[Federal Register: November 25, 2003 (Volume 68, Number 227)]
[Proposed Rules]
[Page 66231-66251]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25no03-25]
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Part III
Federal Communications Commission
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47 CFR Parts 1, 2, 20, 21, 22, 24, 25, 27, 74, 78, 80, 87, 90, 95, 97,
and 101
Promoting Efficient Use of Spectrum Through Elimination of Barriers to
the Development of Secondary Markets; Proposed Rule and Rule
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1, 2, 20, 21, 22, 24, 25, 27, 74, 78, 80, 87, 90, 95,
97, and 101
[WT Docket No. 00-230; FCC 03-113]
Promoting Efficient Use of Spectrum Through Elimination of
Barriers to the Development of Secondary Markets
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document we seek comment on several actions the
Commission could take to further enhance spectrum access and efficient
use of spectrum through the development of more robust secondary
markets in spectrum usage rights in the wireless radio and satellite
services. We also seek comment on how to encourage the development of
information and clearinghouse mechanisms that will facilitate secondary
market transactions between licensees and new users in need of access
to spectrum. Finally, we seek comment on further streamlining of
application processing for spectrum leasing, transfer of control,
license assignments, expanding leasing to additional services, and
modifying or eliminating other regulatory barriers impeding secondary
market transactions.
DATES: Comments by the public on the proposals set forth in the Further
Notice of Proposed Rulemaking (Further NPRM) are due December 5, 2003.
Reply comments are due January 5, 2004.
FOR FURTHER INFORMATION CONTACT: Paul Murray, Wireless
Telecommunications Bureau, at (202) 418-7240, or via the Internet at Paul.Murray@fcc.gov; for additional information concerning the
information collections contained in this document, contact Judith-B.
Herman at (202) 418-0214, or via the Internet at Judith.B-Herman@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further NPRM portion of the Commission's Report and Order and Further
Notice of Proposed Rulemaking, FCC 03-113, in WT Docket No. 00-230,
adopted on May 15, 2003, and released on October 6, 2003.
Contemporaneous with this document, the Commission issues a Report and
Order (published elsewhere in this publication). The full text of this
document is available for inspection and copying during normal business
hours in the FCC Reference Information Center, 445 12th Street, SW.,
Washington, DC 20554. The complete text may be purchased from the FCC's
copy contractor, Qualex International, 445 12th Street, SW., Room CY-
B402, Washington, DC 20554. The full text may also be downloaded at:
http://www.fcc.gov. Alternative formats are available to persons with
disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365 or at Brian.Millin@fcc.gov.
Synopsis of the Further NPRM
I. Introduction
A. Wireless Radio Services
1. We adopt a Further Notice of Proposed Rulemaking (Further NPRM)
that proposes several actions the Commission could take to further
enhance spectrum access and efficient spectrum use on a wider scale
following adoption of the Report and Order in this proceeding. We seek
comment on how to encourage the development of information and
clearinghouse mechanisms that will facilitate secondary market
transactions between licensees and new users in need of access to
spectrum. We also seek comment on further streamlining of application
processing for spectrum leasing, transfers of control, and license
assignments, expanding leasing to additional services not covered by
the Report and Order, and modifying or eliminating other regulatory
barriers impeding secondary market transactions.
B. Satellite Services
2. In the Further NPRM, we further explore and seek comment on
improving access to unused or underutilized satellite spectrum through
secondary markets.
II. Background
3. In November 2000, the Commission concurrently adopted the Policy
Statement and the Notice of Proposed Rulemaking (NPRM), 65 FR 81475
(December 26, 2000) in this proceeding regarding secondary markets in
spectrum usage rights. The Policy Statement enunciated general goals
and principles for the further development of those secondary markets,
while the NPRM proposed concrete steps the Commission might take to
implement such policies with respect to Wireless Radio Services and
Satellite Services. Thirty-seven parties commented on the proposals set
forth in the NPRM, and twenty-one filed reply comments.
4. In 2002, the Commission's staff-level Spectrum Policy Task Force
undertook a comprehensive review of spectrum policy. In examining 90
years of spectrum policy, the Task Force sought to assist the
Commission in developing policies that are more responsive to the
consumer-driven evolution of new wireless technologies, devices, and
services. The findings and recommendations submitted to the Commission
in November 2002 in the Spectrum Policy Task Force Report addressed
many issues relevant to the promotion of secondary markets in spectrum
usage rights.
5. Concurrent with the adoption of the Further NPRM, and as part of
the same document, we adopted a Report and Order portion (Report and
Order), in which we take several actions to remove unnecessary
regulatory barriers to the development of secondary markets in spectrum
usage rights in the Wireless Radio Services. Specifically, in the
Report and Order, we take several steps to facilitate and streamline
the ability of spectrum users to gain access to licensed spectrum by
entering into spectrum leasing arrangements that are suited to the
parties' respective needs. As a threshold matter, we revise the
Commission's interpretation of the de facto control standard relating
to section 310(d) of the Communications Act, 47 U.S.C. 310(d), in the
context of spectrum leasing, replacing the standard that has been in
place since 1963 under the Intermountain Microwave decision, 12 FCC 2d
559 (1963), with a refined standard that better accords with our
contemporary market-oriented spectrum policies, fast-changing consumer
demands, and technological advances. The Intermountain Microwave
standard, which focuses its de facto control analysis on whether
licensees exercise close working control over all of the facilities
using licensed spectrum, is not required by the Communications Act.
Moreover, this standard impedes innovative and efficient leasing
arrangements with third party spectrum users that do not require
Commission approval under the statute. The updated standard we adopt
today for leasing refines the de facto control analysis, consistent
with statutory requirements, by focusing instead on whether licensees
continue to exercise effective working control over any spectrum they
lease to others.
6. In the Report and Order, we implement two different options for
spectrum leasing. One option enables licensees and ``spectrum lessees''
to enter into leasing arrangements, without the need for Commission
approval, so long as the licensee retains de facto control of the
leased spectrum under the newly refined standard. The other option
permits parties to enter into arrangements in which the licensee
transfers de facto control to the lessee
[[Page 66233]]
pursuant to streamlined approval procedures.
7. In addition, consistent with our efforts to facilitate secondary
markets in spectrum by providing for streamlined approval procedures
for certain spectrum leasing arrangements that involve transfers of de
facto control, the Report and Order implements similar streamlined
Commission approval procedures for all license assignments (whether a
full or partial assignment of the license) and transfers of control in
the same Wireless Radio Services covered by our newly adopted spectrum
leasing policies.
III. Further Notice of Proposed Rulemaking
8. We recognize that the steps taken in the Report and Order are
limited in scope, addressing only the legal framework for certain types
of leasing transactions involving exclusive use wireless licenses. In
order to facilitate secondary markets and improve opportunities for
more users to gain access to spectrum, we believe we must provide a
greater range of incumbent licensees with the requisite regulatory
framework as well as the practical capability and economic incentive to
permit access to unused spectrum encompassed within their
authorizations. Thus, additional actions by the Commission are needed
to further promote more flexible and, ultimately, more efficient use of
the spectrum, with significant public interest benefits.
A. Achieving a More Efficient Spectrum Marketplace
1. The Commission's Role in Providing Secondary Market Information and
Facilitating Exchanges
9. In the Policy Statement, we observed that the market for
spectrum, unlike the market for most other goods and services, lacks an
efficient means for identifying buyers and sellers, comparing prices,
and completing transactions. We also noted that negotiation for
spectrum transactions can be complicated by the Commission's technical
and service rules, and that approval of transactions by the Commission
can involve complex submissions in a time-consuming and expensive
process for the parties involved.
10. Our vision for the future spectrum marketplace presumes that
access to adequate information is essential for ensuring that improved
secondary markets achieve the highest benefit for spectrum users and
consumers. Entities desiring to obtain access to spectrum must be able
to identify the potential suppliers of that access, and we seek to
ensure that the costs of obtaining such information and entering into
transactions governing spectrum access are not driven by regulatory
constraints.
11. There are a variety of approaches the Commission could pursue
to promote access to spectrum information needed in the secondary
marketplace. The simplest of these approaches--maintaining an on-line
database of licensees, lessees, and certain other types of users--is
most readily facilitated by Commission action. Specifically, because
the Commission is responsible for issuing spectrum licenses and
enforcing its rules and policies, it necessarily must collect certain
basic and pertinent information, such as the names of licensees and the
geographic areas and frequency bands for which they hold their
authorizations.
12. In the Report and Order, we provide for the public availability
of this type of information in the leasing context. Based on the
notifications and applications required to be filed by licensees and
spectrum lessees, the ULS database will contain information on, inter
alia, the identity of each licensee and spectrum lessee, licensee and
lessee contact information, the spectrum and geographic area
encompassed within the lease, and the term of the lease. We ask parties
to comment on whether collection of this type of information by the
Commission is sufficient to provide potential users of spectrum with
adequate information about possible spectrum lease opportunities.
Should we collect additional information from licensees, spectrum
lessees, or any other authorized users about the nature of their
operations (e.g., more detail about the geographic area actually
covered and the frequencies actually used)? Would the collection of
more detailed operational information be burdensome for affected
parties? Does the Commission receive information through any other data
gathering requirements that might be useful for secondary market
purposes? In addition, we ask parties about their experience in
searching on ULS and how to ensure that it is a useful tool for
researching secondary market opportunities.
13. We also seek comment on whether and to what extent the
Commission should support or encourage the establishment of additional
information services, such as listing offers to transfer, assign, or
lease, establishing exchange mechanisms, or brokering exchanges. As a
general matter, we continue to believe that the private sector is
better suited both to determine what types of information parties might
demand, and to develop and maintain information on the licensed
spectrum that might be available for use by third parties. We seek
comment on the likelihood that private sector mechanisms will develop
for the collection and dissemination of secondary market information.
14. We also request comment on the potential for independent third
parties, i.e., parties other than licensees and potential lessees, to
emerge as ``market-makers'' that not only collect and disseminate
information, but actually negotiate, broker, or otherwise facilitate
spectrum leasing transactions. We ask interested parties to comment
whether they think there is a useful role to be played by market-makers
in facilitating secondary markets and increased access to unused
spectrum. Are such facilitators necessary? If so, will they emerge
naturally as rules allowing secondary market trading are established,
or are there steps the Commission should take to promote them? If the
Commission takes steps to promote market-makers, what steps should it
take?
15. Finally, if interested parties have any alternative proposals
for facilitating operation of the marketplace in spectrum capability,
we request that they outline and describe such alternatives.
2. Developing Policies That Maximize Potential Public Benefits Enabled
by Advanced Technologies, Including Opportunistic Devices
16. Both the Policy Statement and the Spectrum Policy Task Force
Report emphasize that emerging technologies are creating significant
new opportunities for enabling more intensive and efficient use of
spectrum. In particular, these developments increasingly allow more
users the technical ability to access unused spectrum in different
bands for short periods of time, and to do so with more tolerance of
interference than in the past. The Spectrum Policy Task Force noted
that the increased use of digital technologies in general, and specific
advances in software-defined radio, frequency-agile radio, and spread
spectrum technologies, were creating new opportunities for spectrum
access and use. Both the Policy Statement and the Spectrum Policy Task
Force Report noted that these technological advances have important
implications with respect to the nature of policies the Commission
might adopt to facilitate access to spectrum, including access via
secondary markets. Both recommended that the Commission develop
licensing
[[Page 66234]]
and access models that take this new technological potential into
account.
17. We seek comment here on additional steps that the Commission
can take to implement spectrum licensing policies that eliminate
unnecessary regulatory barriers and promote the potential public
benefits made possible by this increasingly dynamic and innovative
nature of spectrum use. We agree with the Spectrum Policy Task Force
Report that these technological advances potentially provide several
answers to current and future spectrum policy challenges. In
particular, they make possible more intensive and efficient use of
spectrum. They also allow operators to take advantage of the time
dimension of the radio spectrum, which could enable additional access
to spectrum for more users and services.
18. We also request comment on the recommendations made in the
Spectrum Policy Task Force Report regarding Commission policies on
access to spectrum as provided by opportunistic devices in currently
licensed bands. In particular, we propose to move forward with the Task
Force's general recommendation that, with regard to currently licensed
bands, the Commission focus on advancing and improving a secondary
markets approach to access to spectrum by opportunistic devices during
the near term. Under this approach, the Commission initially would look
to promote secondary markets through multiple steps, the first of which
we are taking in the Report and Order.
19. The Spectrum Policy Task Force Report noted that a secondary
markets approach did not necessarily require that the prospective
opportunistic user negotiate individually with each affected licensee.
It suggested that other mechanisms, such as band managers, frequency
coordinators, and other intermediaries such as clearinghouses, could
possibly manage the secondary uses on licensees' behalf. We seek
comment on the possible use of any or all of these mechanisms, and how
any such tool should be structured by the Commission.
20. Finally, we seek comment on whether the policies and procedures
adopted in the Report and Order provide sufficient flexibility for
dynamic leasing arrangements involving opportunistic uses of currently
licensed spectrum bands. If not, we seek comment on additional steps
the Commission should take consistent with our statutory authority. To
facilitate secondary access by opportunistic devices, should the
Commission more exhaustively define the nature of the rights embodied
in ``exclusive use'' licenses in the Wireless Radio Services?
B. Forbearance From Individualized Prior Commission Approval for
Certain Categories of Spectrum Leases and Transfers of Control/License
Assignments
21. The Report and Order takes significant steps to facilitate
certain categories of spectrum leasing and to reduce the regulatory
process requirements that can delay the timely implementation of
business arrangements, increase transaction costs, and present
potential regulatory uncertainty. Despite these advancements, however,
we are concerned that even the streamlined regulatory process we have
established for de facto transfer leasing may raise unnecessary hurdles
for transactions that we could find, as a categorical determination,
are consistent with the public interest.
22. Similarly, we have adopted policies in the Report and Order
that should significantly streamline and facilitate the regulatory
process applicable to transfers of control and license assignments in a
significant number of our Wireless Radio Services. Nevertheless, we
continue to consider additional actions we might take to minimize any
unnecessary regulatory impediments to the effectuation of marketplace
transactions while ensuring that we satisfy our statutory obligations
relevant to license transfers of control and assignments.
23. The record before us suggests the need to explore in greater
detail how to grant increased flexibility to parties to design leasing
arrangements that are responsive to their business needs and to
implement them without facing unnecessary regulatory delays. We also
want to assess whether the public interest objectives and policy goals
that underpin any revised approach to de facto transfer leasing that we
may adopt are also applicable to some categories of outright license
transfers and assignments. As part of this examination, we will assess
whether, in light of all relevant statutory and public interest
factors, we should strive to provide some parity in treatment between
lease arrangements that involve a transfer of de facto control and full
assignment of licenses and transfers of licensee control. This review
thus must assess the possible applicability of forbearance or other
streamlining steps to transaction applications.
24. Forbearance standard. Section 10 of the Communications Act
authorizes the Commission to forbear from applying any provision of the
Communications Act with respect to telecommunications carriers or
telecommunications services (or a particular class thereof), provided a
three-pronged test is satisfied. Wireless radio service licensees that
are telecommunications carriers, as defined by the Act, or otherwise
provide commercial mobile radio services (CMRS) and common carrier-
based services, fall within the scope of the Commission's statutory
forbearance authority. The forbearance proposals we describe with
respect to spectrum leasing thus would be applicable only to entities
and services meeting this test. Regulatory processing of leasing
transactions involving spectrum and authorizations restricted to
private use would not be encompassed within any forbearance-based
structure we may adopt.
25. In determining whether forbearance from the prior approval
processes is consistent with the public interest, the Commission must
consider whether forbearance will promote competitive market
conditions, including whether it will enhance competition among
telecommunications service providers. If the Commission determines that
forbearance will promote competition among providers of
telecommunications services, that determination may be the basis for
finding that forbearance is in the public interest (one of the three
prongs of the test).
1. Forbearance With Respect to Certain Spectrum Leasing Arrangements
26. We seek comment on whether to forbear from individual prior
review and approval by the Commission for certain categories of leasing
arrangements involving a transfer of de facto control that would not
raise any public interest concerns. We propose particular benchmarks or
elements for leasing transactions (related to the public interest
concerns we generally consider in evaluating transactions involving a
transfer of de jure and/or de facto control) that would, if satisfied,
allow spectrum lease agreements to be handled under the forbearance
model we propose in this Further NPRM. We also seek comment on
appropriate notification requirements for leases that would not be
subject to individualized prior approval under this proposal.
a. Elements of Leasing Transactions That Would Not Require Prior
Commission Approval
27. We propose to forbear from the requirements of sections 308,
309, and 310(d) of the Communications Act to the extent necessary to
permit us to
[[Page 66235]]
process notification filings regarding leases involving a transfer of
de facto control that satisfy the conditions enunciated in this section
without 30 days prior public notice and without prior Commission review
and consent. Rather, as discussed below, the parties to the leasing
arrangement would be required to file a notification with the
Commission within 14 days of execution of the lease. Responsibility for
compliance with Commission rules, resolving interference issues, and
making Commission filings would shift to the lessee, in the same manner
as described under the de facto transfer leasing model in the Report
and Order above.
28. The lessee must satisfy applicable eligibility and use
restrictions associated with the leased spectrum. For a leasing
agreement to be eligible for processing pursuant to this forbearance
proposal, the lessee would be required to meet any applicable
eligibility limitations and comply with any use restrictions associated
with the spectrum it plans to lease. A lessee would also have to meet
our basic qualification requirements for holding an authorization.
29. We seek comment on this proposed element. We note that
inclusion of this element does not stand as an absolute bar to a lease
contemplating spectrum usage that is inconsistent with applicable
regulations but only serves to prevent such a lease proposal from being
implemented without prior public notice or Commission review. We
believe that, at present, such proposals should be subject to
Commission review and evaluation before the lease is implemented. Is
there any way to permit greater flexibility in lessee use of spectrum
with forbearance-based notification without undermining other policies
adopted by the Commission? Do retaining use and eligibility
restrictions for lessees as a condition of permissible forbearance
processing serve as a significant barrier to implementation of spectrum
leases?
30. While we propose to require a lessee to meet any eligibility
limitations applicable to the licensee from which it is leasing
spectrum, we request comment about how to apply this objective, if we
adopt it, in the context of licensees that are designated entities and/
or entrepreneurs. Should we require a lessee to be eligible for the
same level of competitive bidding benefits, such as bidding credits, as
the licensee from which it is leasing? Should we require only that the
lessee be qualified to hold the license? If so, do we impose unjust
enrichment obligations on a lessee that is qualified for a lesser level
of competitive bidding benefits? How do we ensure that the Commission
has an opportunity to calculate and collect any unjust enrichment
payments?
31. The lessee must comply with the foreign ownership provisions
applicable to Commission licensees. In order for parties to a lease to
avail themselves of forbearance processing as discussed in this Further
NPRM, we first propose that, for a lease involving any radio
authorization, the lessee not be a foreign government or the
representative thereof. This limitation is derived from section 310(a),
which is an absolute ban on foreign government holding of Commission
radio authorizations. Second, for leases involving common carrier radio
authorizations, we propose that the lessee must meet the requirements
of sections 310(b)(1) through (3), i.e., it must not be an alien or a
representative thereof, a corporation organized under the laws of any
foreign government, or have more than 20 percent direct foreign
ownership. Third, we propose that, as a condition of eligibility for
forbearance, the lessee must not have more than 25 percent indirect
foreign ownership, or must have previously obtained a declaratory
ruling from the Commission in advance of entering into the subject
lease that its lease of the spectrum at issue is consistent with the
Commission's foreign ownership policies.
32. We request parties to address the merits of applying the
proposed foreign ownership conditions. Do the conditions ensure that we
are meeting our obligations to enforce and apply sections 310(a) and
(b) in the context of spectrum leases that we allow to proceed without
individualized prior Commission approval of a lease arrangement? What
risk exists that parties could attempt to escape the applicability of
the foreign ownership limitations by implementing a lease following
only notification to the Commission? Conversely, is this element too
strict in terms of applying our foreign ownership policies? Is there
any way we can expand the scope of permissible indirect foreign
ownership in lessees where we are not individually reviewing the
application?
33. We note that, as part of our foreign ownership review process,
we coordinate with Executive Branch agencies to ensure that the level
and identity of the foreign ownership does not present any concerns
with respect to national security, law enforcement, foreign policy, or
trade policy. We seek comment on whether our proposed foreign ownership
conditions for forbearance raise any questions concerning enforcement
of national security, law enforcement, foreign policy, or trade policy
by Executive Branch agencies. What steps do we need to take to ensure
that national security and other concerns addressed by Executive Branch
agencies are satisfactorily handled? We note that no Executive Branch
agencies provided comments for the record on this issue and
particularly seek their input at this time.
34. The spectrum lease arrangement must not raise any competitive
concerns. The Commission acknowledges in the Report and Order the
potential competitive effects that may be associated with a spectrum
lease. We seek to clarify under what conditions leases would not pose
any significant risk to our competition policies such that we would
allow these transactions to proceed without individual Commission
review and approval. We note that to the extent we can create more
certainty for the parties involved in transactions, we are more likely
to promote efficient secondary markets.
35. The benchmarks under which we would allow spectrum leases to
proceed without prior Commission approval must consider the competitive
effects on both the input and output markets. The input market looks at
the spectrum and the number of licensees in an area, while the output
market concerns itself with wireless service and the number of entities
actually providing service. If concentration increases in the output
market (i.e., the number of service providers decreases) as a result of
a transaction, there is a potential that higher prices may be charged
to consumers. If concentration in the input market increases (i.e.,
fewer licensees), then there is a potential that higher prices will be
charged to the actual providers of service for use of the spectrum,
also leading to higher prices to consumers.
36. For the output market, we look at the effect on service
providers. We propose that, in order to be eligible for forbearance
processing under this proposal, a spectrum lease arrangement must not
result in the loss of service in any geographic area by an independent,
facilities-based CMRS provider involved in the transaction. We note
that this requirement should impose no burden on spectrum licensees
that provide service in a given market and that simply wish to lease
unused portions of their spectrum. Nor should this requirement burden
licensees that have not constructed and are therefore not providing
service. The only effect of this condition should be on a licensee that
[[Page 66236]]
is providing service and that, as a result of a contemplated lease,
would cease to provide such service. We decline, at this time, to
forbear from review of this latter class of leases. We request comment
whether this is an appropriate safe harbor or whether some other
benchmark would more effectively serve the public interest while
ensuring that spectrum lease applications processed pursuant to
forbearance-based procedures do not pose unacceptable threats to our
competition policies. If we adopt this or another safe harbor, we
request comment whether we should require the licensee, the lessee, or
both to certify that the lease would not result in the loss of an
existing, independent competitor in the geographic area encompassed
within the lease.
37. For the input market, we consider the potential competitive
effects by looking at the amount of spectrum held by the parties
involved in the lease. For leases involving a transfer of de facto
control, we propose to consider the lessee as having influence over the
spectrum encompassed within the subject lease agreement. In the case of
de facto transfer leasing, the lessee is gaining sufficient control of
the spectrum to be able to affect competition in the geographic area
encompassed by the lease. Although the Commission has eliminated the
spectrum cap it applied to certain CMRS offerings and replaced it with
a case-by-case examination of the competitive effects of a proposed
transaction, we believe that a defined, readily understood benchmark is
necessary in this context. Identifying a readily ascertainable safe
harbor provides certainty to parties. We request commenters to provide
us with recommendations for a safe harbor definition that satisfies
these objectives, including a discussion of how the proposed safe
harbor level will ensure that no significant competitive issues are
posed by a particular lease transaction.
38. We note that our prior spectrum cap addressed only CMRS
offerings, which are a subset of the wireless services to which we are
proposing to extend the opportunity to implement spectrum leases
without advance individualized review by the Commission. As a
supplement to or replacement of a defined CMRS benchmark, we could
specify that a lessee have an attributable interest in no more than a
specified amount of common carrier wireless spectrum in the geographic
market. We request commenters endorsing a limitation based on total
common carrier wireless spectrum to discuss the appropriate level and
the justification for their recommendation.
39. We request comment on these proposals for ensuring that
spectrum leases for which we no longer require prior individualized
review and approval do not raise competitive issues. With regard to
competitive issues, do we need to be concerned only about CMRS
spectrum? Are there any individual services covered by our proposals in
this Further NPRM for which we need to be concerned about potential
anticompetitive effects resulting from aggregation of spectrum? Are
there other groups of services (similar to the services previously
covered by the CMRS spectrum cap--PCS, cellular, and certain SMR
spectrum) for which we should establish a total spectrum aggregation
benchmark in order to prevent any adverse competitive effects stemming
from spectrum leases implemented without prior Commission approval? How
should we account for leases of private spectrum in this competitive
benchmark setting? How should we determine what spectrum is
attributable to a particular entity for competition analysis purposes?
Should we consider a test based on ``significant influence'' over the
spectrum?
40. When combined with our benchmark protecting the level of
competition in the output market, is a benchmark tied to level of
spectrum aggregation, whether for CMRS only, other sets of services, or
common carrier wireless services generally, an appropriate means for
enforcing our competition policies in the context of spectrum leases
that may proceed without prior Commission review and approval? We seek
to ensure that any benchmarks we define are not too restrictive and
thus likely to impede marketplace arrangements that do not raise any
competitive concerns. Conversely, we wish to avoid benchmark levels
that present unacceptable levels of competitive risk. Is there a better
way to define a competitive benchmark?
41. Addressing any other public interest concerns associated with
spectrum leases implemented pursuant to forbearance procedures.
Finally, we seek comment on whether spectrum leasing arrangements
involving transfers of de facto control may raise any other public
interest concerns that we need to address in defining those types of
leases that could be implemented without individualized prior approval
under an exercise of our forbearance authority. We request that
commenters identifying any other relevant public interest
considerations discuss whether those concerns can be addressed by some
form of benchmark or safe harbor, and what that benchmark or safe
harbor might be.
42. Are these proposed prerequisites to spectrum leasing
sufficiently clear to permit licensees and lessees to readily comply
with them and to provide the information required by a modified Form
603 that we would employ for purposes of notifying us of a spectrum
lease? Are there any steps we can take to simplify any of these
benchmarks and to facilitate licensee/lessee compliance therewith?
43. Under the proposed forbearance model, parties would be able to
implement a lease after filing the required notification and without
any prior Commission review necessarily having occurred. The Commission
and members of the public would be allowed to review the notification
and the Commission could request additional information from the
parties if so warranted. As a result, could forbearance processing
undercut our ability to enforce our policies? What actions can and
should we take in response to a spectrum lease that is improperly
implemented under our forbearance processing proposal?
b. Notification
44. As part of our forbearance proposal, we propose that the
parties to a spectrum lease arrangement that qualifies for forbearance
be required to file, within 14 days of executing the lease, a
notification with the Commission similar to that filed by parties to a
pro forma assignment or transfer of control, including the date on
which the parties expect to put the lease into effect. The
notifications would be placed on an informational public notice on a
weekly basis, and would be ``deemed approved'' as of the date of the
public notice. We seek comment on this proposal as well as any other
proposal that commenters might suggest.
45. We note that by placing the notifications on public notice, we
provide members of the public with the opportunity to scrutinize such
filings, similar to our handling of notifications concerning pro forma
transfers of control and assignment of licenses. Any interested party
would be entitled, consistent with our rules and policies concerning
standing, to file a petition for reconsideration within 30 days of the
date of that informational public notice. Similarly, Commission staff
would be able to reconsider the grant on its own motion within 30 days
of the public notice date, and the Commission would be able to
reconsider the grant on
[[Page 66237]]
its own motion within 40 days of the public notice date.
46. We note that we want to ensure that we have sufficient
information about lease arrangements in order to effectuate our public
interest responsibilities while minimizing the burden on the filing
parties in terms of the information they must submit to the Commission.
Accordingly, we request parties to discuss the types of information and
level of detail that should be included in leasing notifications filed
in accordance with this proposed procedure. How much detail should the
parties provide regarding the ownership and affiliates of a lessee?
What information should the parties provide about any spectrum overlaps
created by a spectrum lease?
c. Compliance With the Forbearance Standard
47. As noted above, forbearance from prior approval for spectrum
leases involving a transfer of de facto control would be available only
where telecommunications carriers and telecommunications services are
involved in the transaction. We believe that, if we establish the
benchmarks outlined above or something comparable, forbearing from the
public notice and prior approval requirements would meet the test
imposed by section 10.
48. We request commenters to address whether the conditions we have
proposed above for permitting leases to proceed without prior public
notice and Commission review and approval satisfy the section 10
requirements to support adoption of forbearance. Specifically, have we
accurately assessed satisfaction of the section 10 requirements in this
context? Can parties provide any further explanation why forbearance
from the 30-day public notice period and individualized prior
Commission review and approval supports a finding that the section 10
test has been met? Are there other factors that need to be assessed in
making the section 10 determination? To the extent parties suggest
alternative or additional conditions and benchmarks to be used to
define leasing arrangements that can be processed on a forbearance
basis, we request that they address in detail the section 10
implications of their proposals.
2. Eliminating Prior Commission Approval for Spectrum Leases Involving
Non-Telecommunications Carriers and Non-Telecommunications Services
49. Because our section 10 forbearance authority applies only to
providers of telecommunications services, we may forbear from applying
section 310(d) requirements only for leases involving
telecommunications carriers and telecommunications services.
Nevertheless, we wish to explore whether we can provide similar relief
to parties whose lease transactions otherwise meet the conditions we
have proposed above for forbearance processing but do not fall within
the scope of section 10. We believe such action is necessary and
appropriate in order to place substantively similar wireless
transactions involving different types of licenses on a comparable
basis and to minimize unnecessary regulatory discrimination.
50. As a practical matter, many licenses that are beyond the scope
of section 10 are not subject to the statutory requirement of 30 days
public notice prior to Commission approval, which applies only to
common carrier and broadcast licenses. Nonetheless, section 310(d)
requires prior Commission review and approval of all transaction
applications involving non-common carrier and non-broadcast licenses
(as well as applications involving common carrier and broadcast
licenses). While the review period may be shortened because the 30-day
public notice period is not required as part of that process, the
requirement of prior Commission approval can still cause delays and
costs for parties seeking to enter into such transactions, many of
which raise no significant public interest issues.
51. We therefore seek comment on whether and how the Commission can
structure its review to minimize possible delays in processing time for
leases involving non-telecommunications carriers and non-
telecommunications services. (We note that this proposal encompasses
only services covered by the Report and Order and services that might
be added pursuant to this Further NPRM. Are there policy or legal
barriers to designating additional categories of leases involving non-
telecommunications carriers and non-telecommunications services that
would not be subject to prior approval? Do we have authority to take
action under other existing provisions of the Communications Act? Are
there any other steps we can take in our processing of spectrum lease
applications and/or notifications related to such facilities to help
place these types of filings on comparable footing with spectrum leases
involving only telecommunications services and telecommunications
carriers?
3. Forbearance With Respect to Certain Transfers and Assignments
52. We seek to promote secondary markets generally. Secondary
markets include not only spectrum leasing arrangements but also
transfers of control of licensees and assignment of licenses. In order
to not distort the marketplace in favor of spectrum leases and against
transfers or assignments that might otherwise be pursued as a matter of
sound business decision-making, we believe it is important to ensure
that leases involving the temporary transfer of de facto control and
transfers and assignments involving the permanent transfer of de facto
and de jure control are treated consistently to the extent feasible
under our statutory obligations. We further believe that many of the
same policy and public interest considerations that apply in the
leasing context are equally applicable to transfers and assignments.
Accordingly, we seek comment in this section on whether to use our
forbearance authority to permit certain transfers of control and
assignment of licenses to proceed without prior individualized
Commission review and consent, based on benchmarks similar to those we
propose to use in the leasing context. We ask parties to address
whether the differences between a transfer of de jure and de facto
control, on the one hand, and the transfer of de facto control alone
pursuant to a lease agreement, on the other hand, warrant similar or
distinct regulatory treatments. In addition to the fact that one type
of transaction involves a transfer of de jure control, we note that
such a transfer also is irrevocable. Under a lease, in contrast, the
licensee retains an interest in the authorization and may revoke the
lease under the terms agreed to by the parties or as prescribed by our
rules and policies.
53. Specifically, we seek comment on whether transfers of control
and assignment of licenses (including applications proposing to
disaggregate spectrum and/or partition a geographic area, or a partial
assignment) meeting certain conditions or benchmarks could be eligible
for a forbearance-based notification-only consent process. Could we
determine that prior review of such transactions is not necessary to
fulfill our public interest duties and goals? Clearly, any transfer and
assignment arrangements found to be eligible for forbearance-based
regulatory processing must be subject to appropriate conditions to
ensure that crucial Commission policies are not thwarted by means of
secondary market arrangements. Would allowing these categories of
transactions to proceed
[[Page 66238]]
with a minimum of regulatory cost and delay facilitate the movement of
spectrum in the secondary market to its highest valued use, improve
efficient use of spectrum, increase opportunities for access to
spectrum where needed, and benefit wireless consumers by enhancing the
services made available to them?
54. If we were to permit transfers of control and assignment of
licenses to proceed on a notification-only basis, we request comment on
transactions involving unjust enrichment payments and/or the assumption
by a transferee or assignee of the licensee's installment payment plan
terms. Under such a regulatory structure, should the presence of either
one or both of these factors disqualify a transfer of control or
assignment of license from processing under our forbearance procedures?
Alternatively, would we be able to build a process for determining the
amount of the applicable unjust enrichment payment as well as preparing
and signing the documents necessary for a transferee or assignee to
assume some portion or all of a licensee's installment payment
obligations that ensures that these efforts do not unduly delay
implementation of a lease agreement while affording the Commission
sufficient time to act?
55. If we were to allow transfers of control and assignment of
licenses to proceed without prior Commission approval, what safe
harbors or conditions should we impose to ensure that our public
interest objectives are not impeded by permitting such transactions to
proceed without individualized Commission review? We could apply the
same conditions and elements set forth above for spectrum lease
arrangements, including: the transferee or assignee must satisfy
applicable eligibility and use restrictions associated with the
licensed spectrum; the transferee or assignee must comply with the
foreign ownership requirements applicable to Commission licensees; the
transfer or assignment must not raise any competitive concerns; and,
the transfer or assignment must not raise any other public interest
concerns, to the extent we determine we need to adopt any other
benchmarks or conditions.
56. We request commenters to assess the appropriateness of each of
these conditions in applying forbearance from prior public notice and
Commission consent to transfers of control and assignment of licenses.
Further, the same questions raised regarding these conditions and
benchmarks in the context of spectrum leasing eligible for forbearance
processing are applicable in this context, and we request interested
parties to address those matters here as well. In particular, would
forbearance from prior Commission approval for transfers and
assignments that meet these conditions facilitate our objectives for
development of secondary markets? Would comparability of treatment
between spectrum leases, on the one hand, and transfers of control and
license assignments, on the other hand, help promote a marketplace that
provides incentives to parties to employ the most appropriate
arrangements and more effectively drive spectrum use to its highest
valued use? In light of the fact that transfers and assignments involve
transfer of de jure as well as de facto control, and on a permanent
basis, should we impose any conditions on forbearance that would not
apply in the leasing context?
57. If we were to pursue forbearance for transfer and assignment
applications, should we employ the same notification requirements as
proposed for spectrum leases in a forbearance regime as set forth in
the Report and Order? Does this provide sufficient notice to interested
parties, in light of the differences between spectrum leases and
transfers of de jure and de facto control? Could this process be
revised in any way to achieve a better balance among the competing
public policy objectives implicated by any such plan for forbearance
for transfers and assignments?
58. We request commenters to address whether the forbearance
conditions noted above would satisfy the section 10 requirements for
extending forbearance to some applications involving transfers of
control and/or license assignments. Can parties provide any further
explanation why forbearance from the 30-day public notice period and
individualized prior Commission review and approval supports a finding
that the section 10 test has been met? To the extent parties suggest
alternative or additional conditions and benchmarks to be used to
define transfers of control and assignment of licenses that might be
processed on a forbearance basis, we request that they address in
detail the section 10 implications of their proposals.
59. In assessing whether forbearance from prior public notice and
individualized Commission review meet the section 10 test, we request
commenters to consider the provisions of section 310(d), in particular
the requirement that no transfer of control or assignment of license
may take place unless the Commission finds that ``the public interest,
convenience, and necessity will be served thereby.'' The statutory
transfer of control obligations help to ensure that a licensee,
initially found qualified to hold a Commission authorization, does not
in turn replace itself with an unqualified entity or somehow use the
transfer/assignment process to shirk its obligations to the Commission.
We wish to ensure that any forbearance policies adopted in the context
of transfer and assignment applications will not undercut our ability
to carry out this obligation.
60. We acknowledge that in seeking comment on extending forbearance
policies to some transfer and assignment applications, we are striving
to balance competing goals. We anticipate that more successful
functioning of secondary markets--both spectrum leases and outright
transfers and assignments--will benefit consumers by increasing the
range of wireless services available to them and driving spectrum to
its highest valued use. But our public interest considerations are not
limited solely to an assessment of competitive issues. We must also
look to the Commission's other statutory objectives in weighing whether
forbearance from traditional application processing for transfer and
assignment applications in total furthers the public interest and
whether it can be authorized in accordance with the provisions of
section 10. We specifically request comment from interested parties
regarding all the factors that should be taken into account in making
our public interest calculus in this situation.
61. Finally, to the extent that we pursue forbearance from
traditional regulatory processing for substantial transfer and
assignment applications in the Wireless Radio Services encompassed
within the Report and Order or in any additional services based on this
Further NPRM, relief from prior public notice and Commission approval
requirements would be available only for telecommunications services
and telecommunications carriers. In a manner parallel to adopting
forbearance-based notification processing for spectrum leases, we
recognize the need to provide consistent treatment to similar types of
wireless service licenses. In addition, in the case of transfers and
assignments, there is a real likelihood in today's environment that a
licensee would have licenses that would be eligible for forbearance and
some that would not. We seek comment on how to ensure that we can
expeditiously process a proposed transfer of control or assignment of
license that involves both categories of licenses. Are there
alternative ways we can streamline processing of transfer and
assignment applications involving
[[Page 66239]]
non-telecommunications services and non-telecommunications carriers? We
note that we seek comment only with respect to services covered by the
Report and Order and services that might be added pursuant to this
Further NPRM.
C. Extending the Policies Adopted in the Report and Order to Additional
Spectrum-Based Services
62. In the Report and Order, we extend our new leasing policies to
most Wireless Radio Services in which licensees hold exclusive rights
to use the licensed spectrum. We wish to consider extending our leasing
policies, as adopted in the Report and Order and as they may be
modified based on this Further NPRM, to additional spectrum-based
services. In light of our conclusions about the public interest
benefits of spectrum leasing in the services for which we have adopted
spectrum leasing policies, we consider in this Further NPRM whether we
should extend the policies adopted in the Report and Order to some of
the radio services that we have excluded to date.
63. Public safety services. Our Public Safety Radio Pool is
regulated pursuant to part 90 of our rules. State and local
jurisdictions rely upon our Public Safety Radio Pool to carry out their
public safety obligations. The pool encompasses the licensing of the
radio communications of state and local governmental entities and
certain other categories of activities. Communications transmitted over
these facilities may include communications among members of a
firefighting team, directions to an ambulance crew, and coordination
among different police and fire agencies responding to a regional
crisis. In many instances, such public safety communications are highly
time-critical, but episodic in nature.
64. We seek comment here on whether to permit licensees in the
Public Safety Radio Pool to lease access rights to their licensed
spectrum. Initially, we note that any such leasing would be a voluntary
transaction by a public safety licensee, and not the use of this
spectrum by third parties without consent by that licensee. We also
recognize that public safety licensees require near-instant access to
their full spectrum capacity, when demand surges due to emergencies.
Using traditional technology, the only way to guarantee such access has
been full-time dedicated spectrum. New technologies, however, may allow
both ultra-reliable near-instant access by public safety licensees and
use by other licensees at times of low public safety demand. We note
that the Spectrum Policy Task Force recommended that the Commission
consider permitting public safety licensees to lease their spectrum
usage rights under conditions in which they could immediately reclaim
and use their spectrum in such emergencies. Some have proposed to allow
public safety licensees to lease their spectrum to others on an
interruptible basis, whereby third parties could lease under the
condition that they would immediately cease using the spectrum if the
public safety licensees exercised their right to preempt such leased
use. Under these circumstances, the public safety entity would lose no
access to use of its spectrum, which it nevertheless could also make
available at certain times to third parties. We intend to begin a
proceeding later this year on cognitive radio technologies, including
those that would enable interruptible spectrum leasing. That proceeding
will consider the state of technology as well as changes to the
Commission's technical rules, policies, procedures, or practices that
could facilitate the economic development of such technologies.
65. In light of this, we request that commenters evaluate whether
we should permit public safety licensees to lease their spectrum to
third parties. Generally, we ask whether leasing in this spectrum will
further the public interest, for instance, by resulting in more
efficient use of the public safety spectrum, by providing another
avenue for multiple public safety entities to use the same spectrum,
and/or of providing financial resources to public safety licensees.
Should we permit public safety licensees to lease to entities that are
not eligible to obtain a public safety authorization, which would
provide for a larger number of possible arrangements? If we permit
leasing of public safety radio pool spectrum, should it be subject to
any special rules in light of the importance of ensuring adequate
access to spectrum for public safety purposes? Parties supporting
leasing in the public safety frequencies should identify any elements
of such arrangements that the Commission should consider in adopting
policies.
66. We also seek comment on the significance, if any, of the 1997
Balanced Budget Act for spectrum leasing of 700 MHz public safety
spectrum. In that Act, Congress directed the Commission to reallocate
24 MHz of the spectrum recovered from TV channels 60-69 for public
safety services, and the Commission did so shortly thereafter. Congress
specifically defined the ``public safety services'' that are intended
to benefit from this spectrum allocation. Section 337(f) of the
Communications Act defines the term ``public safety services'' as
services: ``(A) the sole or principal purpose of which is to protect
the safety of life, health, or property; (B) that are provided--(i) by
State or local government entities; or (ii) by nongovernmental
organizations that are authorized by a governmental entity whose
primary mission is the provision of such services; and (C) that are not
made commercially available to the public by the provider.''
67. We seek comment on whether this allocation of spectrum under
section 337(a)(1) affects the ability of licensees in the Public Safety
700 MHz band to lease this spectrum for use that does not meet the
definition of public safety services. We also seek comment on the
significance for spectrum leasing, if any, of the statutory provision
that permits nongovernmental organizations to be authorized as
licensees of this spectrum by the relevant governmental entities.
Because we recently adopted the same eligibility framework for the 50
MHz of spectrum at 4940-4990 MHz that is designated in support of
public safety (the 4.9 GHz band), we pose the same questions relative
to that band.
68. We also note that certain portions of the 700 MHz public safety
spectrum are subject to special licensing regimes under our rules. For
instance, 2.4 MHz of the Public Safety 700 MHz band is licensed to each
state as a geographic area ``State License.'' The Commission adopted
the State License structure after concluding that it would allow, but
not require, each state to plan and develop shared, wide-area systems
under a substantially streamlined licensing process. In this regard,
the Commission revised the rules to allow state licensees to authorize
appropriate public safety agencies, including federal entities, within
a state and its political subdivisions to use the spectrum pursuant to
the state licensee's authorization. We seek comment on the
significance, if any, of this regime to our consideration of whether to
permit licensees to lease this spectrum.
69. Similarly, we point out that a total of 12.5 MHz of the Public
Safety 700 MHz band (the ``General Use'' channels), as well as 6 MHz of
public safety spectrum at 821-824/866-869 MHz, is administered by
regional or state-level planning committees. We seek comment on whether
and/or how leasing would work for spectrum governed by these planning
committees and processes.
70. Section 337(c) of the Communications Act provides that the
Commission must waive any rules
[[Page 66240]]
(other than its regulations regarding harmful interference) necessary
to authorize entities providing public safety services to operate on
unassigned non-public safety spectrum, if the Commission makes five
specific findings. First, the applicant must demonstrate that no other
spectrum allocated for public safety use is immediately available.
Second, the public safety entity must demonstrate that its use of the
requested spectrum will not cause harmful interference to other
spectrum users entitled to protection. Third, it must show that public
safety use of the frequencies is consistent with other public safety
spectrum allocations in the geographic area in question. Fourth, the
applicant must show that the unassigned frequencies were allocated for
their present use not less than two years prior to the grant of the
application at issue. Finally, the applicant must demonstrate that
grant of the application is consistent with the public interest.
Waivers granted under section 337(c) thus are intended to meet a public
safety entity's immediate need for spectrum. Can we extend the spectrum
leasing policies adopted in the Report and Order to licenses granted
under section 337(c)? Are there special considerations we should take
into account in making this determination? Are there any additional
limits that should be imposed on public safety licensees granted
licenses under this section in entering into spectrum leasing
arrangements?
71. Finally, some public safety spectrum is specifically designated
for ``interoperability,'' ``mutual aid,'' or similar activities. Given
the importance of this spectrum in the event of significant disaster or
other activity requiring communication and coordination, are there any
unique factors we should take into account in considering whether, and
if so how, to permit licensees to voluntarily lease this spectrum?
72. Various Private Wireless and Personal Radio Services. The
Private Wireless Services include spectrum licensed under parts 80
(Maritime Services), 87 (Aviation Services), and 97 (Amateur Radio
Service). The Personal Radio Services include spectrum licensed under
part 95 of our rules. We use a variety of methods to license the
spectrum in these rule parts, from licensing by rule, to conditioning
operation on successful completion of a required test, to site-based
licensing, to geographic area licensing. In assessing whether our
spectrum leasing policies should be extended to any of these services,
the nature of the authorization granted to users of the covered
spectrum must be taken into account.
73. Some services encompassed within parts 80, 87, and 95 are
licensed by rule. The rules governing these services indicate who may
operate in the particular services and constitute the authorization to
operate; no individual licenses are issued by the Commission.
Specifically, users of the Wireless Medical Telemetry Service, Medical
Implant Communications Service, Family Radio Service, Radio Control
Radio Service, Citizens Band Service, Low Power Radio Service, and
Multi-Use Radio Service do not receive an individualized license to
cover operation. Given this licensing approach, we query whether it
makes sense to extend our spectrum leasing policies to any services
where licenses are issued by rule. We request any parties addressing
this issue to discuss the legal and practical ramifications of their
position, as well as whether spectrum leasing in such services would
further the public interest.
74. In other private and personal wireless services, users have
access to spectrum because they have passed a testing requirement. Upon
successful completion of the required testing, users have the privilege
of using the spectrum pursuant to an operator license. Moreover, these
operators generally are not entitled to exclusive access to spectrum
but instead must share access to the spectrum with all operators who
have successfully completed the exam requirements.
75. Indeed, in some cases, the operations in these services are not
governed by the issuance of a Commission license. We also note that in
many of these services, stations do not have a fixed transmitting
location. We point out that, for many of the services authorized and
regulated under these parts, a user does not have authority to transfer
or assign an authorization or license. Finally, spectrum throughout
these rule parts is subject to shared, not exclusive, use.
76. These factors potentially present significantly different
issues in considering whether spectrum leasing is meaningful and/or
beneficial in these services than does spectrum leasing of exclusively
licensed spectrum. For instance, if a licensee has no ability to
transfer or assign a license, should that individual or entity have the
ability to engage in spectrum leasing under the policies adopted in
this rulemaking? Accordingly, we seek comment on the special
considerations potentially applicable to the implementation of spectrum
leasing to any of these services. We invite comments on the propriety
of expanding the scope of our leasing policies to reach such services.
Would such leasing promote more efficient spectrum use? Is spectrum
leasing even a reasonable concept for some of these services? Would it
further the public interest? Conversely, could it undermine the
purposes of these services?
77. The Report and Order facilitates spectrum leasing by licensees
on Industrial/Business Radio frequencies with exclusive authorizations,
but requires that they lease only to entities that are also eligible
for Industrial/Business Radio licensees. Should we revise our policies
to permit leasing on these frequencies to commercial providers of
wireless services? We seek comment on the significance, if any, to our
determination on this issue of the Commission's decision in 2000 to
permit such licensees to convert to commercial operation or to assign a
private license to a commercial licensee in certain defined
circumstances.
78. Wireless services on shared frequencies. In the Report and
Order, we declined to allow leasing on shared frequencies, since
parties can readily obtain their own authorizations on shared
frequencies and they are not foreclosed from applying for an
authorization by the existence of another licensee in the same
geographic area. In light of our proposals in this Further NPRM to
expand spectrum leasing and to take other steps to promote secondary
markets, we wish to give further consideration to the possible value
and implementation of spectrum leasing pursuant to authorizations
involving shared frequencies. It might be possible, for example, for a
group of licensees operating on the same frequency on a shared basis to
cooperate in leasing spectrum to another entity. We recognize that
leasing on shared frequencies may raise different implementation issues
than leasing pursuant to an authorization involving the exclusive use
of a block of frequencies in a particular geographic area. We welcome
comments on the feasibility and possible public interest benefits of
leasing involving shared frequencies. To the extent commenters take a
position on this issue, we request that they address any implementation
issues or other considerations that might be unique to this type of
leasing. We also ask commenters whether permitting leasing on such
spectrum would defeat the purpose of having shared spectrum available
to a number of potential users as licensees or would in fact promote
achievement of such goals.
[[Page 66241]]
79. Non-multilateration LMS. Non-multilateration LMS systems,
regulated under part 90, transmit data to and from objects passing
through particular locations (e.g., automated tolls, monitoring of
railway cars), and are licensed on a site-by-site basis, except that
municipalities or other governmental operations may file for a non-
multilateration license covering an Economic Area. Should the
Commission extend its spectrum leasing rules to non-multilateration
LMS? Given the nature of the operations and in light of the shared
spectrum usage in this service, would spectrum leasing potentially be
of benefit in this service?
80. Instructional Television Fixed Service and Multipoint
Distribution Service. These services currently are regulated under
parts 74 and 21, respectively. Our rules currently allow ITFS licensees
to lease their excess channel capacity to others. Specifically, an ITFS
licensee may lease up to 95 percent of its channel capacity for non-
educational programming, consistent with policies unique to this
leasing environment. We recently instituted a comprehensive review of
the service rules relating to MDS and ITFS. Among other issues, we
sought comment on whether there are any circumstances under which we
should restrict or require leasing in order to ensure that access to
spectrum is not unduly limited.
81. In this proceeding, we query whether we should extend the
policies developed in this docket to leasing involving ITFS and MDS
licensees, which have developed with their own approach to excess
capacity leasing. Should we offer leasing based on the models used in
this docket as an alternative format to the licensees in this service
as well? Should the leasing policies adopted in this rulemaking replace
the leasing standards that have been developed on a case-by-case basis
for ITFS and MDS? How does action in this proceeding fit with the
issues being considered in the open rulemaking proposing to evaluate
the licensing structure for ITFS and MDS? We note that the record
compiled in this proceeding on this issue may be taken into account in
WT Docket No. 03-66 as we overhaul the rules and policies generally
applicable to ITFS and MDS.
82. Cable Television Relay Service. This category includes cable
television relay service under part 78. Although we explicitly excluded
this service from consideration in the NPRM, we now request comment
from interested parties as to whether we should permit spectrum leasing
in this service. Parties addressing this issue should discuss any
special considerations that should affect our decision whether to
permit licensees voluntarily to lease this spectrum.
83. Multichannel Video Distribution and Data Service. Multichannel
Video Distribution and Data Service (MVDDS) is regulated pursuant to
subpart P of part 101. MVDDS licensees ``must use spectrum in the 12.2-
12.7 GHz band for any digital fixed non-broadcast service (broadcast
services are intended for reception of the general public and not on a
subscribership basis) including one-way direct-to-home/office wireless
service.'' This service was established subsequent to the Commission's
adoption of the NPRM in this proceeding. Although the Commission
established multiple geographic service areas, the rules specifically
provide that each geographic area license will be auctioned to one
licensee. We request interested parties to address whether the
Commission's decision to authorize only one licensee per service area
in this band should affect our determination whether to permit
licensees voluntarily to lease this spectrum. What would be the
benefits and/or harms of extending our spectrum leasing policies to
this service?
84. 700 MHz Guard Band Managers. The part 27 Guard Band Manager
Service is not included within the scope of action take in the Report
and Order. Should we take any action to revise the rules that govern
the activities of 700 MHz guard band managers? Should such band
managers be given the same opportunities as other licensees to engage
in a greater range of spectrum leasing activities? Do the
considerations related to interference and other operational factors
affect the determination we might make with respect to leasing in the
700 MHz guard band manager frequencies?
85. Satellite Services. Although we decided in the Report and Order
to make no changes in the spectrum leasing policies applicable to our
satellite services at this time, we remain receptive to proposals for
extending the policies we have developed in this proceeding to
satellite services or considering alternative lease arrangements.
Accordingly, we request parties to address whether we should take any
further action in this proceeding to make spectrum leasing as defined
in this proceeding available to satellite services as well in order to
promote more efficient use of spectrum.
86. Forbearance. The forbearance provisions of section 10 apply
only to telecommunication services and telecommunications carriers.
Some of the licenses listed above involve spectrum operations that do
not fall within the definition of telecommunications services. Do we
have any other basis under the Act pursuant to which we could adopt any
of the policies set forth in the Report and Order or proposed in this
Further NPRM?
87. Extending streamlined processing of transfer and assignment
applications to additional services. The Report and Order applies
streamlined processing rules to transfer and assignment applications
involving authorizations in the services for which we adopt spectrum
leasing policies. Should we expand the scope of authorizations to which
this streamlined processing applies? Can we encompass non-
telecommunications services and non-telecommunications carriers within
this streamlined process? Does it make sense to extend streamlined
application processing to transfer and assignment applications
involving other services? We request commenters to document the
benefits and/or harms (depending upon the position they take)
associated with expanding the availability of streamlined processing of
transfer and assignment applications to additional services. We note
that we seek comment only with respect to services covered by the
Report and Order and services that might be added pursuant to this
Further NPRM.
D. Application of the New De Facto Control Standard for Spectrum
Leasing to Other Issues and Types of Arrangements
88. As noted in the Report and Order, we are at present limiting
application of our newly adopted de facto control standard to the
leasing context. Thus, the facilities-based Intermountain Microwave
standard for evaluating de facto control continues to be the prevailing
standard in other regulatory contexts that call for assessment of the
exercise of de facto control over an applicant or licensee, such as in
the case of designated entity and entrepreneur eligibility and
management agreements.
89. We now examine whether we should apply our new de facto control
standard to regulatory contexts other than leasing. We seek comment on
whether our conclusion that the Intermountain Microwave standard no
longer serves the public interest in the leasing context is also
relevant to our application of the standard in other contexts.
Alternatively, we seek comment on whether there are policy reasons to
continue using a facilities-based approach to de facto control analysis
in other regulatory contexts. Are there contexts in which evaluating
[[Page 66242]]
licensee control of facilities continues to be important to regulatory
objectives that are distinguishable from our objectives in the leasing
context? If we elect to continue using a facilities-based approach in
some contexts but not others, how do we reconcile the existence of
divergent de facto control standards under section 310(d) and other
provisions of the Act?
90. Designated entity and entrepreneur eligibility. At present, our
rules for determining affiliation under our designated entity and
entrepreneur policies largely incorporate the Intermountain Microwave
test. We request commenters to address whether the new standard for
assessing de facto control adopted in the Report and Order should also
be employed for assessing affiliation and eligibility for designated
entity and entrepreneur status. Specifically, does section 309(j)
implicate different concerns from section 309(d)? Do the statutory
objectives of section 309(j) require more of a focus on actual
facilities control by the beneficiary of our designated entity/
entrepreneur policies, or is it sufficient that such an entity can
obtain an authorization in an auction and then lease the spectrum
pursuant to the Commission authorization without constructing and
operating its own facilities? The underlying goals of section 309(j)
necessarily will affect whether we conclude that the new de facto
control standard is suitable in this context. Would the new de facto
control standard ensure that the intended beneficiaries of section
309(j) in fact receive those benefits and that the designated entity/
entrepreneur rules (to the extent they are retained) can not be
unfairly manipulated?
91. Management agreements. The Commission has long permitted the
use of management agreements and other agency arrangements by its
licensees as a means to manage their authorized services and
facilities. The issue of whether a licensee has retained de facto
control vis-a-vis a manager in turn has long been premised on the
Intermountain Microwave decision and our related Motorola decision.
This assessment of management agreements is inherently a case-by-case
determination as well as strongly tied to the control of facilities and
operations implemented pursuant to a Commission authorization. Should
we adopt the new de facto control standard for management agreements as
well? Is there anything in the new standard that would forbid elements
of management agreements previously entered into in reliance on the
Intermountain Microwave and Motorola standards? Could extending a
revised de facto control standard to management agreements allow
parties to enter into a purported management agreement--which would not
be subject to the notification and other obligations applicable to
spectrum leasing--when in fact the arrangement should be considered
under spectrum leasing policies? Would this allow parties to undercut
our efforts to obtain adequate information for enforcement purposes as
well as facilitating the efficient functioning of secondary markets?
92. Finally, are there any other contexts in which we currently use
the Intermountain Microwave standard but should now consider adoption
of our new de facto control standard? We request commenters identifying
any such situations to discuss the appropriateness of the new standard
in terms of overall policy objectives as well as practical deployment
considerations.
E. Effect of Secondary Markets on Designated Entity/Entrepreneur
Policies
93. The Commission's designated entity and entrepreneur policies
were adopted to further statutory requirements and to promote
participation in the provision of spectrum-based services by certain
designated entities. These policies were created in 1994 as one
component of the Commission's implementation of the competitive bidding
policies and procedures mandated by sections 309(j)(3) and 309(j)(4) of
the Act. Historically, the Commission's designated entity policies have
sought to ensure that small businesses were given the opportunity to
participate in the provision of spectrum-based services.
94. The Commission currently applies a control test to ensure that
its designated entity and entrepreneur policies serve the programs'
intended beneficiaries. Section 1.2110(c)(2) sets forth the controlling
interest standard and is generally used for determining which entities
are eligible for small business or entrepreneur status. The premise of
this rule is that all parties that control an applicant or have the
power to control an applicant, and such parties' affiliates, will have
their gross revenues counted and attributed to the applicant in
determining the applicant's eligibility for small business status or
for any other size-based status using a gross revenue threshold.
95. From the outset, the Commission has also been determined to
ensure, pursuant to section 309(j)(4)(E), that the designated entity
and entrepreneur policies would not be abused. As the Commission has
explained, these policies are designed, among other reasons, to ``deter
speculation and participation in the licensing process by those who do
not intend to offer service to the public, or who intend to use our
preferences to obtain a license at a lower cost than they otherwise
would have to pay and later sell it at the market price.'' The
Commission has also indicated that the unjust enrichment rules were
designed to recapture for the government a portion of the value of the
bidding credit or other special provision if a designated entity
prematurely transfers its licenses to an ineligible entity. The
Commission's unjust enrichment provisions have been codified in section
1.2111 of the Commission's rules.
96. We inquire whether we should alter the policies adopted in the
Report and Order for designated entity leasing under the de facto
transfer leasing option or under the proposals contained in this
Further NPRM. Should we permit a designated entity or entrepreneur
licensee to lease some or all of its spectrum usage rights to any
entity, regardless of whether that entity would qualify for the same
small business designated entity status as that of the licensee? What
would be the public interest benefits of revising the policies and
rules in this manner? Would such a revision be consistent with our
unjust enrichment policies and rules? What alternative approaches might
the Commission take were it to decide to provide additional flexibility
to designated entity licensees? How would we best design policies so as
to ensure compliance with our statutory obligations to prevent unjust
enrichment?
IV. Procedural Matters
A. Initial Regulatory Flexibility Analysis Regarding the Further NPRM
97. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), see 5 U.S.C. 603, the Commission has prepared this
present Initial Regulatory Flexibility Analysis (IRFA) of the possible
significant economic impact on a substantial number of small entities
by the policies and rules proposed in the Further NPRM. Written public
comments are requested on this IRFA. These comments must be filed in
accordance with the same filing deadlines for comments on the Further
NPRM, and they must have a separate and distinct heading designating
them as responses to the Initial Regulatory Flexibility Analysis. The
Commission will send a copy of the Further NPRM, including this IRFA,
to the Chief Counsel for Advocacy of the Small
[[Page 66243]]
Business Administration (SBA) in accordance with the Regulatory
Flexibility Act. See 5 U.S.C. 603(a).
1. Need for, and Objectives of, the Proposed Rules
98. While the changes we adopt today in the Report and Order are an
important step towards facilitating leasing of spectrum usage rights
and enhancing the functioning of the secondary spectrum marketplace
generally, we believe that there are additional measures that we might
take to improve efficiency and promote access to a secondary spectrum
market in order to ensure the greatest benefit to spectrum users and
consumers. Thus, in the Further NPRM, we seek comment on: (1) How to
encourage the development of information and clearinghouse mechanisms
to facilitate secondary market transactions between licensees and new
users in need of access to spectrum; (2) further streamlining of
application processing for spectrum leasing, transfers of control, and
license assignments; (3) expanding our spectrum leasing policies to
additional services not encompassed within the Report and Order; (4)
applying the new de facto control standard adopted for spectrum leasing
to other issues and types of arrangements; and, (5) evaluating whether
the spectrum leasing policies adopted in the Report and Order for
designated entities should be altered in any respect. We discuss the
potential impact of these on small entities in the paragraphs that
follow.
2. Legal Basis
99. The potential actions on which comment is sought in this
Further NPRM would be authorized under sections 1, 4(i), and 303(r), of
the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), and
303(r).
3. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply
100. The RFA requires that an initial regulatory flexibility
analysis be prepared for notice-and-comment rulemaking proceedings,
unless the Agency certifies that ``the rule will not, if promulgated,
have a significant impact on a substantial number of small entities.''
The RFA 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. A small business concern is one which:
(1) Is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA). A small
organization is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
This IRFA describes and estimates the number of small entity licensees
that may be affected if the proposals in this Further NPRM are adopted.
101. This Further NPRM could result in rule changes that, if
adopted, would create new opportunities and obligations for Wireless
Radio Services licensees and other entities that may lease spectrum
usage rights from these licensees. When identifying small entities that
could be affected by our new rules, we provide information describing
auctions results, including the number of small entities that are
winning bidders. We note, however, that the number of winning bidders
that qualify as small businesses at the close of an auction does not
necessarily reflect the total number of small entities currently in a
particular service. The Commission does not generally require that
applicants provide business size information, except in the context of
an assignment or transfer of control application where unjust
enrichment issues are implicated. Consequently, to assist the
Commission in analyzing the total number of potentially affected small
entities, we request commenters to estimate the number of small
entities that may be affected by any rule changes resulting from this
Further NPRM.
a. Wireless Radio Services
102. Many of the potential rules on which comment is sought in this
Further NPRM, if adopted, would affect small entity licensees of the
Wireless Radio Services identified herein:
103. Cellular Licensees. The SBA has developed a small business
size standard for small businesses in the category ``Cellular and Other
Wireless Telecommunications.'' Under that SBA category, a business is
small if it has 1,500 or fewer employees. According to the Bureau of
the Census, only twelve firms out of a total of 977 cellular and other
wireless telecommunications firms that operated for the entire year in
1997 had 1,000 or more employees. Therefore, even if all twelve of
these firms were cellular telephone companies, nearly all cellular
carriers are small businesses under the SBA's definition.
104. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service
has both Phase I and Phase II licenses. Phase I licensing was conducted
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized
to operate in the 220 MHz band. The Commission has not developed a
definition of small entities specifically applicable to such incumbent
220 MHz Phase I licensees. To estimate the number of such licensees
that are small businesses, we apply the small business size standard
under the SBA rules applicable to ``Cellular and Other Wireless
Telecommunications'' companies. This category provides that a small
business is a wireless company employing no more than 1,500 persons.
According to the Census Bureau data for 1997, only twelve firms out of
a total of 977 such firms that operated for the entire year in 1997,
had 1,000 or more employees. If this general ratio continues in the
context of Phase I 220 MHz licensees, the Commission estimates that
nearly all such licensees are small businesses under the SBA's small
business standard.
105. 220 MHz Radio Service--Phase II Licensees. The Phase II 220
MHz service is subject to spectrum auctions. In an order relating to
this service, we adopted a small business size standard for defining
``small'' and ``very small'' businesses for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. This small business standard indicates that a
``small business'' is an entity that, together with its affiliates and
controlling principals, has average gross revenues not exceeding $15
million for the preceding three years. A ``very small business'' is
defined as an entity that, together with its affiliates and controlling
principals, has average gross revenues that do not exceed $3 million
for the preceding three years. The SBA has approved these small size
standards. Auctions of Phase II licenses commenced on September 15,
1998, and closed on October 22, 1998. In the first auction, 908
licenses were auctioned in three different-sized geographic areas:
three nationwide licenses, 30 Regional Economic Area Group (EAG)
Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses
auctioned, 693 were sold. Thirty-nine small businesses won 373 licenses
in the first 220 MHz auction. A second auction included 225 licenses:
216 EA licenses and 9 EAG licenses. Fourteen companies claiming small
business status won 158 licenses. A third auction included four
licenses: 2 BEA licenses and 2 EAG licenses in the 220 MHz Service. No
small or very
[[Page 66244]]
small business won any of these licenses.
106. Lower 700 MHz Band Licenses. We adopted criteria for defining
three groups of small businesses for purposes of determining their
eligibility for special provisions such as bidding credits. We have
defined a small business as an entity that, together with its
affiliates and controlling principals, has average gross revenues not
exceeding $40 million for the preceding three years. A very small
business is defined as an entity that, together with its affiliates and
controlling principals, has average gross revenues that are not more
than $15 million for the preceding three years. Additionally, the lower
700 MHz Service has a third category of small business status that may
be claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The
third category is entrepreneur, which is defined as an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. The SBA has approved these small size standards. An
auction of 740 licenses (one license in each of the 734 MSAs/RSAs and
one license in each of the six Economic Area Groupings (EAGs))
commenced on August 27, 2002, and closed on September 18, 2002. Of the
740 licenses available for auction, 484 licenses were sold to 102
winning bidders. Seventy-two of the winning bidders claimed small
business, very small business or entrepreneur status and won a total of
329 licenses. A second auction commenced on May 28, 2003, and closed on
June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 CMA
licenses. Seventeen winning bidders claimed small or very small
business status and won sixty licenses, and nine winning bidders
claimed entrepreneur status and won 154 licenses.
107. Upper 700 MHz Band Licenses. The Commission released an order
authorizing service in the upper 700 MHz band. This auction, previously
scheduled for January 13, 2003, has been postponed.
108. Paging. In a recent order relating to paging, we adopted a
size standard for ``small businesses'' for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. A small business is an entity that, together with
its affiliates and controlling principals, has average gross revenues
not exceeding $15 million for the preceding three years. The SBA has
approved this definition. An auction of Metropolitan Economic Area
(MEA) licenses commenced on February 24, 2000, and closed on March 2,
2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven
companies claiming small business status won 440 licenses. An auction
of Metropolitan Economic Area (MEA) and Economic Area (EA) licenses
commenced on October 30, 2001, and closed on December 5, 2001. Of the
15,514 licenses auctioned, 5,323 were sold. 132 companies claiming
small business status purchased 3,724 licenses. A third auction,
consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in
all but three of the 51 MEAs commenced on May 13, 2003, and closed on
May 28, 2003. Seventy-seven bidders claiming small or very small
business status won 2,093 licenses. Currently, there are approximately
24,000 Private Paging site-specific licenses and 74,000 Common Carrier
Paging licenses. According to the most recent Trends in Telephone
Service Report, 608 private and common carriers reported that they were
engaged in the provision of either paging or ``other mobile'' services.
Of these, we estimate that 589 are small, under the SBA-approved small
business size standard. We estimate that the majority of private and
common carrier paging providers would qualify as small entities under
the SBA definition.
109. Broadband Personal Communications Service (PCS). The broadband
PCS spectrum is divided into six frequency blocks designated A through
F, and the Commission has held auctions for each block. The Commission
has created a small business size standard for Blocks C and F as an
entity that has average gross revenues of less than $40 million in the
three previous calendar years. For Block F, an additional small
business size standard for ``very small business'' was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. These small business size standards, in the context of
broadband PCS auctions, have been approved by the SBA. No small
businesses within the SBA-approved small business size standards bid
successfully for licenses in Blocks A and B. There were 90 winning
bidders that qualified as small entities in the Block C auctions. A
total of 93 ``small'' and ``very small'' business bidders won
approximately 40 percent of the 1,479 licenses for Blocks D, E, and F.
On March 23, 1999, the Commission reauctioned 155 C, D, E, and F Block
licenses; there were 113 small business winning bidders.
110. Narrowband PCS. The Commission held an auction for Narrowband
PCS licenses that commenced on July 25, 1994, and closed on July 29,
1994. A second commenced on October 26, 1994 and closed on November 8,
1994. For purposes of the first two Narrowband PCS auctions, ``small
businesses'' were entities with average gross revenues for the prior
three calendar years of $40 million or less. Through these auctions,
the Commission awarded a total of forty-one licenses, 11 of which were
obtained by four small businesses. To ensure meaningful participation
by small business entities in future auctions, the Commission adopted a
two-tiered small business size standard in an order relating to
narrowband PCS. A ``small business'' is an entity that, together with
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $40 million. A ``very small
business'' is an entity that, together with affiliates and controlling
interests, has average gross revenues for the three preceding years of
not more than $15 million. The SBA has approved these small business
size standards. A third auction commenced on October 3, 2001 and closed
on October 16, 2001. Here, five bidders won 317 (MTA and nationwide)
licenses. Three of these claimed status as a small or very small entity
and won 311 licenses.
111. Specialized Mobile Radio (SMR). The Commission awards ``small
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR)
geographic area licenses in the 800 MHz and 900 MHz bands to firms that
had revenues of no more than $15 million in each of the three previous
calendar years. The Commission awards ``very small entity'' bidding
credits to firms that had revenues of no more than $3 million in each
of the three previous calendar years. The SBA has approved these small
business size standards for the 900 MHz Service. The Commission has
held auctions for geographic area licenses in the 800 MHz and 900 MHz
bands. The 900 MHz SMR auction began on December 5, 1995, and closed on
April 15, 1996. Sixty bidders claiming that they qualified as small
businesses under the $15 million size standard won 263 geographic area
licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper
200 channels began on October 28, 1997, and was completed on December
8, 1997. Ten bidders claiming that they qualified as small businesses
under the $15 million size standard won 38 geographic area licenses for
the upper 200 channels in the 800 MHz SMR band. A second auction for
the 800 MHz band was held
[[Page 66245]]
on January 10, 2002 and closed on January 17, 2002 and included 23 BEA
licenses. One bidder claiming small business status won five licenses.
112. The auction of the 1,050 800 MHz SMR geographic area licenses
for the General Category channels began on August 16, 2000, and was
completed on September 1, 2000. Eleven bidders won 108 geographic area
licenses for the General Category channels in the 800 MHz SMR band
qualified as small businesses under the $15 million size standard. In
an auction completed on December 5, 2000, a total of 2,800 Economic
Area licenses in the lower 80 channels of the 800 MHz SMR service were
sold. Of the 22 winning bidders, 19 claimed ``small business'' status
and won 129 licenses. Thus, combining all three auctions, 40 winning
bidders for geographic licenses in the 800 MHz SMR band claimed status
as small business.
113. In addition, there are numerous incumbent site-by-site SMR
licensees and licensees with extended implementation authorizations in
the 800 and 900 MHz bands. We do not know how many firms provide 800
MHz or 900 MHz geographic area SMR pursuant to extended implementation
authorizations, nor how many of these providers have annual revenues of
no more than $15 million. One firm has over $15 million in revenues. We
assume, for purposes of this analysis, that all of the remaining
existing extended implementation authorizations are held by small
entities, as that small business size standard is established by the
SBA.
114. Private Land Mobile Radio (PLMR). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. These radios are used by companies of all
sizes operating in all U.S. business categories, and are often used in
support of the licensee's primary (non-telecommunications) business
operations. For the purpose of determining whether a licensee of a PLMR
system is a small business as defined by the SBA, we could use the
definition for ``Cellular and Other Wireless Telecommunications.'' This
definition provides that a small entity is any such entity employing no
more than 1,500 persons. The Commission does not require PLMR licensees
to disclose information about number of employees, so the Commission
does not have information that could be used to determine how many PLMR
licensees constitute small entities under this definition. Moreover,
because PLMR licensees generally are not in the business of providing
cellular or other wireless telecommunications services but instead use
the licensed facilities in support of other business activities, we are
not certain that the Cellular and Other Wireless Telecommunications
category is appropriate for determining how many PLMR licensees are
small entities for this analysis. Rather, it may be more appropriate to
assess PLMR licensees under the standards applied to the particular
industry subsector to which the licensee belongs.
115. The Commission's 1994 Annual Report on PLMRs indicates that at
the end of fiscal year 1994, there were 1,087,267 licensees operating
12,481,989 transmitters in the PLMR bands below 512 MHz. Because any
entity engaged in a commercial activity is eligible to hold a PLMR
license, the revised rules in this context could potentially impact
every small business in the United States.
116. Fixed Microwave Services. Fixed microwave services include
common carrier, private-operational fixed, and broadcast auxiliary
radio services. Currently, there are approximately 22,015 common
carrier fixed licensees and 61,670 private operational-fixed licensees
and broadcast auxiliary radio licensees in the microwave services. The
Commission has not yet defined a small business with respect to
microwave services. For purposes of this FRFA, we will use the SBA's
definition applicable to ``Cellular and Other Wireless
Telecommunications'' companies--that is, an entity with no more than
1,500 persons. The Commission does not have data specifying the number
of these licensees that have more than 1,500 employees, and thus is
unable at this time to estimate with greater precision the number of
fixed microwave service licensees that would qualify as small business
concerns under the SBA's small business size standard. Consequently,
the Commission estimates that there are 22,015 or fewer small common
carrier fixed licensees and 61,670 or fewer small private operational-
fixed licensees and small broadcast auxiliary radio licensees in the
microwave services that may be affected by the rules and policies
adopted herein. The Commission notes, however, that the common carrier
microwave fixed licensee category includes some large entities.
117. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The SBA has approved
these definitions. The FCC auctioned geographic area licenses in the
WCS service. In the auction, which commenced on April 15, 1997, and
closed on April 25, 1997, there were seven bidders that won 31 licenses
that qualified as very small business entities, and one bidder that won
one license that qualified as a small business entity. An auction for
one license in the 1670-1674 MHz band commenced on April 30, 2003, and
closed the same day. One license was awarded. The winning bidder was
not a small entity.
118. 39 GHz Service. The Commission defines ``small entity'' for 39
GHz licenses as an entity that has average gross revenues of less than
$40 million in the three previous calendar years. ``Very small
business'' is defined as an entity that, together with its affiliates,
has average gross revenues of not more than $15 million for the
preceding three calendar years. The SBA has approved these definitions.
The auction of the 2,173 39 GHz licenses began on April 12, 2000, and
closed on May 8, 2000. The 18 bidders who claimed small business status
won 849 licenses.
119. Local Multipoint Distribution Service. An auction of the 986
Local Multipoint Distribution Service (LMDS) licenses began on February
18, 1998, and closed on March 25, 1998. The Commission defined ``small
entity'' for LMDS licenses as an entity that has average gross revenues
of less than $40 million in the three previous calendar years. An
additional classification for ``very small business'' was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. These regulations defining ``small entity'' in the
context of LMDS auctions have been approved by the SBA. There were 93
winning bidders that qualified as small entities in the LMDS auctions.
A total of 93 small and very small business bidders won approximately
277 A Block licenses and 387 B Block licenses. On March 27, 1999, the
Commission re-auctioned 161 licenses; there were 32 small and very
small business winning bidders that won 119 licenses.
120. 218-219 MHz Service. The first auction of 218-219 MHz
(previously referred to as the Interactive and Video Data Service or
IVDS) spectrum resulted in 178 entities winning licenses for 594
Metropolitan Statistical Areas (MSAs). Of the 594 licenses, 567 were
won by 167 entities qualifying as a small
[[Page 66246]]
business. For that auction, we defined a small business as an entity
that, together with its affiliates, 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. In an order relating to the 218-219 MHz
Service, we defined a small business as an entity that, together with
its affiliates and persons or entities that hold interests in such an
entity and their affiliates, has average annual gross revenues not
exceeding $15 million for the preceding three years. A very small
business is defined as an entity that, together with its affiliates and
persons or entities that hold interests in such an entity and its
affiliates, has average annual gross revenues not exceeding $3 million
for the preceding three years. The SBA has approved of these
definitions. At this time, we cannot estimate 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
prevalence of small businesses in the subscription television services
and message communications industries, we assume for purposes of this
IRFA that in future auctions, many, and perhaps all, of the licenses
may be awarded to small businesses.
121. Location and Monitoring Service (LMS). Multilateration LMS
systems use non-voice radio techniques to determine the location and
status of mobile radio units. For purposes of auctioning LMS licenses,
the Commission has defined ``small business'' as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the preceding three years not exceeding $15 million.
A ``very small business'' is defined as an entity that, together with
controlling interests and affiliates, has average annual gross revenues
for the preceding three years not exceeding $3 million. These
definitions have been approved by the SBA. An auction for LMS licenses
commenced on February 23, 1999, and closed on March 5, 1999. Of the 528
licenses auctioned, 289 licenses were sold to four small businesses. We
cannot accurately predict the number of remaining licenses that could
be awarded to small entities in future LMS auctions.
122. Rural Radiotelephone Service. We use the SBA definition
applicable to cellular and other wireless telecommunication companies,
i.e., an entity employing no more than 1,500 persons. There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and
the Commission estimates that there are 1,000 or fewer small entity
licensees in the Rural Radiotelephone Service that may be affected by
the rules and policies adopted herein.
123. Air-Ground Radiotelephone Service. We use the SBA definition
applicable to cellular and other wireless telecommunication companies,
i.e., an entity employing no more than 1,500 persons. There are
approximately 100 licensees in the Air-Ground Radiotelephone Service,
and the Commission estimates that almost all of them qualify as small
entities under the SBA definition.
124. Offshore Radiotelephone Service. This service operates on
several ultra high frequency (UHF) TV broadcast channels that are not
used for TV broadcasting in the coastal area of the states bordering
the Gulf of Mexico. At present, there are approximately 55 licensees in
this service. We use the SBA definition applicable to cellular and
other wireless telecommunication companies, i.e., an entity employing
no more than 1,500 persons. The Commission is unable at this time to
estimate the number of licensees that would qualify as small entities
under the SBA definition. The Commission assumes, for purposes of this
FRFA, that all of the 55 licensees are small entities, as that term is
defined by the SBA.
125. Multiple Address Systems. MAS entities, in general, fall into
two categories: (1) Those using MAS spectrum for profit-based uses, and
(2) those using MAS spectrum for private internal uses. With respect to
the first category, the Commission defines ``small entity'' for MAS
licenses as an entity that has average gross revenues of less than $15
million in the three previous calendar years. ``Very small business''
is defined as an entity that, together with its affiliates, has average
gross revenues of not more than $3 million for the preceding three
calendar years. The SBA has approved of these definitions. The majority
of these entities will most likely be licensed in bands where the
Commission has implemented a geographic area licensing approach that
would require the use of competitive bidding procedures to resolve
mutually exclusive applications. The Commission's licensing database
indicates that, as of January 20, 1999, there were a total of 8,670 MAS
station authorizations. Of these, 260 authorizations were associated
with common carrier service. In addition, an auction for 5,104 MAS
licenses in 176 EAs began November 14, 2001, and closed on November 27,
2001. Seven winning bidders claimed status as small or very small
businesses and won 611 licenses.
126. With respect to the second category, which consists of
entities that use, or seek to use, MAS spectrum to accommodate their
own internal communications needs, we note that MAS serves an essential
role in a range of industrial, safety, business, and land
transportation activities. MAS radios are used by companies of all
sizes, operating in virtually all U.S. business categories, and by all
types of public safety entities. For the majority of private internal
users, the definitions developed by the SBA would be more appropriate.
The applicable definition of small entity in this instance appears to
be the ``Cellular and Other Wireless Telecommunications'' definition
under the SBA rules. This definition provides that a small entity is
any entity employing no more than 1,500 persons. The Commission's
licensing database indicates that, as of January 20, 1999, of the 8,670
total MAS station authorizations, 8,410 authorizations were for private
radio service, and of these, 1,433 were for private land mobile radio
service.
127. Incumbent 24 GHz Licensees. The rules that we adopt could
affect incumbent licensees who were relocated to the 24 GHz band from
the 18 GHz band, and applicants who wish to provide services in the 24
GHz band. The Commission did not develop a definition of small entities
applicable to existing licensees in the 24 GHz band. Therefore, the
applicable definition of small entity is the definition under the SBA
rules for ``Cellular and Other Wireless Telecommunications.'' This
definition provides that a small entity is any entity employing no more
than 1,500 persons. We believe that there are only two licensees in the
24 GHz band that were relocated from the 18 GHz band, Teligent and TRW,
Inc. It is our understanding that Teligent and its related companies
have less than 1,500 employees, though this may change in the future.
TRW is not a small entity. Thus, only one incumbent licensee in the 24
GHz band is a small business entity.
128. Future 24 GHz Licensees. With respect to new applicants in the
24 GHz band, we have defined ``small business'' as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the three preceding years not exceeding $15 million.
``Very small business'' in the 24 GHz band is defined as an entity
that, together with controlling interests and affiliates, has average
gross revenues not exceeding $3 million for the preceding three years.
The SBA has approved
[[Page 66247]]
these definitions. The Commission will not know how many licensees will
be small or very small businesses until the auction, if required, is
held.
129. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order,
we adopted size standards for ``small businesses'' and ``very small
businesses'' for purposes of determining their eligibility for special
provisions such as bidding credits and installment payments. A small
business in this service is an entity that, together with its
affiliates and controlling principals, has average gross revenues not
exceeding $40 million for the preceding three years. Additionally, a
``very small business'' is an entity that, together with its affiliates
and controlling principals, has average gross revenues that are not
more than $15 million for the preceding three years. SBA approval of
these definitions is not required. An auction of 52 Major Economic Area
(MEA) licenses commenced on September 6, 2000, and closed on September
21, 2000. Of the 104 licenses auctioned, 96 licenses were sold to nine
bidders. Five of these bidders were small businesses that won a total
of 26 licenses. A second auction of 700 MHz Guard Band licenses
commenced on February 13, 2001, and closed on February 21, 2001. All
eight of the licenses auctioned were sold to three bidders. One of
these bidders was a small business that won a total of two licenses.
130. Multipoint Distribution Service, Multichannel Multipoint
Distribution Service, and Instructional Television Fixed Service.
Multichannel Multipoint Distribution Service (MMDS) systems, often
referred to as ``wireless cable,'' transmit video programming to
subscribers using the microwave frequencies of the Multipoint
Distribution Service (MDS) and Instructional Television Fixed Service
(ITFS). In connection with the 1996 MDS auction, the Commission defined
``small business'' as an entity that, together with its affiliates, has
average gross annual revenues that are not more than $40 million for
the preceding three calendar years. The SBA has approved of this
standard. The MDS auction resulted in 67 successful bidders obtaining
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67
auction winners, 61 claimed status as a small business. At this time,
we estimate that of the 61 small business MDS auction winners, 48
remain small business licensees. In addition to the 48 small businesses
that hold BTA authorizations, there are approximately 392 incumbent MDS
licensees that have gross revenues that are not more than $40 million
and are thus considered small entities. After adding the number of
small business auction licensees to the number of incumbent licensees
not already counted, we find that there are currently approximately 440
MDS licensees that are defined as small businesses under either the
SBA's or the Commission's rules. Some of those 440 small business
licensees may be affected by the proposals in the Further NPRM.
131. In addition, the SBA has developed a small business size
standard for Cable and Other Program Distribution, which includes all
such companies generating $12.5 million or less in annual receipts.
According to Census Bureau data for 1997, there were a total of 1,311
firms in this category, total, that had operated for the entire year.
Of this total, 1,180 firms had annual receipts of under $10 million,
and an additional 52 firms had receipts of $10 million or more but less
than $25 million. Consequently, we estimate that the majority of
providers in this service category are small businesses that may be
affected by the rules and policies proposed in the Further NPRM.
132. Finally, while SBA approval for a Commission-defined small
business size standard applicable to ITFS is pending, educational
institutions are included in this analysis as small entities. There are
currently 2,032 ITFS licensees, and all but 100 of these licenses are
held by educational institutions. Thus, we tentatively conclude that at
least 1,932 ITFS licensees are small businesses.
133. Cable Television Relay Service. This service includes
transmitters generally used to relay cable programming within cable
television system distribution systems. The SBA has defined a small
business size standard for Cable and other Program Distribution,
consisting of all such companies having annual receipts of no more than
$12.5 million. According to Census Bureau data for 1997, there were
1,311 firms in the industry category Cable and Other Program
Distribution, total, that operated for the entire year. Of this total,
1,180 firms had annual receipts of $10 million or less, and an
additional 52 firms had receipts of $10 million or more but less than
$25 million. Thus, under this standard, we estimate that the majority
of providers in this service category are small businesses that may be
affected by the rules and policies proposed in the Further NPRM.
134. Cable System Operators (Rate Regulation Standard). The
Commission has developed, with SBA approval, its own definition of a
small cable system operator for purposes of rate regulation. Under the
Commission's rules, a ``small cable company'' is one serving fewer than
400,000 subscribers nationwide. Based on our most recent information,
we estimate that there were 1,439 cable operators that qualified as
small cable companies at the end of 1995. Since then, some of those
companies may have grown to serve over 400,000 subscribers, and others
may have been involved in transactions that caused them to be combined
with other cable operators. The Commission's rules define a ``small
system,'' for purposes of rate regulation, as a cable system with
15,000 or fewer subscribers. The Commission does not request nor does
the Commission collect information concerning cable systems serving
15,000 or fewer subscribers, and thus is unable to estimate, at this
time, the number of small cable systems nationwide.
135. Cable System Operators (Telecom Act Standard). The
Communications Act, as amended, also contains a size standard for a
small cable system operator, which is ``a cable operator that, directly
or through an affiliate, serves in the aggregate fewer than 1 percent
of all subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that there are 68,500,000
subscribers in the United States. Therefore, an operator serving fewer
than 685,000 subscribers shall be deemed a small operator if its annual
revenues, when combined with the total annual revenues of all of its
affiliates, do not exceed $250 million in the aggregate. Based on
available data, we find that the number of cable operators serving
685,000 subscribers or less totals approximately 1,450. Although it
seems certain that some of these cable system operators are affiliated
with entities whose gross annual revenues exceed $250,000,000, we are
unable at this time to estimate with greater precision the number of
cable system operators that would qualify as small cable operators
under the definition in the Communications Act.
136. Multichannel Video Distribution and Data Service. MVDDS is a
terrestrial fixed microwave service operating in the 12.2-12.7 GHz
band. No auction has yet been held in this service, although an action
has been scheduled for January 14, 2004. Accordingly, there are no
licensees in this service.
b. Private Wireless Radio Services
137. Amateur Radio Service. These licensees are believed to be
individuals, and therefore are not small entities.
138. Aviation and Marine Services. Small businesses in the aviation
and
[[Page 66248]]
marine radio services use a very high frequency (VHF) marine or
aircraft radio and, as appropriate, an emergency position-indicating
radio beacon (and/or radar) or an emergency locator transmitter. The
Commission has not developed a small business size standard
specifically applicable to these small businesses. For purposes of this
analysis, the Commission uses the SBA small business size standard for
the category ``Cellular and Other Telecommunications,'' which is 1,500
or fewer employees. Most applicants for recreational licenses are
individuals. Approximately 581,000 ship station licensees and 131,000
aircraft station licensees operate domestically and are not subject to
the radio carriage requirements of any statute or treaty. For purposes
of our evaluations in this analysis, we estimate that there are up to
approximately 712,000 licensees that are small businesses (or
individuals) under the SBA standard. In addition, between December 3,
1998 and December 14, 1998, the Commission held an auction of 42 VHF
Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and
161.775-162.0125 MHz (coast transmit) bands. For purposes of the
auction, the Commission defined a ``small'' business as an entity that,
together with controlling interests and affiliates, has average gross
revenues for the preceding three years not to exceed $15 million
dollars. In addition, a ``very small'' business is one that, together
with controlling interests and affiliates, has average gross revenues
for the preceding three years not to exceed $3 million dollars. There
are approximately 10,672 licensees in the Marine Coast Service, and the
Commission estimates that almost all of them qualify as ``small''
businesses under the above special small business size standards.
139. Personal Radio Services. Personal radio services provide
short-range, low power radio for personal communications, radio
signaling, and business communications not provided for in other
services. The Personal Radio Services include spectrum licensed under
part 95 of our rules. These services include Citizen Band Radio Service
(CB), General Mobile Radio Service (GMRS), Radio Control Radio Service
(R/C), Family Radio Service (FRS), Wireless Medical Telemetry Service
(WMTS), Medical Implant Communications Service (MICS), Low Power Radio
Service (LPRS), and Multi-Use Radio Service (MURS). There are a variety
of methods used to license the spectrum in these rule parts, from
licensing by rule, to conditioning operation on successful completion
of a required test, to site-based licensing, to geographic area
licensing. Under the RFA, the Commission is required to make a
determination of which small entities are directly affected by the
rules being adopted. Since all such entities are wireless, we apply the
definition of cellular and other wireless telecommunications, pursuant
to which a small entity is defined as employing 1,500 or fewer persons.
Many of the licensees in these services are individuals, and thus are
not small entities. In addition, due to the mostly unlicensed and
shared nature of the spectrum utilized in many of these services, the
Commission lacks direct information upon which to base an estimation of
the number of small entities under an SBA definition that might be
directly affected by the proposed rules.
140. Despite the paucity, or in some instances, total absence, of
information about their status as licensees or regulatees or the number
of operators in each such service, users of spectrum in these services
are listed here as a matter of Commission discretion in order to
fulfill the mandate imposed on the Commission by the Regulatory
Flexibility Act to regulate small business entities with an
understanding towards preventing the possible differential and adverse
impact of the Commission's rules on smaller entities. Further, the
listing of such entities, despite their indeterminate status, should
provide them with fair and adequate notice of the possible impact of
the proposals contained in the Further NPRM.
141. Public Safety Radio Services. Public Safety radio services
include police, fire, local government, forestry conservation, highway
maintenance, and emergency medical services. There are a total of
approximately 127,540 licensees in these services. Governmental
entities as well as private businesses comprise the licensees for these
services. All governmental entities with populations of less than
50,000 fall within the definition of a small entity.
c. Satellite-Related Services
142. Fixed Satellite Transmit/Receive Earth Stations. The most
recent Commission data shows that there are approximately 3,149 earth
station authorizations, a portion of which are Fixed Satellite
Transmit/Receive Earth Stations. We do not request nor collect annual
revenue information from these licensees, and are unable to estimate
the number of earth station licensees that are small business entities
under SBA definitions.
143. Fixed Satellite Small Transmit/Receive Earth Stations. The
most recent Commission data shows that there are approximately 3,149
earth station authorizations, a portion of which are Fixed Satellite
Small Transmit/Receive Earth Stations. We do not request nor collect
annual revenue information from these licensees, and are unable to
estimate the number of fixed satellite small transmit/receive earth
station licensees that are small business entities under SBA
definitions.
144. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems
(14 GHz). These stations operate on a primary basis, and frequency
coordination with terrestrial microwave systems is not required. Thus,
a single ``blanket'' application may be filed for a specified number of
small antennas and one or more hub stations. The most recent Commission
data shows that there are 485 current VSAT System authorizations. We do
not request nor collect annual revenue information from these
licensees, and are unable to estimate the number of VSAT system
licensees that are small business entities under SBA definitions.
145. Mobile Satellite Earth Stations. The most recent Commission
data shows that there are 21 licensees. We do not request nor collect
annual revenue information from these licensees, and are unable to
estimate the number of mobile satellite earth station licensees that
are small business entities under SBA definitions.
146. Radio Determination Satellite Earth Stations. The most recent
Commission data shows that there are four licensees. We do not request
nor collect annual revenue information, and are unable to estimate the
number of radio determination satellite earth station licensees that
are small business entities under SBA definitions.
147. Space Stations (Geostationary). The most recent Commission
data shows that there currently are an estimated 75 Geostationary Space
Station authorizations. We do not request nor collect annual revenue
information from these licensees, and are unable to estimate the number
of geostationary space station licensees that are small business
entities under SBA definitions.
148. Space Stations (Non-Geostationary). The most recent Commission
data shows that there currently are seven Non-Geostationary Space
Station authorizations. We do not request nor collect annual revenue
information from these licensees, and are unable to estimate the number
of non-geostationary space station
[[Page 66249]]
licensees that are small business entities under SBA definitions.
149. Direct Broadcast Satellites. Because DBS provides subscription
services, DBS falls within the SBA-recognized definition of ``Cable and
Other Program Distribution.'' This definition provides that a small
entity is one with $12.5 million or less in annual receipts. Currently,
there are nine DBS authorizations, though there are only two DBS
companies in operation at this time. We do not request nor collect
annual revenue information for DBS services, and are unable to
determine the number of DBS operators that would constitute a small
business entity under SBA definitions.
150. Digital Audio Radio Services (DARS). Commission records show
that there are two Digital Audio Radio Services authorizations. We do
not request nor collect annual revenue information from these
licensees, and are unable to estimate the number of DARS licensees that
are small business entities under SBA definitions.
4. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
151. The policies and proposals in the Further NPRM could apply to
a significant number of Commission licensees and spectrum lessees in a
range of wireless services. The Further NPRM explores possible steps to
allow certain spectrum leasing arrangements, and possibly license
assignments and transfers of control, to be implemented without prior
individualized Commission approval, using forms similar to those used
at present for obtaining prior Commission approval of these types of
transactions. At most, the Further NPRM proposals would shift the
timing of filing of forms for certain of the transactions. In addition,
the Further NPRM inquires about extending to additional services the
spectrum leasing procedures adopted in the Report and Order for
spectrum manager leasing arrangements and de facto transfer leasing
arrangements. Licensees otherwise would have to obtain prior Commission
consent to transfers of control or license assignments on similar
forms.
152. Consideration of extending the spectrum leasing policies
adopted in the Report and Order to additional services specified in the
Further NPRM implicates potential reporting, recordkeeping and
compliance requirements for licensees and spectrum lessees in these
additional services, including: (1) Retention of lease agreements; (2)
reporting of spectrum leasing terms to the Commission; (3) licensee and
lessee compliance with the Commission's technical and service rules;
(4) licensee filings with the Commission on behalf of the lessee; (5)
licensee verification of lessee compliance with Commission rules; (6)
licensee supervision of a lessee's adherence to the Commission's rules
and policies; and (7) the leasing of spectrum by entities designated as
``small business'' or ``very small business'' under the Commission's
rules. Licensees and lessees may retain or hire outside professionals
(e.g., legal and engineering staff) to draft lease agreements, provide
consulting services, maintain records, and comply with applicable
Commission rules. They also may employ existing or new employees to be
responsible for reporting, recordkeeping, and other compliance
requirements.
153. The Further NPRM also explores what steps the Commission
should take, possibly including additional information submissions, to
promote effective functioning of secondary markets in spectrum usage
rights. The Further NPRM does not, however, propose any specific
reporting, recordkeeping or compliance requirements in this regard. We
seek comment on what, if any, requirements we should impose if we adopt
the proposals set forth in the Further NPRM.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
154. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): ``(1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use
of performance, rather than design, standards; and (4) an exemption
from coverage of the rule, or any part thereof, for small entities.''
155. Regarding our inquiry in the Further NPRM about how to
facilitate increased access to spectrum usage information, we do not
anticipate any adverse impact on small entities. In fact, small (and
large) entities should benefit by obtaining access to information that
would enable their acquisition of spectrum that suits particular
business needs. In addition, we note that we are encouraging parties to
comment on whether we should develop an on-line information database,
require more detailed operational information from licensees/lessees,
create additional information services, encourage private sector
collection and distribution of information, or allow independent third
parties to act as ``market makers.'' Although certain information
collection requirements might impact entities, including small
entities, due to increased reporting requirements, the Further NPRM and
this IRFA provide interested parties with an opportunity to comment on
the possible burdens associated with each of the possible steps.
156. We also seek comment in the Further NPRM as to whether there
are any additional steps that could be taken to further an efficient
secondary marketplace through technological advances, opportunistic
spectrum users, or other mechanisms (e.g., spectrum managers). We do
not anticipate that any rules we decide to adopt in this area would
adversely impact small entities. We believe that small (and large)
entities will benefit from removing any unnecessary regulatory barriers
to efficient spectrum usage.
157. Regarding our proposal in the Further NPRM to forbear from
individual prior review and approval by the Commission for certain
categories of leasing arrangements involving a transfer of de facto
control, we do not anticipate any adverse impact on small entities. In
this connection, while we believe that lessening regulatory
requirements would facilitate leasing arrangements entered into by all
entities, including both small and large entities, we are mindful that
forbearance must also be in the public interest. Consequently, we seek
comment on various aspects of this proposal and specifically request
commenters, including small entities, to comment on the eligibility
criteria for forbearance set forth in the Further NPRM. We realize that
although some of the specific criteria could impact small entities,
overall small entities should benefit from a more streamlined approach.
Moreover, these specific criteria affect all entities, whether large or
small entities. For example, lessees will need to comply with our
foreign ownership restrictions before forbearance would apply. This
requirement would be equitably applied to all entities seeking to
obtain spectrum through a spectrum leasing arrangement. Moreover, even
where possible spectrum lessees may not take advantage of entering into
spectrum leasing arrangements without individualized prior Commission
approval, such entities (again, whether large or small entities) would
be able to
[[Page 66250]]
seek approval by means of our prior approval procedures for spectrum
leasing arrangements.
158. Similarly, regarding our possible forbearance from individual
prior review and approval by the Commission for transfer and assignment
transactions, as proposed in the Further NPRM, it seems unlikely that
small entities would suffer any adverse impact. Nonetheless, we seek
comment on the various eligibility criteria that might be employed and,
in particular, we encourage small entities to comment on the impact
that our unjust enrichment and installment payment policies might have
on this proposal.
159. Regarding the possible extension of the spectrum leasing
policies adopted in the Report and Order to a number of excluded
wireless services, as proposed in the Further NPRM, we anticipate
generally that there would be no adverse impact on small entities.
Because there are substantial numbers of small entities in all the
wireless services, small entities could be significantly affected by
our extension of leasing policies to the wireless services excluded by
the Report and Order. We believe, however, that these small entities
would likely benefit from the increased flexibility that leasing
arrangements will offer in meeting their particular spectrum needs.
160. Regarding the possibility of extending our decision to
streamline the application processing for transfer and assignment
applications to other wireless services, as proposed in the Further
NPRM, we anticipate no adverse impact to small entities. The
information that would be collected under a more streamlined approach
is similar to what is currently required under our transfer and
assignment rules and should facilitate spectrum leasing by reducing
transaction costs, uncertainty, and delay. While an alternative would
be to require no approval, we believe that this would run counter to
our statutory responsibilities under section 310(d) of the
Communications Act.
161. Regarding our analysis in the Further NPRM of the question of
whether to apply our new de facto control standard to regulatory
contexts other than leasing, we cannot determine at this time what the
impact on small entities might be. Should we move away from the
facilities-based approach of our Intermountain Microwave standard, it
may be presumed that small entities would have more flexibility to
enter into certain types of management agreements. On the other hand,
such an approach might not be warranted in connection with our
designated entity and entrepreneur eligibility rules and policies. We
thus encourage small entities to comment on the various issues raised
in the Further NPRM regarding an appropriate standard for defining de
facto control.
162. Finally, regarding our inquiry in the Further NPRM into
whether the restrictions adopted for designated entity leasing should
be altered, we believe that small entities would likely benefit from
the removal of certain restrictions. But as noted above, there is a
balance of competing considerations taking place here. We hope that
small entities in particular will comment on what approach best
promotes an efficient secondary spectrum market, provides benefits to
small entities, and considers our statutory and public interest
obligations.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
163. None.
B. Initial Paperwork Reduction Act of 1995 Analysis Regarding the
Further NPRM
164. In the Further NPRM, this document seeks comment on a proposed
information collection As part of the Commission's continuing effort to
reduce paperwork burdens, we invite the general public and the Office
of Management and Budget (OMB) to take this opportunity to comment on
the information collections contained in this document, as required by
the Paperwork Reduction Act of 1995, Public Law 104-13. Public and
agency comments are due at the same time as other comments on this
document and must have a separate heading designating them as responses
to the Initial Paperwork Reduction Analysis (IPRA). OMB comments are
due January 26, 2004. Comments should address: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; and (d) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.
C. Comment Dates Regarding the Further NPRM
165. Pursuant to applicable procedures set forth in sections 1.415
and 1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested
parties may file comments on the Further NPRM on or before December 5,
2003 and reply comments on or before January 5, 2004. Comments and
reply comments should be filed in WT Docket No. 00-230. All relevant
and timely comments will be considered by the Commission before final
action is taken in this proceeding.
166. Comments may be filed either by filing electronically, such as
by using the Commission's Electronic Comment Filing System (ECFS), or
by filing paper copies. Parties are strongly urged file their comments
using ECFS (given recent changes in the Commission's mail delivery
system). Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html. Only one
copy of an electronic submission must be filed. In completing the
transmittal screen, the electronic filer should include its full name,
Postal Service mailing address, and the applicable docket or rulemaking
number, WT Docket No. 00-230. Parties also may submit comments
electronically by Internet e-mail. To receive filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and
should include the following words in the body of the message, ``get
form (your e-mail address).'' A sample form and directions will be sent
in reply.
167. Parties who choose to file by paper may submit such filings by
hand or messenger delivery, by U.S. Postal Service mail (First Class,
Priority, or Express Mail), or by commercial overnight courier. Parties
must file an original and four copies of each filing in WT Docket No.
00-230. Parties that want each Commissioner to receive a personal copy
of their comments must file an original plus nine copies. If paper
filings are hand-delivered or messenger-delivered for the Commission's
Secretary, they must be delivered to the Commission's contractor,
Natek, Inc., at 236 Massachusetts Avenue, NE., Suite 110, Washington,
DC 20002-4913. To receive an official ``Office of the Secretary'' date
stamp, documents must be addressed to Marlene H. Dortch, Secretary,
Federal Communications Commission. (The filing hours at this facility
are 8 a.m. to 7 p.m.) If paper filings are submitted by mail though the
U.S. Postal Service (First Class mail, Priority Mail, and Express
Mail), they must be sent to the Commission's Secretary, Marlene H.
Dortch, Federal Communications Commission, Office of the Secretary, 445
12th Street, SW., Washington, DC 20554. If paper filings are submitted
by commercial overnight courier (i.e., by overnight delivery other
[[Page 66251]]
than through the U.S. Postal Service), such as by Federal Express or
United Parcel Service, they must be sent to the Commission's Secretary,
Marlene H. Dortch, Federal Communications Commission, Office of the
Secretary, 9300 East Hampton Drive, Capitol Heights, MD 20743. (The
filing hours at this facility are 8 a.m. to 5:30 p.m.)
168. Parties may also file with the Commission some form of
electronic media submission (e.g., diskettes, CDs, tapes, etc.) as part
of their filings. In order to avoid possible adverse affects on such
media submissions (potentially caused by irradiation techniques used to
ensure that mail is not contaminated), the Commission advises that they
should not be sent through the U.S. Postal Service. Hand-delivered or
messenger-delivered electronic media submissions should be delivered to
the Commission's contractor, Natek, Inc., at 236 Massachusetts Avenue,
NE., Suite 110, Washington, DC 20002-4913. Electronic media sent by
commercial overnight courier should be sent to the Commission's
Secretary, Marlene H. Dortch, Federal Communications Commission, Office
of the Secretary, 9300 East Hampton Drive, Capitol Heights, MD 20743.
169. Regardless of whether parties choose to file electronically or
by paper, they should also send one copy of any documents filed, either
by paper or by e-mail, to each of the following: (1) Qualex
International, Portals II, 445 12th Street, SW., Room CY-B402,
Washington, DC 20554, facsimile (202) 863-2898, or e-mail at qualexint@aol.com; and (2) Paul Murray, Commercial Wireless Division,
Wireless Telecommunications Bureau, 445 12th Street, SW., Washington, DC 20554, or e-mail at Paul.Murray@fcc.gov.
170. Comments, reply comments, and ex parte submissions will be
available for public inspection during regular business hours in the
FCC Reference Information Center, Federal Communications Commission,
445 12th Street, SW., Room CY-A257, Washington, DC 20554. These
documents also will be available electronically at the Commission's
Disabilities Issues Task Force Web site, http://www.fcc.gov/dtf, and from the
Commission's Electronic Comment Filing System. Documents are available
electronically in ASCII text, Word 97, and Adobe Acrobat. Copies of
filings in this proceeding may be obtained from Qualex International,
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554,
telephone (202) 863-2893, facsimile (202) 863-2898, or via e-mail at qualexint@aol.com. This document is also available in alternative
formats (computer diskette, large print, audio cassette, and Braille).
Persons who need documents in such formats may contact Brian Millin at (202) 418-7426, TTY (202) 418-7365, Brian.Millin@fcc.gov, or send an e-mail to access@fcc.gov.
D. Ex Parte Rules Regarding the Further NPRM--Permit-But-Disclose
Proceeding
171. With regard to the Further NPRM, this is a permit-but-disclose
notice and comment rule making proceeding. Ex parte presentations are
permitted, except during the Sunshine Agenda period, provided they are
disclosed as provided in Commission rules. See generally 47 CFR 1.1202,
1.1203, and 1.1206.
V. Ordering Clauses
172. Pursuant to the authority contained in sections 1, 4(i), and
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i), and 303(r), the Further NPRM is adopted.
173. The Commission's Consumer Information Bureau, Reference
Information Center, shall send a copy of the Report and Order and the
Further NPRM of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-29193 Filed 11-24-03; 8:45 am]
BILLING CODE 6712-01-P