218-219 MHz Service

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 20, and 95

[FCC 99-239; WT Docket No. 98-169]

218-219 MHz Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document modifies the regulations governing the licensing

of the 218-219 MHz Service to maximize the efficient and effective use

of the 218-219 MHz band. The Commission amends the rules to redesignate

the 218-219 MHz Service from a strictly private radio service to a

service that can be used in common carrier and private operations,

extend the license term to ten years, adopt a ``substantial service''

analysis to replace the three-and five-year construction benchmarks,

and permit partitioning and disaggregation of spectrum. Additionally,

the Commission addresses the constitutional issues raised by Graceba

Total Communications, Inc. that are before the Commission on remand

from the D.C. Circuit Court of Appeals, together with similar issues

raised by other commenters in the proceeding.

DATES: Effective January 3, 2000.

ADDRESSES: Federal Communications Commission, 445 12th Street, S.W.,

Room 4-C207, Washington, D.C. 20554. A copy of any comments on the

information collection contained herein should be submitted to Judy

Boley, Federal Communications Commission, 445 12th Street, S.W., Room

1-C804, Washington, D.C. 20554 or via the Internet to [email protected];

and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street,

N.W., Washington, D.C. 20503 or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Jamison Prime, Shellie Blakeney or

Nick Kolovos of the Policy and Rules Branch, Public Safety and Private

Wireless Division, Wireless Telecommunications Bureau, (202) 418-0680.

For further information concerning the information collection contained

in the Report and Order and Memorandum Opinion and Order, contact Judy

Boley at (202) 418-0215 or via the Internet to [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report

and Order and Memorandum Opinion and Order in WT Docket No. 98-169, FCC

99-239, adopted September 7, 1999, and released September 10, 1999. The

full text of the Report and Order and Memorandum Opinion and Order is

available for inspection and copying during normal business hours in

the FCC Reference Center, 445 12th Street, S.W., Room CY-A257,

Washington, D.C. 20554. The full text of the Report and Order and

Memorandum Opinion and Order may also be purchased from the

Commission's copy contractor, International Transcription Services,

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

3800, facsimile (202) 857-3805. The full text of the Report and Order

and Memorandum Opinion and Order may also be downloaded at: http://

www.fcc.gov/Bureaus/Wireless/Orders/1999/fcc99239.wp.

Alternative formats (computer diskette, large print, audio cassette,

and Braille) are available to persons with disabilities by contacting

Martha Contee at (202) 418-0260, TTY (202) 418-2555, or at

[email protected].

Synopsis of the Report and Order and Memorandum Opinion and Order

The Report and Order gives maximum flexibility to 218-219 MHz

Service providers, letting them choose their regulatory status. Mobile

service providers may elect their regulatory status as either

commercial (under the Commercial Mobile Radio Service [CMRS] rules) or

private (under the Private Mobile Radio Service rules). Fixed service

providers may elect their regulatory status as either common carrier or

private, under the conditions set forth in Title III of the

Communications Act of 1934, as amended. Regardless of regulatory

status, the Report and Order further clarifies that both one-and two-

way communications are permissible, as well as Response Transmitter

Unit-to-Response Transmitter Unit (RTU-to-RTU) communications (in

addition to RTU interconnection with the public switched network or any

CMRS service). License terms are extended to ten years, regardless of

whether the license was obtained by lottery or auction.

Regarding payment options, existing licensees that (a) were current

in installment payments (i.e., less than 90 days delinquent) as of

March 16, 1998, or (b) had properly filed grace period requests under

the former installment payment rules, are eligible for a new payment

structure. These eligible licensees may choose between (a)

reamortization of principal and interest installment payments over the

new ten-year period; (b) amnesty wherein licensees surrender any

licenses they choose to the Commission for subsequent auction and, in

return, have all of the outstanding debt on those licenses forgiven

(together with a refund of any installment payments already made,

either in full or applied toward retained licenses, as applicable); or

(c) prepayment whereupon licensees may retain or return as many

licenses as they desire. Licensees electing the prepayment option,

however, must prepay the outstanding principal of any license they wish

to retain.

The Report and Order also resolves constitutional concerns raised

by Graceba Total Communications, Inc. regarding a bidding preference

for minorities and women that was used in the 1994 auction for what is

now the 218-219 MHz Service. Now, every winning bidder that met the

small business qualifications for that auction receives a 25 percent

bidding credit, in order to achieve parity with the bidding credit

formerly given to minorities and women. Minority-and women-owned

winning bidders are not disadvantaged by this action because all such

bidders also met the small business qualifications.

Regarding service and construction requirements, the three-and

five-year construction benchmarks are replaced by a ``substantial

service'' construction requirement, defined as a ``service that is

sound, favorable, and substantially above a level of mediocre service

which might minimally warrant renewal.'' In addition, the following

``safe harbor'' examples achieve compliance: (a) a demonstration of

coverage to twenty percent of the population or land area of the

licensed service area; (b) a demonstration of specialized or

technologically sophisticated service that does not require a high

level of coverage to be of benefit to customers; or (c) a demonstration

of service to niche markets or a focus on serving populations outside

of areas currently serviced by other licensees. These criteria are to

be demonstrated at the time of license renewal.

License transfer restrictions on lotteried licenses are relaxed,

though they remain subject to case-by-case,

[[Page 59657]]

public interest analysis. Spectrum aggregation restrictions are also

relaxed, so that cross-ownership is allowed of both frequency segment A

(218.0-218.5 MHz) and frequency segment B (218.5-219.0 MHz) in the same

service area. Partitioning and disaggregation are now allowed, and any

partitionee/disaggregatee is authorized to hold its license for the

remainder of the original licensee's term.

The Report and Order revises several technical standards as well,

responsive to changes in the original scope of use contemplated for the

218-219 MHz Service. The duty cycle limitation, of a maximum of five

seconds per hour for each RTU, is eliminated. The 100 milliwatt power

limitation on mobile RTUs is reduced to an average of 4 watts, while

maintaining protection for TV Channel 13 reception. Automatic power

control restrictions are eliminated. The cell transmitter station (CTS)

antenna height/transmitter power ratios are removed, but CTS antennas

may still not be taller than is necessary to assure adequate service.

The 20 watt maximum effective radiated power for transmitters is

retained. Section 95.861(e) of the Commission's Rules continues to

provide the framework for resolving interference complaints, with the

further requirement that licensees produce an interference control plan

that includes, as part of the planning process, an analysis of the

proposed system and the methods used to eliminate co- and adjacent

channel interference, together with updates to reflect changes in

system design or construction.

Finally, the Part 1, Subpart Q standardized auction rules are

incorporated by reference, providing a uniform set of competitive

bidding rules on issues concerning designated entities, application and

payment, competitive bidding design, procedure and timing, and anti-

collusion. Small businesses and very small businesses will receive

bidding credits consistent with the Part 1 rules, but installment

payments will no longer be available as a means of financing winning

bids. Small businesses are defined as having average annual gross

revenues not to exceed $15 million for the preceding three years, and

very small businesses are defined as having average annual gross

revenues not to exceed $3 million for the preceding three years.

The Memorandum Opinion and Order dismisses a Petition for

Reconsideration filed by Interactive America Corporation (IAC). IAC

challenged the Commission's failure, prior to the then-planned auction

of IAC's defaulted licenses, to disclose IAC's pending appeal (Auction

No. 13), but that argument is moot because the Commission subsequently

postponed Auction No. 13, and the D.C. Circuit denied IAC's petition

for review. IAC also argued that any 218-219 MHz Service auction should

be delayed until final rules are adopted. However, this Report and

Order adopts such rules, rendering that argument moot as well.

Regulatory Flexibility Act Final Analysis

As required by the Regulatory Flexibility Act (RFA),\1\ an Initial

Regulatory Flexibility Analysis (IRFA) was incorporated in the

Amendment of Part 95 of the Commission's Rules to Provide Regulatory

Flexibility in the 218-219 MHz Service and Amendment of Part 95 of the

Commission's Rules to Allow Interactive Video and Data Service

Licensees to Provide Mobile Services, Order, Memorandum Opinion and

Order, and Notice of Proposed Rulemaking.\2\ The Commission sought

written public comment on the proposals in the 218-219 MHz Flex NPRM,

including comment on the IRFA. This present Final Regulatory

Flexibility Analysis (FRFA) conforms to the RFA.\3\

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\1\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et. seq., has

been amended by the Contract With America Advancement Act of 1996,

Public Law Number 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of

the CWAAA is the Small Business Regulatory Enforcement Fairness Act

of 1996 (SBREFA).

\2\ Amendment of Part 95 of the Commission's Rules to Provide

Regulatory Flexibility in the 218-219 MHz Service and Amendment of

Part 95 of the Commission's Rules to Allow Interactive Video and

Data Service Licensees to Provide Mobile Services (proceeding

terminated), Order, Memorandum Opinion and Order, and Notice of

Proposed Rulemaking, 63 FR 52215 (Sept. 30, 1998), 13 FCC Rcd 19064,

19101 (1998) (218-219 MHz Flex NPRM).

\3\ See 5 U.S.C. 604.

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I. Need for, and Objectives of, the Report and Order

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, we continue our 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 rules adopted in

this Report and Order 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).\4\

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\4\ 47 U.S.C. 257, 309(j).

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II. Summary of Significant Issues Raised by Public Comments in

Response to the Initial Regulatory Flexibility Analysis

No petitions were filed in direct response to the IRFA. In general,

commenters and reply commenters supported our proposals to provide

additional flexibility in the 218-219 MHz Service. Moreover, many of

the commenters and reply commenters were existing 218-219 MHz Service

licensees many of whom, as discussed infra, qualify as small

businesses. These commenters overwhelmingly supported proposals that

would permit (1) acquisitions by partitioning or disaggregation; (2)

218-219 MHz Service licensees and applicants to choose regulatory

status; and (3) non-defaulting 218-219 MHz Service licensees currently

participating in the installment payment plan to elect one of three

restructuring plans concerning their outstanding payments, despite the

increased reporting requirements that these proposals may entail.

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

Which the Rules Apply

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.\5\ 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

[[Page 59658]]

established by the SBA.\6\ A small organization is generally ``any not-

for-profit enterprise which is independently owned and operated and is

not dominant in its field.'' \7\ Below, we further describe and

estimate the number of small entity licensees and regulatees that may

be affected by the proposed rules, if adopted.

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\5\ U.S.C. 601(3) (incorporating by reference the definition of

``small business concern'' in 15 U.S.C. 632). Pursuant to 5 U.S.C.

601(3), the statutory definition of a small business applies

``unless an agency after consultation with the Office of Advocacy of

the Small Business Administration and after opportunity for public

comment, establishes one or more definitions of such term which are

appropriate to the activities of the agency and publishes such

definition(s) in the Federal Register.''

\6\ Small Business Act, 15 U.S.C. 632 (1996).

\7\ 5 U.S.C. 601(4).

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The rules adopted in this Report and Order 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.

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.\8\

In the Competitive Bidding Tenth Report and Order, we 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.\9\ On January 6, 1998, the SBA approved of the small

business size standards established in the Competitive Bidding Tenth

Report and Order.\10\

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\8\ 13 CFR 121.201, SIC Code 4841.

\9\ Implementation of Section 309(j) of the Communications Act,

Competitive Bidding, PP Docket No. 93-253, Tenth Report and Order,

61 FR 60198 (Nov. 27, 1996), 11 FCC Rcd 19974, 19981-85 (1996)

(Competitive Bidding Tenth Report and Order), recon. pending.

\10\ See Letter to Daniel B. Phythyon, Chief, WTB, from Aida

Alverez, Administrator, SBA, Dated Jan. 6, 1998.

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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.\11\ There are 1,463

companies in the 1992 Census Bureau report which are categorized as

small businesses providing cable and pay TV services.\12\ We know that

many of these businesses are cable and television service businesses,

rather than businesses operating in the 218-219 MHz band. We also know

that, to date, we have 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.

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\11\ U.S. Small Business Administration 1992 Economic Census

Industry and Enterprise Report, Table 2D, SIC Code 4841 (Bureau of

the Census data adapted by the Office of Advocacy of the U.S. Small

Business Administration).

\12\ The Census table divides those companies by the amount of

annual receipts. There is a dividing point at companies with annual

receipts of $10 million. The next increment is annual receipts of

$17 million, a category that greatly exceeds the SBA definition of

small businesses that provide subscription television services.

However, there are 17 firms in this category, with revenues between

$10-$17 million. Approximately 1,480 SIC Code 4841 category firms

have annual gross receipts of $15 million or less. Only a small

fraction of those 1,480 firms provide IVDS.

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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.\13\ 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.\14\

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\13\ 13 CFR 121.201, SIC Code 4822.

\14\ 1992 Economic Census Industry and Enterprise Receipts Size

Report, U.S. Bureau of the Census, U.S. Department of Commerce,

Table 2D, SIC Code 4822 (industry data prepared by the Census Bureau

under contract to the U.S. SBA Office of Advocacy).

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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, we 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.\15\ We cannot estimate, however, the number of

licenses that will be won by entities qualifying as small or very small

businesses under our 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,

we assume for purposes of this FRFA that in future auctions, all of the

licenses may be awarded to small businesses, which would be affected by

the rule changes we propose.

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\15\ Implementation of Section 309(j) of the Communications Act,

Competitive Bidding, PP Docket No. 93-253, Fourth Report and Order,

59 FR 24947 (May 13, 1994), 9 FCC Rcd 2330, 2336 (1994).

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IV. Description of Projected Reporting, Recordkeeping and Other

Compliance Requirements

The final rules adopted in this Report and Order alter the

reporting and recordkeeping requirements for a number of small business

entities. Specifically, (1) 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; (2) 218-219 MHz Service licensees will not be required to

file construction reports at specified intervals after initial

licensure, but will be obligated to demonstrate that they are providing

``substantial service'' as a condition for renewal of their license;

and (3) acquisitions by partitioning or disaggregation will be treated

as assignments of a license and parties will be required to comply with

the 218-219 MHz Service licensing requirements. In addition small

business may make elections under the final rules that will alter their

reporting and recordkeeping requirements. Specifically, (1) 218-219 MHz

Service licensees and applicants may choose to elect regulatory status

(common carrier, private, commercial mobile radio service, private

mobile radio service) and file appropriate documentation coincident

with the regulatory status elected; (2) non-defaulting 218-219 MHz

Service licensees currently participating in the installment payment

plan may elect one of three restructuring plans concerning their

outstanding payments; and (3) 218-219 MHz Service licensees electing to

continue making installment payments may be required to execute loan

documents as a condition of the

[[Page 59659]]

reamortization of its installment payment plan under the revised ten-

year term.

V. Steps Taken To Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

In response to general comments filed in this proceeding we have

adopted final rules designed to maximize opportunities for

participation by, and growth of, small businesses in providing wireless

services. Specifically, we expect that the extension of license terms

from five to ten years and allowing partitioning and disaggregation of

licenses, will specifically assist small businesses. We adopted a plan

that provided for a reamortization of installment payment debt in

conjunction with the extension of license term that differed from our

original proposal in specific response to concerns raised in comments

and reply comments. Commenters noted that our original proposal would

have required licensees to pay two years worth of principal payments,

as well as the accrued interest, in a lump sum, within ninety days of

the Report and Order to retain their licenses, and claimed that such a

plan would not allow licensees in particular, small businesses

sufficient time to make new capital arrangements. Commenters proposed a

variety of means of providing relief beyond that which we proposed in

the 218-219 MHz Flex NPRM. We note that some of these proposals such as

a ten-year payout schedule that would be entirely interest-free \16\

may have resulted in greater relief than that provided by the

reamortization procedures adopted in the Report and Order.

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\16\ See CRSPI Reply Comments at 2.

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We also believe that our 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. We considered proposals by small business interests

to eliminate (instead of liberalize) technical restrictions for the

service,\17\ but concluded that limited technical restrictions are

still necessary in order to protect other licensees offering services

(such as TV Channel 13 broadcasting) operating in or in close proximity

of the 218-219 MHz band. We further believe that by retroactively

applying a bidding credit for small businesses to the IVDS auction and

by adopting our general auction rules that provide for small business

bidding credits, we will maximize opportunities for participation by,

and growth of, small businesses in the 218-219 MHz Service. For these

reasons, we did not consider any significant alternatives to our

proposals to minimize significant economic impact on small entities,

nor were any significant alternatives of this nature proposed by

commenters and reply commenters.

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\17\ See, e.g., Petty Comments at 1.

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Report to Congress

The Commission will send a copy of the Report and Order, including

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

Business Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C.

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

Report and Order, including FRFA, to the Chief Counsel for Advocacy of

the Small Business Administration. A copy of the Report and Order and

FRFA (or summaries thereof) will also be published in the Federal

Register. See 5 U.S.C. 604(b).

List of Subjects in 47 CFR Parts 1, 20 and 95

Communications equipment, Radio, Reporting and recordkeeping

requirements.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

For the reasons discussed in the preamble, the Federal

Communications Commission amends 47 CFR parts 1, 20 and 95 as follows:

PART 1--PRACTICE AND PROCEDURE

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

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

155, 225, and 303(r).

2. Section 1.2105 is amended by revising paragraph (a)(2)(xi) is to

read as follows:

Sec. 1.2105 Bidding application and certification procedures;

prohibition of collusion.

(a) * * *

(2) * * *

(xi) For C block and 218-219 MHz Service applicants, an attached

statement made under penalty of perjury indicating whether or not the

applicant has ever been in default on any Commission licenses or has

ever been delinquent on any non-tax debt owed to any Federal agency.

* * * * *

PART 20--COMMERCIAL MOBILE RADIO SERVICES

3. The authority citation for Part 20 continues read as follows:

Authority: 47 U.S.C. 154, 160, 251-254, 303, and 332 unless

otherwise noted.

4. Section 20.9 is amended by redesignating paragraph (a)(13) as

(a)(14), redesignating paragraph (a)(12) as (a)(13) and by 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

5. The authority citation for Part 95 continues to read as follows:

Authority: Secs. 4, 303, 48 Stat. 1066, 1082, as amended; 47

U.S.C. 154, 303.

6. Section 95.1 is amended be 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.

Subpart F Heading--[Revised]

7. The heading for subpart F is revised to read, ``218-219 MHz

Service.''

8. Section 95.801 is revised to read as follows:

Sec. 95.801 Scope.

This subpart sets out the regulations governing the licensing and

operation of a 218-219 MHz system. This subpart supplements Part 1,

Subpart F of this chapter, which establishes the requirements and

conditions under which commercial and private radio stations may be

licensed and used in the Wireless Telecommunications Services. The

provisions of this subpart contain additional pertinent information for

current and prospective licensees specific to the services governed by

this part 95.

9. Sections 95.803 (a) and (b) and the section heading are revised

to read as follows:

[[Page 59660]]

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.

* * * * *

10. Section 95.805 is 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.

11. Section 95.807 is 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 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.

(4) Pre-existing licenses. Licenses issued before [effective date

of rules] are authorized to provide services on a private basis.

Licensees may modify this initial status pursuant to paragraph (a)(3)

of this section.

(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.

12. Section 95.811 is amended by revise paragraphs (b), (c), and

(d) to read as follows:

Sec. 95.811 License requirements.

* * * * *

(b) A CTS must be individually licensed to the 218-219 MHz Service

licensee for the service area in which the CTS is located in accordance

with part 1, subpart F of this chapter if it:

(1) Is in the vicinity of certain receiving locations (see

Sec. 1.924 of this chapter);

(2) May have significant environmental effect (see part 1, subpart

I of this chapter);

(3) Is part of an antenna structure that requires notification to

the Federal Aviation Administration (see part 17, subpart B of this

chapter); or

(4) Has an antenna the tip of which exceeds:

(i) 6.1 meters (20 feet) above ground level; or

(ii) 6.1 meters (20 feet) above the top of an existing man-made

structure (other than an antenna structure) on which it is mounted.

(c) All CTSs not meeting the licensing criteria under paragraph (b)

of this section are authorized under the 218-219 MHz Service system

license.

(d) 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.

13. Section 95.812 is 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.

14. Section 95.813 is amended by removing paragraph (c) and by

revising paragraph (b) to read as follows:

Sec. 95.813 License 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 of this part 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.

15. Section 95.815 is amended by revising paragraphs (a) and (b) 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 analyzing the co- and adjacent channel interference

potential of the proposed system, identifying methods being used to

minimize this interference, and showing how the proposed system will

meet the service requirements set forth in Sec. 95.831 of this part.

This plan must be updated to reflect changes to the 218-219 MHz Service

system design or construction.

(b) In addition to the requirements of part 1, subpart F of this

chapter, each request by a 218-219 MHz Service system licensee to add,

delete, or modify technical information of an individually licensed CTS

(see Sec. 95.811(b) of this part) must include a description of the

system after the proposed addition, deletion, or modifications,

including the population in the service area, the number of component

CTSs, and an explanation of how the system will satisfy the service

requirements specified in Sec. 95.831 of this part.

* * * * *

16. Section 95.816 is revised 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 procedures. The

procedures set forth in part 1, Subpart Q of this chapter will apply

unless otherwise provided in this part.

(b) Installment payments. Eligible Licensees that elect resumption

pursuant to Amendment of part 95 of the Commission's Rules to Provide

Regulatory Flexibility in the 218-219 MHz Service, Report and Order and

Memorandum Opinion and Order, FCC 99-239 (released September 10, 1999)

may continue to participate in the installment payment program.

Eligible Licensees are those that were current in installment payments

(i.e. less than ninety days delinquent) as of March 16, 1998, or those

that had properly filed grace period requests under the former

installment payment rules. All unpaid interest from grant date through

election date will be capitalized into the principal as of Election Day

creating a new principal amount. Installment payments must be made on a

quarterly basis. Installment payments will be calculated based on new

principal

[[Page 59661]]

amount as of Election Day and will fully amortize over the remaining

term of the license. The interest rate will equal the rate for five-

year U.S. Treasury obligations at the time of licensing.

(c) Eligibility for small business provisions.

(1) A small business is an entity that, together with its

affiliates and controlling interests, has average gross revenues not to

exceed $15 million for the preceding three years.

(2) A very small business is an entity that, together with its

affiliates and controlling interests, has average gross revenues not to

exceed $3 million for the preceding three years.

(3) For purposes of determining whether an entity meets either of

the definitions set forth in paragraph (b)(1) or (b)(2) of this

section, the gross revenues of the entity, its affiliates, and

controlling interests shall be considered on a cumulative basis and

aggregated.

(4) Where an applicant (or licensee) cannot identify controlling

interests under the standards set forth in this section, the gross

revenues of all interest holders in the applicant, and their

affiliates, will be attributable.

(5) A consortium of small businesses (or a consortium of very small

businesses) is a conglomerate organization formed as a joint venture

between or among mutually independent business firms, each of which

individually satisfies the definition in paragraph (b)(1) of this

section (or each of which individually satisfies the definition in

paragraph (b)(2) of this section). Where an applicant or licensee is a

consortium of small businesses (or very small businesses), the gross

revenues of each small business (or very small business) shall not be

aggregated.

(d) Controlling interest.

(1) For purposes of this section, controlling interests includes

individuals or entities with de jure and de facto control of the

applicant. De jure control is greater than 50 percent of the voting

stock of a corporation, or in the case of a partnership, the general

partner. De facto control is determined on a case-by-case basis. An

entity must disclose its equity interest and demonstrate at least the

following indicia of control to establish that it retains de facto

control of the applicant:

(i) The entity constitutes or appoints more than 50 percent of the

board of directors or management committee;

(ii) The entity has authority to appoint, promote, demote, and fire

senior executives that control the day-to-day activities of the

licensee; and

(iii) the entity plays an integral role in management decisions.

(2) Calculation of certain interests.

(i) Ownership interests shall be calculated on a fully diluted

basis; all agreements such as warrants, stock options and convertible

debentures will generally be treated as if the rights thereunder

already have been fully exercised.

(ii) Partnership and other ownership interests and any stock

interest equity, or outstanding stock, or outstanding voting stock

shall be attributed as specified below.

(iii) Stock interests held in trust shall be attributed to any

person who holds or shares the power to vote such stock, to any person

who has the sole power to sell such stock, and, to any person who has

the right to revoke the trust at will or to replace the trustee at

will. If the trustee has a familial, personal, or extra-trust business

relationship to the grantor or the beneficiary, the grantor or

beneficiary, as appropriate, will be attributed with the stock

interests held in trust.

(iv) Non-voting stock shall be attributed as an interest in the

issuing entity.

(v) Limited partnership interests shall be attributed to limited

partners and shall be calculated according to both the percentage of

equity paid in and the percentage of distribution of profits and

losses.

(vi) Officers and directors of an entity shall be considered to

have an attributable interest in the entity. The officers and directors

of an entity that controls a licensee or applicant shall be considered

to have an attributable interest in the licensee or applicant.

(vii) Ownership interests that are held indirectly by any party

through one or more intervening corporations will be determined by

successive multiplication of the ownership percentages for each link in

the vertical ownership chain and application of the relevant

attribution benchmark to the resulting product, except that if the

ownership percentage for an interest in any link in the chain exceeds

50 percent or represents actual control, it shall be treated as if it

were a 100 percent interest.

(viii) Any person who manages the operations of an applicant or

licensee pursuant to a management agreement shall be considered to have

an attributable interest in such applicant or licensee if such person,

or its affiliate pursuant to Sec. 1.2110(b)(4) of this chapter, has

authority to make decisions or otherwise engage in practices or

activities that determine, or significantly influence:

(A) The nature or types of services offered by such an applicant or

licensee;

(B) The terms upon which such services are offered; or

(C) The prices charged for such services.

(ix) Any licensee or its affiliate who enters into a joint

marketing arrangement with an applicant or licensee, or its affiliate,

shall be considered to have an attributable interest, if such applicant

or licensee, or its affiliate, has authority to make decisions or

otherwise engage in practices or activities that determine, or

significantly influence:

(A) The nature or types of services offered by such an applicant or

licensee;

(B) The terms upon which such services are offered; or

(C) The prices charged for such services.

(e) Bidding credits. A winning bidder that qualifies as a small

business or a consortium of small businesses as defined in this

subsection may use the bidding credit specified in

Sec. 1.2110(e)(2)(ii) of this chapter. A winning bidder that qualifies

as a very small business or a consortium of very small businesses as

defined in this subsection may use the bidding credit specified in

accordance to Sec. 1.2110(e)(2)(i) of this chapter.

(f) Winning bidders in Auction No. 1, which took place on July 28-

29, 1994, that, at the time of that auction, met the qualifications

under the Commission's rules then in effect, for small business status

will receive a twenty-five percent bidding credit pursuant to Amendment

of Part 95 of the Commission's Rules to Provide Regulatory Flexibility

in the 218-219 MHz Service, Report and Order and Memorandum Opinion and

Order, FCC 99-239 (released September 10, 1999).

17. Section 95.819 is 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 47 CFR

1.2111.

(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

in accordance with the provisions and procedures set forth in

Sec. 1.948 of this chapter.

(c) If the transfer, assignment, sale, or gift of a license is

approved, the new

[[Page 59662]]

licensee is held to the construction requirements set forth in

Sec. 95.833 of this part.

18. Section 95.823 is 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 (i.e. Economic

Areas) is utilized 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

1983 North American Datum (NAD83). 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 (partitionor or disaggregator) that

elected to pay for its license through an installment payment plan

partitions its license or disaggregates spectrum to another party

(partitionee or disaggregatee) 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 principal balance

owed by the partitionor or disaggregator shall be apportioned according

to Sec. 1.2111(e)(3) of this chapter. The partitionor or disaggregator

is responsible for accrued and unpaid interest through and including

the consummation date.

(ii) The partitionee or disaggregatee shall, as a condition of the

approval of the partial assignment application, pay its entire pro rata

amount of the outstanding principal balance on or before the

consummation date. 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, if

applicable, shall receive loan documents evidencing the partitioning

and disaggregation. 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 may be required, as a condition to approval of the

partial assignment application, to execute loan documents agreeing to

pay its pro rata portion of the outstanding principal balance due, 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.

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.

(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 of this part for their respective

partitioned areas. If either licensee failed to meet its requirement in

Sec. 95.833 of this part, 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 requirement in

Sec. 95.833 of this part for the entire market. If the partitionor

fails to meet the requirement in Sec. 95.833 of this part, 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 of this

part 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 requirement in Sec. 95.833 of this part 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 non-performing 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

appropriate construction benchmarks set forth in Sec. 95.833 of this

part.

19. Section 95.831 is 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 license must demonstrate

that it provides substantial service within the service area.

Substantial service is defined as a service that is sound, favorable,

and substantially above a level of service which might minimally

warrant renewal.

20. Section 95.833 is revised to read as follows:

Sec. 95.833 Construction requirements.

(a) Each 218-219 MHz Service licensee must make a showing of

[[Page 59663]]

``substantial service'' within ten years of the license grant. A

``substantial service'' assessment will be made at renewal pursuant to

the provisions and procedures contained in Sec. 1.949 of this chapter.

(b) Each 218-219 MHz Service licensee must file a report to be

submitted to inform the Commission of the service status of its system.

The report must be labeled as an exhibit to the renewal application. At

minimum, the report must include:

(1) A description of its current service in terms of geographic

coverage and population served;

(2) An explanation of its record of expansion, including a

timetable of new construction to meet changes in demand for service;

(3) A description of its investments in its 218-219 MHz Service

systems;

(4) A list, including addresses, of all component CTSs constructed;

and

(5) Copies of all FCC orders finding the licensee to have violated

the Communications Act or any FCC rule or policy; and a list of any

pending proceedings that relate to any matter described in this

paragraph.

(c) Failure to demonstrate that substantial service is being

provided in the service area will result in forfeiture of the 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 pursuant to Sec. 95.813 of this part.

21. Section 95.853 is revised to read as follows:

Sec. 95.853 Frequency segments.

There are two frequency segments available for assignment to the

218-219 MHz Service in each service area. Frequency segment A is

218.000-218.500 MHz. Frequency segment B is 218.501-219.000 MHz.

22. Section 95.855 is revised to read as follows:

Sec. 95.855 Transmitter effective radiated power limitation.

The effective radiated power (ERP) of each CTS and RTU shall be

limited to the minimum necessary for successful communications. No CTS

or fixed RTU may transmit with an ERP exceeding 20 watts. No mobile RTU

may transmit with an ERP exceeding 4 watts.

23. Section 95.859 is amended by revising paragraph (a) and by

removing and reserving paragraph (b) to read as follows:

Sec. 95.859 Antennas.

(a) The overall height from ground to topmost tip of the CTS

antenna shall not exceed the height necessary to assure adequate

service. Certain CTS antennas must be individually licensed to the 218-

219 MHz System licensee (see Sec. 95.811(b) of this part) and the

antenna structures of which they are a part must be registered with the

Commission (see part 17 of this chapter).

24. Section 95.861 is revised to read as follows:

Sec. 95.861 Interference.

(a) When a 218-219 MHz Service system suffers harmful interference

within its service area or causes harmful interference to another 218-

219 MHz Service system, the licensees of both systems must cooperate

and resolve the problem by mutually satisfactory arrangements. If the

licensees are unable to do so, the Commission may impose restrictions

including, but not limited to, specifying the transmitter power,

antenna height or area, duty cycle, or hours of operation for the

stations concerned.

(b) The use of any frequency segment (or portion thereof) at a

given geographical location may be denied when, in the judgment of the

Commission, its use in that location is not in the public interest; the

use of a frequency segment (or portion thereof) specified for the 218-

219 MHz Service system may be restricted as to specified geographical

areas, maximum power, or other operating conditions.

(c) A 218-219 MHz Service licensee must provide a copy of the plan

required by Sec. 95.815(b) of this part to every TV Channel 13 station

whose Grade B predicted contour overlaps the licensed service area for

the 218-219 MHz Service system. The 218-219 MHz Service licensee must

send the plan to the TV Channel 13 licensee(s) within 10 days from the

date the 218-219 MHz Service licensee submits the plan to the

Commission, and the 218-219 MHz Service licensee must send updates to

this plan to the TV Channel 13 licensee(s) within 10 days from the date

that such updates are filed with the Commission pursuant to

Sec. 95.815(b) of this part.

(d) Each 218-219 MHz Service system licensee must provide upon

request, and install free of charge, an interference reduction device

to any household within a TV Channel 13 station Grade B predicted

contour that experiences interference due to a component CTS or RTU.

(e) Each 218-219 MHz Service system licensee must investigate and

eliminate harmful interference to television broadcasting and

reception, from its component CTSs and RTSs, within 30 days of the time

it is notified in writing, by either an affected television station, an

affected viewer, or the Commission, of an interference complaint.

Should the licensee fail to eliminate the interference within the 30-

day period, the CTS(s) or RTU(s) causing the problem(s) must

discontinue operation.

(f) The boundary of the 218-219 MHz Service system, as defined in

its authorization, is the limit of interference protection for that

218-219 MHz Service system.

Sec. 95.863 [Removed]

25. Section 95.863 is removed.

[FR Doc. 99-27874 Filed 11-2-99; 8:45 am]

BILLING CODE 6712-01-P