Multipoint Distribution Service (LMDS) and adopted competitive

bidding and service rules to implement LMDS in the 27.5-28.35 GHz and

29.1-29.25 GHz frequency bands (28 GHz band) and the 31 GHz band. In

this Third Order on Reconsideration (Third Reconsideration Order), the

Commission addressed petitions for reconsideration and clarification of

the Second Report and Order, except petitions for reconsideration of

the LMDS competitive bidding rules.2 The petitions were

denied, with one exception that resulted in limited revisions to the

rules adopted in the Second Report and Order. The Third Reconsideration

Order deferred consideration of the comments filed in response to the

Fifth Notice of Proposed Rulemaking, which was issued in conjunction

with the Second Report and Order, to a separate Report and Order to be

issued in the near future.

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\1\ Rulemaking To Amend Parts 1, 2, 21, and 25 of the

Commission's Rules To Redesignate the 27.5-29.5 GHz Frequency Band,

To Reallocate the 29.5-30.0 GHz Frequency Band, To Establish Rules

and Policies for Local Multipoint Distribution Service and for Fixed

Satellite Services, Petitions for Reconsideration of the Denial of

Applications for Waiver of the Commission's Common Carrier Point-to-

Point Microwave Radio Service Rules, CC Docket No. 92-297, Suite 12

Group Petition for Pioneer Preference, PP-22; Second Report and

Order, Order on Reconsideration, and Fifth Notice of Proposed

Rulemaking, 12 FCC Rcd 12545 (1997), 62 FR 23148, April 29, 1997,

and 62 FR 16514, April 7, 1997.

\2\ The petitions for reconsideration of the LMDS competitive

bidding rules were considered in the Second Order on Reconsideration

at 62 FR 48787, September 17, 1997.

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2. The Second Report and Order adopted an ownership rule that

imposed a three-year restriction on the eligibility of incumbent local

exchange companies (LECs) and incumbent cable companies to hold an

attributable interest in the larger LMDS license of 1,150 megahertz

whose geographic service area significantly overlaps such incumbent's

authorized or franchised service area. The Third Reconsideration Order

reviewed the portion of the eligibility restriction that permits

incumbent LECs and incumbent cable companies to bid

[[Page 9444]]

on and acquire such an in-region LMDS license, so long as they

subsequently come into compliance with the eligibility restriction

through divestiture of the ineligible interests or areas within 90 days

of the grant of such license.

3. The Commission affirmed that the divestiture rule is consistent

with similar rules in similar ownership eligibility restrictions and

would not undermine the restriction. Ineligible incumbents would not be

able to distort the auction process, which is protected by several

provisions that prevent various anticompetitive strategies. The rule

also is consistent with the Commission's goal to structure the

eligibility restriction as flexibly as possible to minimize potential

adverse limitations on incumbent LECs and incumbent cable companies by

permitting them to compete for the LMDS license and then decide which

business to pursue or divest.

4. The Third Reconsideration Order also reviewed the portion of the

eligibility rule that defines an ownership interest of 20 percent or

higher as an attributable interest for eligibility purposes. The

Commission affirmed that the 20 percent attribution level better serves

the competitive goals for LMDS than a 10 percent attribution level for

several reasons. The 20 percent level maximizes the opportunity for

competition and increases the availability of financing by permitting a

wide variety of players to enter the markeplace and provide financing,

while preventing anticompetitive activities of incumbents. The 20

percent level was reasonably based upon a market analysis and

predictive judgments that weighed and balanced several competing

interests, and was adopted because it is more reasonable than other

levels in achieving the goals of the eligibility restriction. In

addition, there are safeguards in the LMDS attribution rule that make

incumbent cable companies ineligible to hold a controlling interest in

an LMDS licensee, even if their attributable ownership interest is less

than 20 percent.

5. The Commission found that the 20 percent level is consistent

with the ownership restriction that applies to similar wireless

services and that was adopted to achieve similar goals to promote

competition and prevent the concentration of spectrum among entities

with the incentive to prevent competition. Although the Commission uses

a 5 percent level in another ownership restriction, the circumstances

are different and require a more restrictive approach than LMDS.

Different ownership attribution standards have been adopted in the

context of different rulemakings, depending on the particular

circumstances and objectives in each case.

6. The Commission also reviewed the portion of the eligibility rule

that does not treat debts, warrants and similar convertible interests

as attributable interests until conversion is effected. The Third

Reconsideration Order affirmed the rule, which is consistent with

similar ownership restrictions adopted by the Commission. The different

treatment of such debts and interests in the attributable interest

provisions of the LMDS designated entity auction rules also adopted in

the Second Report and Order was based on the different circumstances

and objectives of the designated entity rules and was consistent with

the auction rules adopted in other services. The Third Reconsideration

Order found that existing Commission rules prevent incumbent LECs and

incumbent cable companies that hold such convertible instruments from

engaging in anticompetitive activities and undermining the eligibility

restriction. In addition, the Commission has adopted ownership

disclosure requirements that the Third Reconsideration Order directs

LMDS applicants to address in the long-form applications to be filed by

the LMDS auction winners and that provide additional safeguards to

ensure that anticompetitive conduct does not materialize.

7. The Third Reconsideration Order determined that the policies and

criteria used in establishing ownership restrictions in various

rulemakings for different services would benefit from a comprehensive

evaluation. Accordingly, the Commission decided to initiate a

proceeding to examine the various ownership restrictions, including

their ownership attribution standards and their treatment of

convertible interests, later this year.

8. The Third Reconsideration Order reviewed the decision to apply

the eligibility restriction to all incumbent LECs and incumbent cable

companies, including rural incumbent LECs. The Commission affirmed that

the rule is consistent with the policy objectives of section 309(j) of

the Communications Act to promote competition in all areas, ensure

prompt delivery of service to rural areas, and provide opportunities

for rural telephone companies. Rural incumbent LECs have the same

incentives for anticompetitive use of LMDS licenses as other incumbent

LECs to bar the entry of new competitors. The eligibility restriction

reserves the initial licensing of LMDS for entrants without market

power to ensure new competitors to all areas, including rural areas.

9. The Commission also concluded that the eligibility restriction

does not subject rural incumbent LECs to greater disqualification under

its definition of a significant overlap, which occurs when the service

area of an incumbent LEC or incumbent cable company includes at least

10 percent of the population of the LMDS licensed service area. Whether

applied to an entire licensed area or a smaller partitioned licensed

area, a significant overlap was determined to create the potential for

exercise of undue market power by incumbent LECs, including rural

incumbent LECs. The Commission affirmed that if an incumbent LEC or

incumbent cable company, including a rural incumbent LEC, is prevented

from acquiring an LMDS license that significantly overlaps its service

area, it is not barred altogether from acquiring an LMDS license and

several alternatives are available. The incumbent LEC or incumbent

cable company may acquire an LMDS license that does not significantly

overlap, that overlaps so long as it divests the overlapping area

within 90 days of a grant of the license, or that is partitioned from a

larger LMDS license and complies with the eligibility restriction.

Incumbents also may acquire the 150 megahertz LMDS license to which the

eligibility restriction does not apply.

10. The Third Reconsideration Order noted that in the Second Report

and Order, the Commission has committed to initiate a review of the

eligibility restriction in the year 2000, in order to determine whether

the restriction should be extended to promote competition. The

Commission determined, on reconsideration, to begin this review prior

to 2000 and to provide a framework for the use of the Commission's

resources in carrying out the review. Therefore, the Chief Economist,

the Chief of the Cable Services Bureau, the Chief of the Common Carrier

Bureau, the Chief of the Mass Media Bureau, the Chief of the

International Bureau, the General Counsel, and the Chief of the

Wireless Telecommunications Bureau were instructed to prepare jointly a

study examining whether there has been sufficient entry and increases

in competition to sunset the eligibility restriction on incumbent LECs

and incumbent cable companies. The results of this study, together with

a joint recommendation, are to be submitted to the Commission no later

than June 30, 1999. Based on the report and joint

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recommendation, the Commission intends to determine whether to initiate

a rulemaking proceeding to extend the date for the termination of the

eligibility restriction.

11. The Third Reconsideration Order identified safeguards that

exist, even after the eligibility restriction is terminated, to ensure

that proposed license acquisitions by incumbent LECs or incumbent cable

operators will not be inconsistent with the pro-competitive policies on

which the restriction is based. After the initial auctioning of LMDS

licenses, licenses are acquired under the Commission's transfer and

assignment rules, which require prior Commission approval. The Third

Reconsideration Order determined that the Commission would consider

whether a particular market is sufficiently competitive before granting

approval, and would rely on an examination of the same factors

identified in the Second Report and Order for determining whether a

market is sufficiently competitive to grant a waiver of the eligibility

restriction under section 101.1003(a)(2) of the Commission's Rules (47

CFR 101.1003(a)(2)).

12. The Third Reconsideration Order granted a petition for

clarification of the LMDS technical rules concerning frequency

coordination and emission masks. The Second Report and Order imposed a

frequency coordination requirement on LMDS licensees that requires

licensees to initiate the coordination procedures in the Commission's

rules to avoid interference problems with any neighboring LMDS licensee

located within 20 kilometers of the boundaries of its service area. The

Commission clarified that the identity of any such neighboring

licensees is readily available in the Commission's database in order

for the LMDS licensee to fulfill its obligation to provide notification

of its operations to such neighbors. The Commission further clarified

that such neighbor is required to respond to the notification with

specific information concerning any problem, providing the LMDS

licensee with sufficient information to further enable it to fulfill

its obligation to complete the coordination process. The Third

Reconsideration Order also clarified that the emission mask

requirements in part 101 of the Commission's Rules apply to LMDS and

that LMDS will be governed by the emission specifications set out in

section 101.111 of the Rules (47 CFR 101.111(a)(2)).

13. The Third Reconsideration Order reviewed whether the flexible

LMDS construction rule, which requires LMDS licensees to demonstrate

substantial service during the 10-year licensed period in order to be

granted license renewal, adversely impacts rural LECs and is

inconsistent with section 309(j) of the statute. The Commission

affirmed that the flexibility of the rule will promote efficient use of

the spectrum, encourage service to rural areas, and prevent the

warehousing of spectrum, which are consistent with the policies in

section 309 (j). The Commission affirmed that specific construction

benchmarks were not devised because of the broad range of new and

innovative LMDS services, many of which are in the design stage.

Stricter requirements could discourage participation in LMDS because

the services and equipment are under development.

14. The Third Reconsideration Order upheld the decision to

designate the entire 300 megahertz in the 31 GHz band for LMDS and to

terminate licensing under the previous service rules, which provided a

point-to-point localized service in the 31 GHz band. In denying the

petition for reconsideration to designate only 150 megahertz in the 31

GHz band plan for LMDS, the Commission found that there was adequate

support for its finding that the entire 300 megahertz should be

designated to LMDS to ensure its potential for development of a full

range of broadband telecommunications and video distribution services

and to fulfill the Commission's obligation to designate spectrum for

the most effective and efficient use.

15. The Third Reconsideration Order reviewed the decision to

dismiss the applications that were filed under the previous point-to-

point 31 GHz service rules and were pending at the Commission when the

LMDS service rules were adopted for the 31 GHz band on March 11, 1997,

in the Second Report and Order. On reconsideration, the dismissed

applicants were allowed to refile the dismissed applications within 60

days of the effective date of the Third Reconsideration Order under

existing application rules in part 101 of the Commission's Rules (47

CFR 101.1, et seq.). Operating rules were modified to permit the 31 GHz

operations under the technical parameters that applied to previously

authorized 31 GHz licenses.

16. The Third Reconsideration Order permitted authorization of the

same stations and services requested in the dismissed applications, but

prohibited expansion of the authorized operations beyond the scope of

the initial license. The new licensees and the existing 31 GHz

licensees were directed to share the band with each other consistent

with such authorizations under the previous rules. However, all

operations in the new licenses will be authorized on a secondary basis

to LMDS operations, and any such new 31 GHz operations are required not

to interfere with LMDS operations and to accept any interference from

LMDS. The Commission concluded that these unique circumstances

prevented any adverse impact on LMDS operations to be provided in the

31 GHz band and on the future licensing of the band under the LMDS

service rules.

17. Only entities that had applications dismissed when the Second

Report and Order was adopted were eligible to refile such applications

under the previous 31 GHz application rules for secondary authorization

to LMDS. Similar treatment was not accorded to entirely new

applications for future licensing under the previous 31 GHz services,

because that would not alleviate concerns of potential harm to LMDS or

benefit such future licensees in the face of incompatible LMDS

operations. The Third Reconsideration Order, however, recognized the

important public interest objectives of governmental entities that

requested ongoing licensing of the 31 GHz band under the previous 31

GHz service rules for traffic control systems that meet Federal goals

to reduce vehicular traffic congestion and air pollution. Several

alternative means were identified by which such governmental entities

may still acquire authorization for spectrum use or can otherwise

obtain the traffic services they need.

18. The Third Reconsideration Order reviewed the Order on

Reconsideration issued in conjunction with the Second Report and Order

that upheld the decision to dismiss several hundred waiver applications

for authority to provide LMDS in the 28 GHz band under the previous 28

GHz service rules. The Commission denied petitioners' claims on further

reconsideration that dismissal of their 28 GHz waiver applications was

the result of retroactive rulemaking and disparate treatment, and

should not have been summarily dismissed. The Commission explained that

an applicant has no vested right to a continuation of the substantive

standards in effect at the time an application was filed and, thus, the

waiver applicants had no vested rights that were affected. In addition,

unless a waiver of the rules was granted as the applicants requested,

applications that failed to comply with the 28 GHz licensing rules

under which they were filed may be dismissed summarily.

[[Page 9446]]

Supplemental Final Regulatory Flexibility Analysis

19. As required by the Regulatory Flexibility Act, see 5 U.S.C. 603

(RFA), a Final Regulatory Flexibility Analysis (FRFA) was incorporated

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

Notice of Proposed Rulemaking (Second Report and Order) in this

proceeding. The Commission's Supplemental Final Regulatory Flexibility

Analysis (SFRFA) in this Third Reconsideration Order reflects revised

or additional information to that contained in the FRFA. The SFRFA thus

is limited to matters raised in response to the Second Report and Order

that are granted on reconsideration in the Third Reconsideration Order.

This SFRFA conforms to the RFA, as amended by the Contract with America

Advancement Act of 1996 (CWAAA), Public Law 104-121, 110 Stat. 846

(1996), codified at 5 U.S.C. 601 et seq.

I. Need For and Objectives of the Action

20. The actions taken in this Third Reconsideration Order are in

response to petitions for reconsideration or clarification of the

service rules, except competitive bidding rules, adopted in the Second

Report and Order to implement the new Local Multipoint Distribution

Service (LMDS) in the 28 GHz and 31 GHz frequency bands. The petitions

are denied, except the petitions seeking reconsideration of the

decision to dismiss the pending applications requesting authorization

of 31 GHz services under the previous service rules. The rule changes

adopted in the Third Reconsideration Order allow the dismissed

applicants to refile their applications for the same 31 GHz

authorization, but on a secondary basis to LMDS. The rule changes are

intended to permit the limited 31 GHz services requested in the

dismissed applications that include traffic control systems, among

other services in the public interest, while reaffirming the

Commission's decision to terminate future licensing of new applications

under the previous 31 GHz service rules and designate the 31 GHz band

for LMDS, which offers a wide array of telecommunications and video

programming distribution services.

II. Summary of Significant Issues Raised by the Public in Response

to the Final Regulatory Flexibility Statement

21. No comments were received in direct response to the FRFA. In

response generally to the Second Report and Order, the Commission

received petitions, as well as ex parte letters and letters in support,

that seek reconsideration, and also received oppositions to those

petitions. Sierra Digital Communications, Inc (Sierra) requests that

the dismissed 31 GHz applications be reinstated and the licensees given

the same interference protections and relocation procedure that the

Commission accorded incumbent 31 GHz licensees when it redesignated the

31 GHz band for LMDS. Sierra argues that the potential public interest

benefits in authorizing the requested services in the dismissed

applications, which include public safety services and public

expenditures, outweigh any benefits that may come from licensing 31 GHz

for LMDS free of the requested services. Nevada Department of

Transportation (Nevada DOT) requests that its applications and the

applications of the Las Vegas Cities (Cities) for a traffic control

system be granted on a temporary basis and secondary to LMDS in order

to allow the implementation of equipment that was purchased and

installed and to provide public safety services while the licensees

seek an alternative technology or frequency band.

22. CellularVision USA, Inc. (CellularVision) and Texas Instruments

(TI) oppose the requests. They contend that authorization of the 31 GHz

operations in the dismissed applications is inconsistent with the

decision to designate the 31 GHz for LMDS and that the operations would

interfere with LMDS, result in enforcement problems for LMDS, and

precipitate other applications for similar relief.

III. Description and Estimate of the Number of Small Entities to

Which Rules Will Apply

23. The rule changes adopted in the Third Reconsideration Order

would apply to a specific number of entities that had pending

applications for authorization of 31 GHz services on file that were

dismissed when the Commission adopted the Second Report and Order on

March 11, 1997. We estimate that there are approximately 10 dismissed

applicants with several dismissed applications, based on Commission

records. The dismissed applicants are permitted to refile the dismissed

applications and obtain a license to provide the 31 GHz services

designated in the band before the Commission designated the band for

LMDS. No new applicants may request such 31 GHz authorization. Also, no

new applications may be filed by the dismissed applicants, which may

only refile the dismissed applications.

24. The FRFA found that the rules adopted at that time would apply

to all incumbent 31 GHz licensees providing 31 GHz services under the

previous 31 GHz service rules. The Commission determined the

description and estimate of the number of small entities among the

total number of 31 GHz licensees based on the licensed services and

their qualifications as small entities. Of the total number of 86

licensees, 59 were Local Television Transmission Service (LTTS)

licensees, 8 were private business licensees, and 19 were governmental

entities. To determine which of the licensees qualified as small

entities, the Commission estimated the number of governmental entities

with populations less than 50,000, but was unable to determine which of

LTTS licensees or private business licensees were small. To ensure that

no small interests were overlooked, the Commission assumed that most of

the licensees were small entities and estimated that at least 50 of the

86 licensees to be small entities.

25. Since the revisions adopted in the Third Reconsideration Order

do not apply to incumbent 31 GHz licensees, the estimates of small

entities in the FRFA is not affected and does not need to be adjusted.

The revisions instead apply to the small and specific number of

dismissed applicants that requested 31 GHz licenses and are permitted

to refile for the same services requested in the dismissed

applications. There are a variety of dismissed applicants, including

governmental entities and private businesses. Inasmuch as the total

number of dismissed applicants is very small and only ten are

estimated, the Commission assumed that all of these are small entities

in order to ensure that no small interests are overlooked.

IV. Description of Projected Reporting, Recordkeeping, and Other

Compliance Requirements

26. The dismissed applicants have the option to refile applications

for the same services requested in the dismissed applications within 60

days following the effective date of the Third Reconsideration Order.

Not all of the dismissed applicants may decide to refile their

dismissed applications. The filing fees were refunded to the dismissed

applicants that paid fees. The applicants may only apply for the same

stations and services contained in the dismissed applications, and the

licenses will be secondary to LMDS licenses. All of the dismissed

applications requested service authorizations that are governed by the

established licensing, operating, and technical rules and procedures in

part 101 of the Commission's Rules (47 CFR 101.1 et seq.). Thus, the

data

[[Page 9447]]

required for refiling the dismissed applications were collected on the

dismissed applications and the refiling requirement does not require

new information nor impose any undue burdens on the dismissed 31 GHz

applicants, including small businesses.

V. Steps Taken To Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

27. The rule changes adopted in the Third Reconsideration Order are

in response to petitions for reconsideration filed by entities that,

for purposes of this analysis, we have considered to be small entities.

The changes minimize any significant economic impact on small entities

consistent with our objectives in adopting the rule changes and

consistent with the comments we received.

28. The requests of Sierra, Nevada DOT, and other commenters are

granted to permit the 31 GHz operations requested in the dismissed

applications. Although the Commission determined that terminating

future licensing under the 31 GHz rules is consistent with the public

interest in designating the 31 GHz band for LMDS, the Commission found

that permitting the operations reflected in the dismissed applications

and modified by the Order is an exception based on unique circumstances

that is in the public interest. Nevada DOT demonstrates that dismissal

of the considerable number of applications to implement the Las Vegas

traffic control system would not spare the unnecessary expenses

identified in the Second Report and Order, but rather would prevent the

use of purchased and installed equipment until a replacement technology

is found. To the extent that applicants have already invested in

constructing these systems, the system could be implemented during the

inception of LMDS without substantial additional investment for

retooling or relocation at this time.

29. Although Sierra requests that the Commission reinstate the

dismissed applications, the Commission decided that providing the

dismissed applicants with the opportunity to refile the applications is

a more reasonable approach to licensing the dismissed applications. The

filing fees were returned to the dismissed applicants that paid fees.

The Third Reconsideration Order reaffirmed the dismissal of the pending

applications, but without prejudice to their being refiled within 60

days of the effective date of the Third Reconsideration Order to

provide applicants time to consider whether to refile. Circumstances

have changed since the pending applications were filed and reinstated

applications may not reflect the applicant interests or intentions. The

new licenses will be secondary to LMDS licenses and limited to the

scope of the services authorized, without modification for expansion.

Dismissed applicants that do not wish to operate in this manner have

the option to not reapply.

30. The Commissioners decided to permit the dismissed applicants to

refile the applications for licensed authorization under the

established licensing procedures in part 101, which governed the

dismissed applications. Licenses will be issued for a 10-year period

and may be renewed, which provides Nevada DOT more opportunity to

implement its services than the temporary license it requested. As for

CellularVision's concern that allowing the refiling of the dismissed

applications will encourage the filing of similar applications, only

the applications that were dismissed in the Second Report and Order may

be refiled and they are limited to the same stations and services

contained in the pending applications. The number of applicants are

very few and the scope of their services is already identified in the

dismissed applications, so that uncertainties about the impact of the

refiling opportunity should be reduced.

31. The Commission decided to authorize any licenses based on the

dismissed applications on a secondary basis to LMDS, so that such 31

GHz licensees may not interfere with LMDS and must accept any

interference from LMDS. As noted, the Commission considered the

concerns of CellularVision and TI about potential interference with

LMDS operations. Under a license that is secondary to LMDS licenses,

the licensees are prevented from adversely impacting LMDS and are

required to modify their systems to eliminate interference or seek

alternative access to frequencies. As the Commission concluded, it is

in the public interest to allow these important traffic control

facilities to continue to operate as long as they do not interfere with

future LMDS operations. In addition, the new licensees may provide

service to the full extent permitted under the license, but are not

permitted any expansion or increase in operations, further minimizing

any impact of the new 31 GHz services on LMDS.

32. Thus, the Commission declined to grant Sierra's request to

accord the new licensees the same interference protection against LMDS

that the Commission adopted in the Second Report and Order for non-LTTS

licensees in the outer 150 megahertz segment of the 31 GHz band. That

protection was based on the needs of existing 31 GHz licensees that had

well-established traffic control systems or private business services

that were licensed before LMDS was designated for the band,

circumstances which do not apply here. Moreover, Nevada DOT requests

that the dismissed applications, including the considerable number of

its own and those of the Cities, be subject to secondary status to LMDS

to accommodate LMDS concerns and facilitate the authorization of the

dismissed applications in light of the redesignation of the band for

LMDS. On balance, permitting the licensing of the limited operations

requested in the few dismissed applications on a secondary basis to

LMDS will prevent the undue economic hardships to small entities that

seek to implement the proposed services, while preventing any chilling

effect on the potential development of LMDS in 31 GHz by new LMDS

licensees that are small entities.

VI. Report to Congress

33. The Commission will send a copy of this Supplementary Final

Regulatory Flexibility Analysis, along with the Third Reconsideration

Order, in a report to Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C. 801(a)(1)(A).

A copy of the Third Reconsideration Order and this SFRFA (or summary

thereof) be sent to the Chief Counsel for Advocacy for the Small

Business Administration.

Ordering Clauses

34. Accordingly, it is ordered that the actions of the Commission

herein are taken pursuant to sections 4(i), 257, 303(r), and 309(j) of

the Communications Act of 1934, 47 U.S.C. 154(i), 257, 303(r), 309(j).

35. It is further ordered that the late-filed letters of CommPare,

Inc., CSG Wireless, Inc., State of Nevada Department of Transportation,

Parsons Transportation Group, Inc., and Westec Communications, Inc.,

are accepted.

36. It is further ordered that the Petitions for Reconsideration

filed by the Independent Alliance, LBC Communications, LDH

International, Inc., M3 Illinois Telecommunications Corporation, the

Rural Telecommunications Group, Sierra Communications, Inc., and Webcel

Communications, Inc., are granted to the extent indicated herein and

otherwise are denied.

37. It is further ordered that the Motion for Stay Pending Review

of Petition for Reconsideration filed by LDH International, Inc., is

denied.

[[Page 9448]]

38. It is further ordered that the Commission's Rules are amended

as set forth in the Rule Changes.

39. It is further ordered that the applications that were dismissed

in the Second Report and Order are permitted to be refiled under the

terms and conditions in this Third Reconsideration Order and shall be

filed no later than 60 days following the effective date of this Order.

40. It is further ordered that the provisions of this Order and the

Commission's Rules, as amended in the Rule Changes, shall become

effective 60 days after publication in the Federal Register.

41. It is further ordered that the Director, Office of Public

Affairs, shall send a copy of this Order, including the Supplemental

Final Regulatory Flexibility Analysis, to the Chief Counsel for

Advocacy of the Small Business Administration in accordance with

section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 603(a).

List of Subjects in 47 CFR Part 101

Radio, Reporting and recordkeeping requirements.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Part 101 of Chapter I of Title 47 of the Code of Federal

Regulations is amended as follows:

PART 101--FIXED MICROWAVE SERVICE

1. The authority citation for part 101 continues to read as

follows:

Authority: 47 U.S.C. 154, 303, 309(j), unless otherwise noted.

2. Section 101.57 is amended by revising paragraph (a)(1) to read

as follows:

Sec. 101.57 Modification of station license.

(a)(1)(i) Except as provided in paragraph (a)(1)(ii) of this

section and in Sec. 101.59, no modification of a license issued

pursuant to this part (or the facilities described thereunder) may be

made except upon application to the Commission.

(ii) The provisions of paragraph (a)(1)(i) of this section shall

not apply in the case of:

(A) Licenses authorized for operation in the 31,000-31,300 MHz band

prior to March 11, 1997;

(B) Non-Local Multipoint Distribution Service licenses authorized

for such operation in the band pursuant to applications refiled no

later than April 27, 1998; and

(C) The Local Multipoint Distribution Service as provided in

Sec. 101.61(c)(10).

* * * * *

3. Section 101.103 is amended by adding paragraph (b)(3) as

follows:

Sec. 101. 103 Frequency coordination procedures.

* * * * *

(b) * * *

(3) Non-LMDS operations in the entire 31,000-31,300 MHz band

licensed after March 11, 1997, based on applications refiled no later

than April 27, 1998 are unprotected with respect to each other and

subject to harmful interference from each other.

(i) Such operations and any operations licensed prior to March 11,

1997, in the band are unprotected with respect to each other and

subject to harmful interference from each other.

(ii) Such operations are licensed on a secondary basis to LMDS

operations licensed in the band, may not cause interference to LMDS

operations, and are not protected from interference from LMDS

operations.

(iii) Such operations licensed on a point-to-point basis may not be

extended or otherwise modified through the addition of point-to-point

links. Such operations licensed on a point-to-radius basis may add

additional stations within the licensed area.

* * * * *

4. Section 101.107 is amended by revising footnote 8 in paragraph

(a) to read as follows:

Sec. 101.107 Frequency tolerance.

(a) * * *

\8\ For stations authorized prior to March 11, 1997, and for

non-Local Multipoint Distribution Service stations authorized

pursuant to applications refiled no later than April 27, 1998, the

transmitter frequency tolerance shall not exceed 0.030 percent.

* * * * *

5. Section 101.113 is amended by revising footnote 8 in paragraph

(a) to read as follows:

Sec. 101.113 Transmitter power limitations.

(a) * * *

\8\ For stations authorized prior to March 11, 1997, and for

non-Local Multipoint Distribution Service stations authorized

pursuant to applications refiled no later than April 27, 1998, the

transmitter output power shall not exceed 0.050 watt.

* * * * *

6. Section 101.147 is amended by revising footnote 16 in paragraph

(a) and by revising the introductory text of paragraph (u) to read as

follows:

Sec. 101.147 Frequency assignments

(a) * * *

\16\ As of June 30, 1997, frequencies in these bands are

available for assignment only to LMDS radio stations, except for

non-LMDS radio stations authorized pursuant to applications refiled

no later than April 27, 1998.

* * * * *

(u) 31,000-31,300 MHz. Stations licensed in this band prior to

March 11, 1997, may continue their authorized operations, subject to

license renewal, on the condition that harmful interference will not be

caused to LMDS operations licensed in this band after June 30, 1997.

Non-LMDS stations licensed after March 11, 1997, based on applications

refiled no later than April 27, 1998 are unprotected and subject to

harmful interference from each other and from stations licensed prior

to March 11, 1997, and are licensed on a secondary basis to LMDS. In

the sub-bands 31,000-31,075 MHz and 31,225-31,300 MHz, stations

initially licensed prior to March 11, 1997, except in LTTS, and LMDS

operations authorized after June 30, 1997, are equally protected

against harmful interference from each other in accordance with the

provisions of Sec. 101.103(b). For stations, except in LTTS, permitted

to relocate to these sub-bands, the following paired frequencies are

available: * * *

* * * * *

7. Section 101.803 is amended by revising note 7 of paragraph (a)

and revising note 9 of paragraph (d) to read as follows:

Sec. 101.803 Frequencies.

(a) * * *

\7\ As of June 30, 1997, frequencies in this band only are

available for assignment to LMDS radio stations, except for non-LMDS

radio stations authorized pursuant to applications refiled no later

than April 27, 1998. Stations authorized prior to June 30, 1997, may

continue to operate within the existing terms of the outstanding

licenses, subject to renewal. Non-LMDS stations authorized pursuant

to applications refiled no later than April 27, 1998 shall operate

on an unprotected basis and subject to harmful interference from

similarly licensed stations or stations licensed prior to June 30,

1997, and on a secondary basis to LMDS radio stations.

(d) * * *

* * * * *

\9\ As of June 30, 1997, frequencies in this band only are

available for assignment to LMDS radio stations, except for non-LMDS

stations authorized pursuant to applications refiled no later than

April 27, 1998. Stations authorized prior to June 30, 1997, may

continue to operate within the existing terms of the outstanding

licenses, subject to renewal. Non-LMDS stations authorized pursuant

to applications refiled no later than April 27, 1998 shall operate

on an unprotected basis and subject to harmful interference from

each other or stations licensed prior to June 30, 1997, and on a

secondary basis to LMDS radio stations.

* * * * *

[FR Doc. 98-4750 Filed 2-24-98; 8:45 am]

BILLING CODE 6712-01-P