Establishing Rules and Policies for Local Multipoint Distribution Service and Fixed Satellite Services

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 21

[CC Docket No 92-297, FCC 96-311]

Establishing Rules and Policies for Local Multipoint Distribution

Service and Fixed Satellite Services

AGENCY: Federal Communications Commission.

ACTION: Fourth Notice of Proposed Rulemaking.

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SUMMARY: In this Fourth Notice of Proposed Rulemaking (FNPRM), the

Commission proposes to designate, on a primary protected basis, the

31.0-31.3 GHz (31 GHz) band to LMDS for both hub-to-subscriber and

subscriber-to-hub transmissions. In addition, the Commission seeks

comment on eligibility of LECs and cable operators to obtain LMDS

licenses in the geographic areas they serve. These actions are taken to

provide maximum flexibility to a full range of LMDS service providers,

and to provide consumers with more choices in service providers, new

services, and innovative technologies.

DATES: Comments must be submitted on or before August 12, 1996, and

reply comments must be submitted on or before August 22, 1996.

ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Regarding 31 GHz frequency band

issues: Bob James, Private Wireless Division, Wireless

Telecommunications Bureau, (202) 418-0680; regarding eligibility

issues: Walter Strack, Wireless Telecommunications Bureau, (202) 418-

0600.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Fourth Notice of Proposed Rulemaking in CC Docket 92-297, adopted July

19, 1996, and released July 22, 1996. The complete text of the Fourth

Notice of Proposed Rulemaking 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 Services,

at (202) 857-3800, 1919 M Street, N.W., Room 246, Washington, D.C.

20554.

SYNOPSIS OF FOURTH NOTICE OF PROPOSED RULEMAKING

f Proposed Rulemaking 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 Services,

at (202) 857-3800, 1919 M Street, N.W., Room 246, Washington, D.C.

20554.

SYNOPSIS OF FOURTH NOTICE OF PROPOSED RULEMAKING

1. In the first Notice of Proposed Rulemaking (NPRM), 58 FR 6400

(January 28, 1993), the Commission considered three petitions for

rulemaking proposing a redesignation of the 28 GHz band. That band

currently is designated for fixed point-to-point and fixed satellite

service use. It found that redesignation of the point-to-point use of

the band to point-to-multipoint use could stimulate greater use of a

band that largely has lain fallow. However, the Commission asked for

comment from satellite entities regarding the effect of redesignation

on any proposed fixed satellite use of the band. Non-geostationary

orbit (NGSO) and Geostationary orbit (GSO) FSS systems were proposed.

In addition, entities planning mobile satellite services requested

spectrum for their uplink feeder links.

2. In the Third Notice of Proposed Rulemaking (Third NPRM), 60 FR

43740 (August 23, 1995), the Commission proposed a band segmentation

plan that it tentatively concluded would permit both LMDS and Fixed

Satellite Service (FSS) systems to operate in the 28 GHz frequency

band. It also proposed to accommodate feeder links for certain Mobile

Satellite Service (MSS) systems in this band. The Report and Order

which is issued in combination with the instant FNPRM makes a final

decision on segmentation of the 28 GHz band among fixed satellite,

mobile satellite uplinks, and LMDS. That decision will be published in

this publication in due course.

3. The FNRPM requests comment on two matters

accommodate feeder links for certain Mobile

Satellite Service (MSS) systems in this band. The Report and Order

which is issued in combination with the instant FNPRM makes a final

decision on segmentation of the 28 GHz band among fixed satellite,

mobile satellite uplinks, and LMDS. That decision will be published in

this publication in due course.

3. The FNRPM requests comment on two matters. First, it proposes to

designate, on a primary protected basis, the 31.0-31.3 GHz (31 GHz)

band to LMDS for both hub-to-subscriber and subscriber-to-hub

transmissions. This action stems from efforts to accommodate a variety

of LMDS system designs, services and transmission media in the adjacent

28 GHz band, and is being taken on the Commission's own motion. This

proposed designation of spectrum for LMDS would provide consumers

access to more choices in service providers, new services, and

innovative technologies, while accommodating those LMDS system designs

requiring a wide separation between the transmit and receive

frequencies when operated in a two-way mode.

4. In order to ensure that there is adequate two-way interactive

capacity for the various proposed LMDS systems, the Commission

recognizes the need to designate additional spectrum for LMDS. The

Commission observed that there is significant consumer demand for

alternate providers of local exchange services, internet access, LANs

and video teleconferencing, and that the LMDS proponents note that this

demand can be more immediately satisfied, in an economically and

technically efficient manner, by LMDS than by many of the alternate

transmission media, thus making these services more accessible rapidly

to a wider segment of the population. Accordingly, the Commission

believes that the proposed designation of 300 MHz of spectrum would

ensure consumers access to new and competitive services and

technologies

re immediately satisfied, in an economically and

technically efficient manner, by LMDS than by many of the alternate

transmission media, thus making these services more accessible rapidly

to a wider segment of the population. Accordingly, the Commission

believes that the proposed designation of 300 MHz of spectrum would

ensure consumers access to new and competitive services and

technologies. Further, through written ex parte comments, several LMDS

proponents highlighted some technical difficulties with using the 31

GHz band, e.g., need for two antennas to deliver the desired service,

effects on performance level, and increased system costs. The

Commission requests that parties address its proposal to make the LMDS

service a primary protected use in the 31.0-31.3 GHz band, the

technical issues LMDS operators might encounter in using this band, and

possible measures that may be used in overcoming such technical issues.

The Commission also requests comment on how to assign this additional

spectrum to LMDS entities. Should it be treated as a separate block and

assigned independently of other LMDS spectrum? Or should it be combined

with spectrum assigned in the associated Report and Order for LMDS

operations and assigned as a single block? The Commission proposes to

assign the 31 GHz spectrum and the 1000 MHz designated in the attached

Report and Order as a single block.

5. An additional issue concerns existing licensees operating in the

31 GHz band, some of which are engaged in traffic signal

communications, i.e., traffic light monitoring and control. Such

existing usage appears to be relatively light and geographically

concentrated. Overlaying LMDS operations in those areas where there are

such uses raises the potential for interference problems which could

degrade the utility of such systems and perhaps adversely affect LMDS

operations

ome of which are engaged in traffic signal

communications, i.e., traffic light monitoring and control. Such

existing usage appears to be relatively light and geographically

concentrated. Overlaying LMDS operations in those areas where there are

such uses raises the potential for interference problems which could

degrade the utility of such systems and perhaps adversely affect LMDS

operations. However, the Commission's current rules explicitly provide

that authorized operations at 31 GHz are not afforded any rights or

obligations with respect to interference with other licensed

operations. Thus, any operations that an entity believes are critical

in nature and should otherwise warrant interference protection should

be operated in a frequency band where such necessary protection is

provided for in our rules. One band where these types of operations are

permitted is the 23 GHz band. However, because systems in the 23 GHz

band receive interference protection, new systems are subject to the

prior coordination requirements of Section 101.103(d). The Commission

asks for comment on what effect these

requirements will have on 31 GHz systems moving to the 23 GHz band. In

addition, the Commission notes that mobile operations are permitted in

the 31 GHz band but are not permitted in the 23 GHz band. There appear

to be no existing mobile operations in the 31 GHz band; nevertheless,

the Commission asks for comment on what effect, if any, this will have

in moving current fixed operations to the 23 GHz band. Given that

incumbents are only authorized to operate on a non-interference basis,

should they be entitled to any recovery for reasonable relocation

costs? If so, should any of the 28 GHz band applicants be required to

contribute to the recovery of such reasonable costs?

6. The Commission's proposal to make LMDS a protected service in

this band presupposes that incumbent licensees continue to operate on a

unprotected basis, in this instance, ``secondary'' to LMDS

ce basis,

should they be entitled to any recovery for reasonable relocation

costs? If so, should any of the 28 GHz band applicants be required to

contribute to the recovery of such reasonable costs?

6. The Commission's proposal to make LMDS a protected service in

this band presupposes that incumbent licensees continue to operate on a

unprotected basis, in this instance, ``secondary'' to LMDS. In the

event one of the unprotected operations interferes with, or receives

interference from, an LMDS system, the unprotected licensees must take

steps to remedy the problem, or accept the resulting interference if it

is operating the affected receiver or transmitter. Although the

incumbent licensees have assumed all the risks of receiving

interference, given the nature of some of these operations, the

Commission seeks comment on whether there are any methods by which

incumbent 31 GHz operations could be accommodated without delaying,

causing interference to, or limiting the usefulness of LMDS services in

this band. In light of the proposed ``secondary'' nature of the non-

LMDS fixed services in this band, the Commission also seeks comment on

whether it should accept any new applications, modifications, or

renewal applications in the 31 GHz band.

7. Consistent with its intent to allow the rapid deployment of

LMDS, the Commission encourages cooperation among the LMDS providers

and existing licensees in exploring any methods which would allow the

services to coexist, but that would not impose any economic or

technical burdens on the LMDS providers

d accept any new applications, modifications, or

renewal applications in the 31 GHz band.

7. Consistent with its intent to allow the rapid deployment of

LMDS, the Commission encourages cooperation among the LMDS providers

and existing licensees in exploring any methods which would allow the

services to coexist, but that would not impose any economic or

technical burdens on the LMDS providers. For example, would the LMDS

licensees have sufficient capacity to accommodate the existing

licensees as customers of their services? Or are there existing

mechanisms that will permit all of these services to share the entire

band without imposing any economic burdens on LMDS? Or are there other

options the Commission should consider? In commenting on this request,

the Commission asks that any recommendation advocating sharing include

the supporting technical analysis.

8. Second, the FNPRM seeks comment on eligibility of LECs and cable

operators to obtain LMDS licenses in the geographic areas they serve.

Throughout this proceeding commenters have had opportunities to address

whether open eligibility for LMDS licenses would be likely to impede or

hasten competition. The current record of this proceeding, however, was

developed prior to enactment of the Telecommunications Act of 1996

(1996 Act). One of the key objectives of the 1996 Act is to expedite

the introduction of competition to incumbent LECs and cable companies.

In carrying out this statutory mandate, the Commission considers it

important to obtain specific comment on how our policies towards LMDS

eligibility would best promote the competitive objectives of the 1996

Act.

9. The proposed rules contemplate only a single LMDS licensee in

each service area. Accordingly, in the same market, there will be no

competition among multiple LMDS licensees, although some competition

may develop among providers of similar services via alternative

transmission technologies

our policies towards LMDS

eligibility would best promote the competitive objectives of the 1996

Act.

9. The proposed rules contemplate only a single LMDS licensee in

each service area. Accordingly, in the same market, there will be no

competition among multiple LMDS licensees, although some competition

may develop among providers of similar services via alternative

transmission technologies. It therefore is appropriate to consider

measures to ensure that the unprecedented amount of spectrum assigned

to each LMDS license will be used to enhance the competitive provision

of services in these highly concentrated markets. The Commission seeks

comment on whether it should temporarily restrict eligibility for

incumbent LECs and cable companies that seek to obtain LMDS licenses in

their geographic service areas.

10. In the NPRM that initiated this proceeding, the Commission

proposed to license two equal competitors in every LMDS service area

and not to restrict the ability of specific types of telecommunications

providers to obtain LMDS licenses. In the Third NPRM, the Commission

proposed only a single LMDS license for each service area and sought

additional comment on the eligibility issue regarding Commercial Mobile

Radio Service (CMRS) providers, MMDS licensees, LEC and cable

participation in LMDS.

11. In determining whether it would be in the public interest to

restrict LEC or cable eligibility to obtain a LMDS license within their

respective service areas, the Commission considers whether LMDS will

provide a unique and important new source of competition to incumbent

cable and telephone companies. The record of this proceeding strongly

supports the conclusion that LMDS is a potentially important source of

competition to both LECs and cable operators. 28 GHz LMDS licenses will

permit use of up to 1.3 GHz of spectrum by a single provider, and

equipment is relatively close to marketability

provide a unique and important new source of competition to incumbent

cable and telephone companies. The record of this proceeding strongly

supports the conclusion that LMDS is a potentially important source of

competition to both LECs and cable operators. 28 GHz LMDS licenses will

permit use of up to 1.3 GHz of spectrum by a single provider, and

equipment is relatively close to marketability. While it is not

possible to identify all potential uses of LMDS, licensees could use

this unparalleled amount of spectrum to construct sophisticated

networks that will incorporate aspects of many current

telecommunications offerings. It also appears that LMDS is uniquely

positioned to provide competitive telecommunications services and video

program delivery because of its large potential for two-way broadband

capabilities. In considering eligibility for LECs and cable operators

within their geographic service areas one must weigh the potential for

competition presented by open entry against the possibility that this

spectrum may be used to forestall rather than promote competition. Open

eligibility may delay or eliminate an opportunity to increase the

number of competitors in the local exchange telephony and multichannel

video programming markets. On the other hand, a bar on eligibility

could prevent LECs and cable operators from using LMDS to compete

against each other more effectively and rapidly or to provide new

services not now offered by any firm. It also is possible that by

restricting eligibility we prevent some potential providers from

realizing efficiencies of scale and scope that could be realized if,

for example, a LEC could use LMDS to expand the area it serves and to

expand the range of services it offers. As a deregulatory principle,

this Commission does not seek to interfere in or distort decisions

based on sound business judgment by imposing unnecessary regulation.

The Commission seeks comment on these issues.

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realizing efficiencies of scale and scope that could be realized if,

for example, a LEC could use LMDS to expand the area it serves and to

expand the range of services it offers. As a deregulatory principle,

this Commission does not seek to interfere in or distort decisions

based on sound business judgment by imposing unnecessary regulation.

The Commission seeks comment on these issues.

12. The Commission asks parties to comment with specificity on

projected uses of LMDS spectrum, including the degree to which LMDS is

uniquely suited to entry into the local exchange and multichannel video

programming markets. Do LMDS licenses represent a unique and necessary

resource for de-concentrating the market power of incumbent LECs and

cable operators? If an LMDS license is such a resource, can it have a

deconcentrating effect if it is held by an incumbent LEC or cable

operator, given the range of services that can be provided using LMDS?

For example, would a LEC's use of an LMDS license to provide video

services reduce the market power of the incumbent cable operator? Are

there other realistic means of entry into these markets? In addressing

this point, the Commission

asks parties to discuss other realistic means of entry in terms of (1)

the availability of similar spectrum-based services; (2) technological

factors; (3) economic cost; and (4) timing.

13. The Commission also asks for comment on whether there are any

inherent cost advantages possessed by incumbent LECs or cable operators

in holding LMDS licenses to provide service within their geographic

service areas. Are there any economies of scope, or other efficiencies,

such as efficiencies in billing and marketing of the services? Are any

of these efficiencies unique to LMDS or could a LEC or cable operator

realize them using above 40 GHz band, MMDS, OVS or other wireless or

wireline facilities? Are there cost advantages in use of LMDS spectrum

outside the markets served by incumbents? Can these cost advantages be

quantified?

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pe, or other efficiencies,

such as efficiencies in billing and marketing of the services? Are any

of these efficiencies unique to LMDS or could a LEC or cable operator

realize them using above 40 GHz band, MMDS, OVS or other wireless or

wireline facilities? Are there cost advantages in use of LMDS spectrum

outside the markets served by incumbents? Can these cost advantages be

quantified?

14. Are there any other advantages that incumbent LECs and cable

operators have in providing LMDS service? For example, does their size,

experience in that telecommunications market or financial status make

incumbent LECs, or more specifically the RBOCs, uniquely positioned to

be strong LMDS providers? If so, will limiting incumbent LEC and cable

operators from bidding on LMDS licenses only in their current service

areas discourage investment in LMDS or the development of LMDS

technology? Excluding incumbent LECs and cable operators, are there a

sufficient number of other providers with the necessary resources and

expertise to construct and operate LMDS systems? Will incumbent

eligibility restrictions have any negative effects on competition in

the multichannel video programming and local exchange markets--for

example by making it more difficult for incumbent LECs to compete with

cable operators for the provision of video services?

15. The Commission also asks for comment on whether an incumbent

LEC or cable operator offering LMDS services within its respective

geographic service area would be likely to offer it at a higher price

than new entrants. Would this depend on whether the LMDS service

offered by the incumbents is substitutable for the services they

currently offer? Commenters are also asked to address whether it would

be more cost-effective for incumbents to acquire LMDS spectrum to

supplement their own existing services rather than to face immediate

competition by allowing LMDS spectrum to be acquired by a potential

competitor.

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this depend on whether the LMDS service

offered by the incumbents is substitutable for the services they

currently offer? Commenters are also asked to address whether it would

be more cost-effective for incumbents to acquire LMDS spectrum to

supplement their own existing services rather than to face immediate

competition by allowing LMDS spectrum to be acquired by a potential

competitor.

16. Finally, the Commission seeks comment on how the auction

process can be expected to influence the concerns prompting our

consideration of incumbent eligibility. Will an auction ensure the

highest and best use of the spectrum--even if an incumbent wins the

license? Or, is there an economic incentive for an incumbent to bid

successfully at auction and to warehouse the spectrum? Or divert it to

less competitive uses? Does this economic incentive exist when the

spectrum can be used for services other than those provided by the

incumbent? In any case, would payment of a winning auction bid and the

cost of compliance with the build-out rules proposed in the Second

Further Notice of Proposed Rulemaking, 59 FR 7964 (February 17, 1994),

prove a sufficient check against such warehousing?

17. If the Commission determines that the benefits of open entry

are outweighed by our desire to encourage alternative sources of

competition, should it adopt any restrictions, and if so, how should

they be structured? One option is to prohibit incumbent LECs and cable

companies from bidding on or acquiring licenses, each within its

geographic service area. Alternatively, the Commission could limit

incumbent LECs and cable companies' use of the LMDS spectrum. For

example, LEC participation in LMDS could be limited to the provision of

no more than a certain percentage of non-video programming, and cable

participation in LMDS could be limited to the provision of no more than

a certain percentage of video services

thin its

geographic service area. Alternatively, the Commission could limit

incumbent LECs and cable companies' use of the LMDS spectrum. For

example, LEC participation in LMDS could be limited to the provision of

no more than a certain percentage of non-video programming, and cable

participation in LMDS could be limited to the provision of no more than

a certain percentage of video services. The advantage to this approach

is that it is narrower than a complete eligibility restriction, and it

would allow incumbent providers to use the spectrum to provide

competing services, as well as supplemental incumbent services. The

disadvantage to this approach is that it may impair the deployment of

LMDS as a market-driven flexible broadband service and is inconsistent

with the Commission's flexible spectrum policy. The Commission seeks

comment on these and any other alternatives.

18. In order to adopt any restrictions on incumbent cable and LEC

participation, the Commission needs to define ``incumbent'' since LATA

lines and cable franchise areas are not coincident with BTA boundaries.

One possibility would be to use the cellular/PCS cross-ownership rule,

which implicates similar competitive concerns. Consistent with this

rule, an incumbent LEC or cable operator would be considered ``in-

region'' if 20 percent or more of the population of a BTA is within a

LEC's telephone service area or a cable company's franchised service

area. The Commission asks for comment on this option and on any

alternative. It also seeks comment on whether the same definition

should be applied to both types of incumbents.

19. The Commission also seeks comment on what should constitute an

attributable interest in an incumbent LEC or cable operator. In the

past, the Commission has used several different formulations of

attribution in different contexts. For these purposes, the Commission

proposes to consider a 10 percent or more interest, when factored

through a multiplier, to be attributable

pes of incumbents.

19. The Commission also seeks comment on what should constitute an

attributable interest in an incumbent LEC or cable operator. In the

past, the Commission has used several different formulations of

attribution in different contexts. For these purposes, the Commission

proposes to consider a 10 percent or more interest, when factored

through a multiplier, to be attributable. It also proposes to consider

a 10 percent or more interest in an affiliate of an incumbent, when

factored through a multiplier, to be considered attributable. This

attribution level tracks Section 652 of the 1996 Act, 47 U.S.C.

Sec. 572, and it has the same goals as does the Commission in this

proceeding.

20. In addition, if the eligibility of incumbent LECs and cable

operators is limited, the Commission seeks comment on how these

restrictions should be addressed in the context of the proposal in the

Third NPRM to allow partitioning and disaggregation. It requests

comment on whether competitive harm would result from a LMDS licensee

disaggregating its license and assigning any excess spectrum to an

incumbent LEC or cable operator within their geographic service areas.

Similarly, comment is requested on whether any competitive harm would

result from a LMDS licensee partitioning some of its service area to an

incumbent LEC or MSO within their geographic service area.

21. Finally, if the Commission were to propose any restrictions, to

believes that such restrictions should continue only until there is

increased competition in the video and telephony markets. In the cable

context, Section 623(l) of the Communications Act sets forth a four

pronged test for determining when a cable operator faces effective

competition. The Commission seeks comment on whether this effective

competition test is a reliable indicator of appropriate levels of

multichannel video programming competition for these purposes

sed competition in the video and telephony markets. In the cable

context, Section 623(l) of the Communications Act sets forth a four

pronged test for determining when a cable operator faces effective

competition. The Commission seeks comment on whether this effective

competition test is a reliable indicator of appropriate levels of

multichannel video programming competition for these purposes. The

Commission focuses especially on Section 623 L(1), which can be

relatively easy to satisfy in rural areas. For LECs, there is no

standard test for effective competition in the local exchange market.

The ``Competitive Checklist,'' set forth in Section 271(c)(2)(B) of the

1996 Act, is one part of the mechanism used to determine when the

Regional Bell Operating Companies (RBOCs) may enter the in-region long

distance market. Comment is requested on whether the Competitive

Checklist or all the prerequisites for BOC in-region entry

serves as a reliable indicator of appropriate levels of local exchange

competition for determining when LECs should be allowed to hold LMDS

licenses. In addition, since the ``Competitive Checklist'' does not

apply to LECs which are not RBOCs, comment is requested on how it could

be used with other LECs. The Commission also seeks comment on

alternative sunset provision. For example, it could limit eligibility

for such entities to a fixed period of time (such as, 3 or 5 years)

with automatic sunset and optional renewal of these restrictions.

Commenters are requested to provide information on the following

questions: what alternative criteria should the Commission use to

sunset these restrictions? Should the Commission consider the number of

facilities-based competitors? Are there local competitors throughout

the service area? If the Commission does not use the ``Competitive

Checklist'', does the list suggest factors that the Commission should

incorporate into any sunset criteria we may adopt?

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stions: what alternative criteria should the Commission use to

sunset these restrictions? Should the Commission consider the number of

facilities-based competitors? Are there local competitors throughout

the service area? If the Commission does not use the ``Competitive

Checklist'', does the list suggest factors that the Commission should

incorporate into any sunset criteria we may adopt?

22. Because it plans to begin the LMDS licensing process this year,

the Commission realizes that the imposition of any eligibility

restrictions now, even if they sunset at some future point, may

effectively preclude incumbent LECs and cable operators from

participation in that initial licensing process. However, incumbents

could offer LMDS services at a future date by acquiring all or part of

the LMDS spectrum in a BTA in a post-auction transaction, if we adopt

our competitive bidding rules proposed in the Third NPRM. The

Commission requests comment on these issues.

Comment Dates

23. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's rules, 47 CFR Secs. 1.415 and 1.419,

interested parties may file comments on or before August 12, 1996, and

reply comments on or before August 22, 1996. To file formally in this

proceeding, you must file an original and four copies of all comments,

reply comments and supporting comments. If you want each Commissioner

to receive a personal copy of your comments, you must file an original

plus eight copies. You should send comments and reply comments to

Office of the Secretary, Federal Communications Commission, Washington,

D.C. 20554. Comments and reply comments will be available for public

inspection during regular business hours in the FCC Reference Center of

the Federal Communications Commission, Room 239, 1919 M Street, N.W.,

Washington, D.C. 20554.

Initial Regulatory Flexibility Analysis

You should send comments and reply comments to

Office of the Secretary, Federal Communications Commission, Washington,

D.C. 20554. Comments and reply comments will be available for public

inspection during regular business hours in the FCC Reference Center of

the Federal Communications Commission, Room 239, 1919 M Street, N.W.,

Washington, D.C. 20554.

Initial Regulatory Flexibility Analysis

24. As required by Section 603 of the Regulatory Flexibility Act,

the Commission has prepared an Initial Flexibility Analysis (IRFA) of

the expected significant economic impact on small entities by the

policies and rules proposed in this Fourth Notice of Proposed

Rulemaking. Written public comments are requested on the IRFA. Comments

must be identified as responses to the IRFA and must be filed by the

deadlines for comments on the FNPRM provided in section (VI)(C).

I. Reason for Action

25. This Fourth Notice of Proposed Rulemaking (FNPRM) requests

comment on two issues: (1) whether the Commission should designate, on

a primary protected basis, the 31.0-31.3 GHz (31 GHz) band to Local

Multipoint Distribution Service (LMDS); and (2) whether the Commission

should restrict eligibility of local exchange carriers (LEC) and cable

operators to hold LMDS licenses in the geographic areas they serve.

26. With regard to the first issue, the Commission determines that

a further NPRM is necessary to accommodate a variety of LMDS system

designs, services, and transmission media in the adjacent 28 GHz band.

The additional spectrum would facilitate interactive systems, thus

providing new and innovative communications services for residential

and business users, including small businesses. Moreover, the

additional spectrum potentially could benefit small businesses unable

to participate in competitive bidding for licenses because additional

spectrum not needed by a LMDS licensee could potentially be leased to

smaller businesses

cilitate interactive systems, thus

providing new and innovative communications services for residential

and business users, including small businesses. Moreover, the

additional spectrum potentially could benefit small businesses unable

to participate in competitive bidding for licenses because additional

spectrum not needed by a LMDS licensee could potentially be leased to

smaller businesses. The 31 GHz band currently is licensed only on a

secondary basis, and has few incumbents. Nevertheless, the Commission

requests comment on whether there are any methods of accommodating

these services.

27. With regard to the second issue, the current record of this

proceeding was developed prior to the enactment of the

Telecommunications Act of 1996. One of the key objectives of the Act is

to expedite the introduction of competition to incumbent LECs and cable

companies. In carrying out this mandate, the Commission believes it

important to obtain specific comment on how its policies towards LMDS

eligibility would best promote the competitive objectives of the Act.

In addition, the comments received after the close of the record in

this proceeding, including comments from small entities such as WebCel,

convince us that further comment is warranted.

II. Objectives

28. The objective of this NPRM is to request public comment on the

proposals made herein for the efficient licensing of LMDS services, for

the development and implementation of a new technology to provide

innovative telecommunications services to the public.

III. Legal Basis for Proposed Rules

29. The authority for this action is the Administrative Procedure

Act, 5 U.S.C. 553; and sections 4(i), 4(j), 301, 303(r) of the

Communications Act of 1934 as amended, 47 U.S.C. 145, 301, and 303(r).

IV. Description and Estimate of Small Entities Subject to the Rules

ies. We are required to estimate the number of such entities with

populations of less than 50,000 that would be affected by our new

rules. There are 85,006 governmental entities in the nation. This

number includes such entities as states, counties, cities, utility

districts and school districts. There are no figures available on what

portion of this number has populations of fewer than 50,000. However,

this number includes 38,978 counties, cities and towns, and of those,

37,566, or 96 percent, have populations of fewer than 50,000. The

Census Bureau estimates

that this ratio is approximately accurate for all governmental

entities. There are twenty-seven (27) incumbent licensees in the 31.0-

31.3 GHz band. Accordingly, we estimate that 96 percent, or 25 to 26 of

these licensees, are small entities.

33. We request comment on the description and the number of small

entities that are significantly impacted by this proposed rule.

V. Reporting, Recordkeeping, and Other Compliance Requirements

34. The proposals under consideration in this FNPRM would not

involve any reporting or recordkeeping requirements.

35. Incumbent licensees in the 31.0-31.3 GHz band would have new

compliance requirements vis-a-vis LMDS licensees. Our rules provide

that licensees therein operate on a non-interference basis, meaning

that they have no rights to protection from interference, nor any

obligations to not interfere with other similar incumbent operations.

The Fourth NPRM proposes that LMDS be designated as a primary protected

use of the band, ensuring that LMDS licensees would have interference

protection from other authorized users of the band.

VI. Significant Alternatives Considered and Rejected

is, meaning

that they have no rights to protection from interference, nor any

obligations to not interfere with other similar incumbent operations.

The Fourth NPRM proposes that LMDS be designated as a primary protected

use of the band, ensuring that LMDS licensees would have interference

protection from other authorized users of the band.

VI. Significant Alternatives Considered and Rejected

36. The Commission considered and rejected the alternative of

placing all LMDS spectrum in the 28 GHz band, rather than placing a

portion of the available spectrum in the 31 GHz band. The Commission

concluded that LMDS requires additional spectrum to successfully deploy

the variety of services proposed. It also concluded that these proposed

services could be successfully implemented with non-contiguous bands of

spectrum, whereas the satellite services could not. To the extent LMDS

entities are small businesses, as discussed in the Final Regulatory

Flexibility Analysis, infra, such entities are affected by this

decision. However, some small entities commenting on the final band

plan concurred with this approach (e.g., CellularVision, RioVision).

37. In addition, the Commission considered and rejected the

alternative of proceeding with open eligibility in licensing, for the

reasons stated herein. This action is responsive to the many small

entities commenting in this proceeding who requested that restrictions

be placed upon, or considered for, local exchange carriers and major

cable companies, e.g., WebCel.

VII. Federal Rules That Overlap, Duplicate, or Conflict With These

Proposed Rules

38. None.

Ordering Clause

39. Authority for issuance of this Fourth Notice of Proposed

Rulemaking is contained in Sections 4(i), 303(r) and 309(j) of the

Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r) and

309(j).

List of Subjects in 47 CFR Part 21

Communications Common Carriers, Federal Communications Commission,

Radio.

uplicate, or Conflict With These

Proposed Rules

38. None.

Ordering Clause

39. Authority for issuance of this Fourth Notice of Proposed

Rulemaking is contained in Sections 4(i), 303(r) and 309(j) of the

Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r) and

309(j).

List of Subjects in 47 CFR Part 21

Communications Common Carriers, Federal Communications Commission,

Radio.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96-19347 Filed 7-26-96; 8:45 am]

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