[Federal Register: May 2, 2003 (Volume 68, Number 85)]
[Rules and Regulations]
[Page 23417-23423]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02my03-14]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[WT Docket No. 99-266; FCC 03-51]
Practice and Procedure
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission clarifies rules relating to
tribal lands bidding credits that were established to provide
incentives for wireless telecommunications carriers to serve
individuals living on tribal lands. In the Second Report and Order, the
Commission extends the time period during which winning bidders can
negotiate with the relevant tribes to obtain the certification needed
to obtain the credit. The Commission also clarifies various
administrative matters involved in implementing the credit.
DATES: Effective July 1, 2003.
FOR FURTHER INFORMATION CONTACT: Roger Noel or Linda Chang, Wireless
Telecommunications Bureau, at (202) 418-0620.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Second Report and Order (2nd R&O), FCC 03-
51, adopted March 7, 2003, and released March 14, 2003. The full text
of the 2nd R&O is available for public inspection during regular
business hours at the FCC Reference Information Center, 445 12th St.,
SW., Room CY-A257, Washington, DC 20554. The complete text may be
purchased from the Commission's duplicating contractor: Qualex
International, 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.
Synopsis of Second Report and Order
I. Background
1. In June 2000, the Commission adopted bidding credits for use by
winning bidders who pledge to deploy facilities and provide service to
federally recognized tribal areas that have a telephone service
penetration rate at or below 70 percent. In setting out the bidding
credit, the Commission noted that communities on tribal lands have had
less access to telecommunications services than any other segment of
the U.S. population. See Extending Wireless Telecommunications Services
to Tribal Lands, WT Docket No. 99-266, Report and Order, 65 FR 47349
(August 2, 2000) (R&O), and Further Notice of Proposed Rulemaking, 65
FR 47366 (August 2, 2000) (FNPRM).
2. The R&O provided that, in order to obtain a bidding credit in a
particular market, a winning bidder must indicate on its long-form
application (FCC Form 601) that it intends to serve tribal lands in
that market. Following the long-form application filing deadline, the
applicant has 90 calendar days to amend its application to identify the
tribal lands to be served, and provide certification from the tribal
government(s) that: (1) It will allow the bidder to site facilities and
provide service on its tribal land(s), in accordance with the
Commission's rules; (2) it has not and will not enter into an exclusive
contract with the applicant precluding entry by other carriers, and
will not unreasonably discriminate against any carrier; and (3) its
tribal land is a qualifying tribal land as defined in the Commission's
rules, i.e., an area that has a telephone penetration rate at or below
70 percent. In addition, at the conclusion of the 90-day period, the
applicant must amend its long-form application to file a certification
that it will comply with the bidding credit build-out requirement, and
that it will consult with the tribal government regarding the siting of
facilities and deployment of service on the tribal land. Upon receipt
by the Commission of the certifications, the bidding credit is awarded
and the applicant makes payment of the final net adjusted bid amount.
If the required certifications are not provided at the conclusion of
the 90-day period, the bidding credit is not awarded and the applicant
is required to pay the balance on the original gross bid amount in
order to be awarded the licenses.
3. In order to ensure that applicants awarded bidding credits
actually deploy facilities and provide service to tribal lands, the
Commission imposed performance requirements as a condition of obtaining
the bidding credit. The Commission required that a licensee construct
and operate its system to cover 75 percent of the population of the
qualifying tribal land within three years of the grant of the license.
While this 75 percent benchmark is higher than the construction
benchmarks applicable to auctioned wireless licenses generally, the
Commission determined that it would ensure that only carriers that are
committed to serving tribal lands will receive bidding credits, and
that wireless telecommunications services will be deployed rapidly to
underserved tribal areas. In the R&O, the Commission required that, at
the conclusion of the three-year period, licensees file a notification
of construction indicating that they have met the 75 percent
construction requirement on the tribal lands for which the credit was
awarded. If the licensee fails to comply with any condition, it is
required to repay the bidding credit plus interest thirty days after
the conclusion of the construction period. In the event the licensee
fails to repay the amount, the license automatically cancels.
4. In limiting the scope of the bidding credit to federally
recognized tribal areas with telephone penetration rates equal to or
less than 70 percent, the Commission concluded that the credits would
target the tribal communities with the greatest need for access to
telecommunications service. Although the Commission acknowledged that
there are some non-tribal areas with penetration rates lower than the
national average, it was determined that almost all non-tribal areas
have penetration rates greater than 70 percent and that non-tribal
areas have penetration rates significantly greater than most tribal
areas. Accordingly, the Commission found it appropriate to limit the
program to tribal lands with a 70 percent or less penetration rate. The
Commission did not, however, foreclose the possibility of extending the
credit both to non-tribal areas and to areas with higher penetration
rates.
5. In the FNPRM, the Commission solicited comment on ways the
bidding credit could be extended to encourage further deployment of
wireless telecommunications services. The Commission specifically
sought
[[Page 23418]]
comment on whether it should award bidding credits to carriers who
commit to serve non-tribal areas with a 70 percent or less penetration
rate, or tribal and/or non-tribal areas with penetration levels above
70 percent but significantly below the national average. Further,
comment was requested regarding whether the Commission should expand
the program to give transferable bidding credits to be used in future
auctions to existing licensees in already-established wireless services
who deploy and provide service to unserved tribal communities. The
Commission also asked whether it should make credits available to
licensees that enter into partitioning agreements with tribal
authorities that allow the tribal government to provide service, either
directly or through negotiation with a third-party carrier.
II. Discussion
A. Modification and Clarification of Bidding Credit Procedures
6. Certification Procedure. When the Commission adopted the tribal
lands bidding credit in the R&O, it established the method by which a
bidding credit would be calculated, as well as the application process
involved in obtaining a bidding credit. Since the inception of the
tribal lands bidding credit, there have been 10 auctions, with 375
winning bidders purchasing 10,479 licenses. However, only 27 winning
bidders to date have initially indicated on their long-form
applications that they would be seeking the tribal lands bidding
credit, and of those applicants, only five submitted the required 90-
day certifications. Upon review of this proceeding, the Commission
finds that the small number of applications seeking the credit is due,
at least in part, to the administrative process established by the
Commission. Specifically, the Commission finds that the 90-day deadline
for obtaining the certifications from the applicable tribal
government(s) makes it extremely difficult to qualify for the credit.
The 90-day deadline and certifications were established: (1) To ensure
prompt issuance of licenses to winning bidders; (2) to provide a time
frame for making contact with tribal governments and obtaining
requisite certifications; and (3) to ensure that the wireless carrier
intends to provide service to the tribal land. Because ninety days may
not be a sufficient amount of time for licensees and tribal authorities
to complete the certification process, the Commission extends the
tribal lands certification period to 180 days. Accordingly, a winning
bidder claiming a tribal lands bidding credit will now have 180 days to
amend its long-form application to identify the tribal lands to be
served, and provide the required certification from the tribal
government. Further, the winning bidder will have 180 days to file a
certification that it will comply with the tribal lands build-out
requirements, and consult with the tribal government regarding the
siting of facilities and deployment of service on the tribal land. If
the winning bidder fails to submit the required certifications within
the 180-day period, the bidding credit will not be awarded, and the
winning bidder will be required to pay the balance on the original
gross bid amount in order to obtain the license.
7. Full or partial assignments of licenses involving tribal lands
bidding credits. An issue that was inadvertently omitted in the R&O is
the impact of license assignments on licenses with tribal lands bidding
credit construction/repayment obligations. The Commission therefore
clarifies that if the license is assigned to another entity, the
construction/repayment obligations associated with the credit are
transferred as well. Because all obligations of the license
automatically transfer to the assignee, the Commission will not require
the assignee to seek re-certification where the original licensee
received certifications from the appropriate tribal authorities. It is
important to note that an assignee contracting with a licensee to
transfer a license for which a tribal lands bidding credit was received
bears the risk that the tribal government may not allow the assignee to
deploy facilities on its land. The Commission expects that parties
interested in obtaining wireless licenses will exercise due diligence
in identifying whether or not a tribal lands bidding credit
construction obligation is associated with the license, and, therefore,
take into account the heightened construction obligation, the
dependence of the credit on obtaining the consent of the tribal
government, and the potential for a repayment penalty in case the
construction requirement is not met within the original three-year time
frame. It is up to the assignee to verify that the tribe will consent
to allowing the assignee access to its lands.
8. Also, the Commission clarifies that in partial license transfers
involving geographic partitioning, the tribal land must be wholly
contained within either the assignor's or assignee's proposed license
area after the partition. The Commission will not permit, for example,
a tribal area for which a credit was awarded to be ``split'' between
partitioned areas because this would be inconsistent with the original
purpose of issuing the credit, i.e., to ensure that at least 75 percent
of the tribal land is served. Where a partition occurs, the
construction/repayment obligation will attach to the license for the
partitioned area that encompasses the tribal land for which the credit
was awarded. However, in partial license transfers involving spectrum
disaggregation (but not partitioning), the construction/repayment
obligation will be presumed to remain with the original licensee whose
stated intention was to serve the tribal land unless the parties to the
transaction inform us otherwise. As is the case with partitioning,
spectrum covering the tribal land must be disaggregated in its entirety
(i.e. a disaggregation involving only a portion of a tribal area
subject to a bidding credit will not be permitted).
9. Notification of Construction. In the R&O, the Commission did not
clearly set out the notification of construction procedures applicable
to licensees that are granted tribal lands bidding credits. Pursuant to
the goals of section 309(j)(4)(B) of the Act, the Commission has set
out performance requirements for the various services, with alternative
construction obligations for those licensees using tribal land bidding
credits. As noted, the Commission imposed more stringent construction
requirements for those licensees that choose to utilize the tribal
lands bidding credit in order to ensure that only those most committed
to building out their facilities will receive bidding credits and that
service is deployed as quickly as possible. In order to verify
compliance with the tribal lands construction requirement, any licensee
employing a bidding credit must file a notification of construction
(FCC Form 601, Schedule K) electronically at the conclusion of the
three-year construction period along with an attachment stating
affirmatively that it is providing coverage to 75 percent of the
population of the tribal area for which the credit was awarded. In its
notification of construction, the licensee must provide the total
population of the tribal area covered by its license as well as the
number of persons it is serving in the tribal area. If the licensee
fails to make an adequate showing that it has met the 75 percent
benchmark, it will be required to repay the bidding credit, plus
interest, thirty days after the conclusion of the construction period.
47 CFR 1.2110(f)(3)(vii). Failure to repay this amount will result in
automatic termination of the license. 47 CFR 1.946(c).
[[Page 23419]]
10. Penalty for failure to construct and failure to timely repay
bidding credit. The Commission also takes this opportunity to correct
an omission in the rules implemented in connection with the R&O, in
which the Commission stated that a licensee's failure to comply with
build-out requirements, and subsequent failure to repay the bidding
credit, plus interest, thirty days after the conclusion of the
construction period, would result in automatic termination of the
licensee's license, i.e., termination without any further notification
being sent to the licensee, opportunity for a hearing, or other
Commission action. This penalty will now be expressly codified in Part
1 of the Commission's rules.
B. Use of Bidding Credits in Non-Tribal Areas or Areas With Telephone
Penetration Rates of More Than 70 Percent
11. In the FNPRM, the Commission sought comment on whether it
should apply the bidding credit to non-tribal areas on the same terms
and conditions as for tribal areas, or alternatively, whether it should
extend the bidding credit to areas (tribal and non-tribal) with
penetration levels greater than 70 percent, but below the national
average of 94 percent. As noted, very few commenters submitted
responses to the FNPRM. Those who filed comments generally support
extending bidding credits to entities seeking to provide service to
non-tribal areas with telephone penetration rates below the national
average.
12. The Commission concludes that it is premature to expand the
program to non-tribal areas or to areas with penetration rates of
greater than 70 percent at this time. Because this program is still in
its early stages and few entities have taken advantage of the bidding
credit thus far, the Commission cannot yet determine whether it would
be constructive to expand the use of the bidding credit to non-tribal
areas generally. Moreover, the Commission is concerned about the
paucity of comment regarding this issue. It is necessary to have a more
substantial record as to whether the use of bidding credits is
appropriate to encourage deployment of services into non-tribal areas,
particularly from those most familiar with dealing with rural and high-
cost service issues. Similarly, the Commission believes the record is
insufficient at this time to support expanding the use of the bidding
credit to areas having telephone penetration rates of greater than 70
percent. However, in an effort to develop a more complete and up-to-
date record on possible adjustment of the penetration rate threshold,
the Commission seeks comment in its Second Further Notice of Proposed
Rulemaking on information from the 2000 Census regarding increases in
tribal penetration rates that has recently been released by the Census
Bureau. See Extending Wireless Telecommunications Services to Tribal
Lands, WT Docket No. 99-266, Second Further Notice of Proposed
Rulemaking, FCC 03-51, adopted March 7, 2003, and released March 14,
2003.
C. Applying Bidding Credits to Existing Licenses
13. The Commission noted in the R&O that the current tribal lands
bidding credit can be applied only in the auction in which it is
obtained. Accordingly, the bidding credit is not available to carriers
with existing licenses that were acquired in prior auctions or through
transfer or assignment. The Commission therefore asked in the FNPRM
whether a more flexible form of credit should be made available to
existing licensees who have constructed facilities, using currently-
licensed spectrum to provide service to qualifying tribal lands. Under
this approach, carriers who use their existing spectrum to provide
service to such areas could receive bidding credits that could be used
in future auctions. Further, the Commission sought comment on whether
such a credit should be transferable to third parties for use in future
auctions. The Commission also sought comment on its legal authority
under section 309(j) of the Communications Act to adopt the flexible
bidding credit.
14. Although the Commission continues to believe that the tribal
lands bidding credit is a valuable means to encourage greater
deployment of telecommunications services into underserved tribal
areas, the Commission concludes that in light of its still-limited
experience with the bidding credit program, it should not extend the
program to already-licensed carriers or make the credit transferable at
this juncture. The Commission believes that before taking such a step,
additional time is needed to determine the effectiveness of the program
as currently structured in meeting its intended goals. The Commission
also finds that the limited comment it has received in this proceeding
does not provide sufficient support or guidance for such an expansion
of the program. Accordingly, the Commission declines to extend the
program to already-licensed carriers or make the credit transferable at
this time.
D. Transferable Bidding Credits for Licensees That Partition Tribal
Areas
15. In the FNPRM, the Commission solicited comment on whether
bidding credits should be made available to carriers that enter into
partitioning agreements with tribal governments to facilitate
deployment of service to tribal lands. The Commission proposed that a
credit would be awarded to a geographic area licensee that partitioned
portions of its license area covering tribal lands to the appropriate
tribal government. Again, the Commission received limited comment
regarding this issue, and therefore it concludes that the record does
not at this time support expanding the bidding credit program as
proposed.
III. Procedural Matters
A. Paperwork Reduction Act Analysis
16. The actions taken in the 2nd R&O have been analyzed with
respect to the Paperwork Reduction Act of 1995 (PRA), Pub. L. No. 104-
13, and found to impose new or modified reporting and recordkeeping
requirements or burdens on the public. Implementation of these new or
modified reporting and recordkeeping requirements will be subject to
approval by the Office of Management and Budget (OMB) as prescribed by
the PRA, and will go into effect upon announcement in the Federal
Register of OMB approval.
B. Final Regulatory Flexibility Act Analysis.
17. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the FNPRM. The Commission sought written public comment
on the proposals in the FNPRM, including comment on the IRFA. This
present Final Regulatory Flexibility Analysis (FRFA) conforms to the
RFA.
Need for, and Objectives of, the 2nd R&O.
18. In the 2nd R&O, the Commission clarifies rules previously
adopted in the R&O and FNPRM in WT Docket 99-266 to provide incentives
for wireless telecommunications carriers to serve individuals living on
tribal lands. In that R&O, the Commission authorized the grant of
bidding credits to winning bidders who deploy facilities and provide
service to federally-recognized tribal areas that have a telephone
service penetration rate below 70 percent. In the present item, the
Commission clarifies, on its own motion, administrative matters
involved in implementing the bidding credit, such as the process by
which carriers obtain certifications
[[Page 23420]]
permitting them to deploy facilities on tribal lands. This 2nd R&O also
addresses issues raised in the FNPRM. In the FNPRM, the Commission
requested comment on whether it should expand the use of bidding
credits. Specifically, the Commission sought comment as to whether to:
(1) Apply bidding credits to entities who undertake to serve non-tribal
areas and/or tribal areas with telephone penetration levels above 70
percent, but significantly below the national penetration average; (2)
award bidding credits for use in future auctions to existing geographic
area licensees who deploy facilities in unserved tribal communities;
and, (3) grant bidding credits to licensees who enter into partitioning
agreements with tribal governments that enable tribal entities to
provide service, either directly or by way of a third-party carrier. It
is the Commission's goal to ensure that all Americans have access to
telecommunications service.
19. While the Commission continues to believe that the tribal lands
bidding credit is a useful device in improving telephone penetration
rates on tribal lands, it concludes that the specific measures proposed
in the Commission's FNPRM to encourage greater deployment should not be
adopted at this time. Given the nascent state of the tribal lands
bidding credit program, as well as the lack of a comprehensive record
supporting the proposed extensions of the bidding credit, the
Commission believes that it is premature to expand the use of bidding
credits as proposed.
Summary of Significant Issues Raised by Public Comments in Response to
the IRFA
20. No comments were filed that specifically addressed the rules
and policies proposed in the IRFA.
Description and Estimate of the Number of Small Entities To Which the
Rules Will Apply.
21. The RFA directs agencies to provide a description of, and where
feasible, an estimate of the number of small entities that may be
affected by the rules adopted herein. 5 U.S.C. 604(a)(3). The RFA
generally defines the term ``small entity'' as having the same meaning
as the terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the term
``small business'' has the same meaning as the term ``small business
concern'' under the Small Business Act. 5 U.S.C. 601(3) (incorporating
by reference the definition of ``small business concern'' in the Small
Business Act, 15 U.S.C. 632). 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). 15 U.S.C. 632.
22. Cellular Licensees. The SBA has developed a small business size
standard for small businesses in the category ``Cellular and Other
Wireless Telecommunications.'' 13 CFR 121.201, North American Industry
Classification System (NAICS) code 513322. 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 from a total of 1238 cellular
and other wireless telecommunications firms operating during 1997 had
1,000 or more employees. Therefore, even if all twelve of these firms
were cellular telephone companies, nearly all cellular carriers were
small businesses under the SBA's definition. In addition, the
Commission notes that there are 1807 cellular licenses; however, a
cellular licensee may own several licenses. According to the most
recent Trends in Telephone Service data, 858 carriers reported that
they were engaged in the provision of either cellular service, Personal
Communications Service (PCS), or Specialized Mobile Radio telephony
services, which are placed together in that data. See Trends in
Telephone Service, Industry Analysis Division, Wireline Competition
Bureau , Table 5.3--Number of Telecommunications Service Providers that
are Small Businesses (May 2002). The Commission has estimated that 291
of these are small under the SBA small business size standard.
Accordingly, based on this data, the Commission estimates that not more
than 291 cellular service providers will be affected by these revised
rules.
23. 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, the Commission applies the definition under
the SBA rules applicable to ``Cellular and Other Wireless
Telecommunication'' companies. This category provides that a small
business is a wireless company employing no more than 1,500 persons.
According to the Bureau of the Census, only twelve firms from a total
of 1238 cellular and other wireless telecommunications firms operating
during 1997 had 1,000 or more employees. If this general ratio
continues in 2002 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.
24. 220 MHz Radio Service--Phase II Licensees. The Phase II 220 MHz
service is a new service, and is subject to spectrum auctions. In the
220 MHz Third Report and Order, the Commission 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. See Amendment of Part 90
of the Commission's Rules to Provide for the Use of the 220-222 MHz
Band by the Private Land Mobile Radio Service, PR Docket No. 89-552,
Third Report and Order, 62 FR 16004 (April 3, 1997). 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, 683 were sold. Thirty-nine
small businesses won licenses in the first 220 MHz auction. The second
auction included 225 licenses: 216 EA licenses and 9 EAG licenses.
Fourteen companies claiming small business status won 158 licenses.
25. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order,
the Commission adopted a small business size standard for ``small
businesses'' and ``very small businesses'' for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. See Service Rules for the 746-764 MHz Bands, and
Revisions to Part 27 of the Commission's Rules, WT Docket No. 99-168,
Second Report and Order, 65 FR 17594 (April 4, 2000). A small
[[Page 23421]]
business 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. 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 9 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.
26. Lower 700 MHz Band Licenses. The Commission adopted criteria
for defining three groups of small businesses for purposes of
determining their eligibility for special provisions such as bidding
credits. See Reallocation and Service Rules for the 698-746 MHz
Spectrum Band (Television Channels 52-59), GN Docket No. 01-74, Report
and Order, 67 FR 5491 (February 6, 2002). The Commission 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. An auction of 704 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.
27. Private and Common Carrier Paging. In the Paging Second Report
and Order, the Commission adopted a small size standard for ``small
businesses'' for purposes of determining their eligibility for special
provisions such as bidding credits and installment payments. Revision
of Part 22 and Part 90 of the Commission's Rules to Facilitate Future
Development of Paging Systems, WT Docket No. 96-18, Second Report and
Order, 62 FR 11616 (March 12, 1997). 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 985 licenses auctioned, 440
were sold. Fifty-seven companies claiming small business status won. At
present, 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, 608 carriers reported that
they were engaged in the provision of either paging or ``other mobile''
services. Of these, the Commission estimates that 589 are small, under
the SBA-approved small business size standard. The Commission estimates
that the majority of private and common carrier paging providers would
qualify as small entities under the SBA definition.
28. 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. See Amendment of Parts 20 and 24 of the
Commission's Rules--Broadband PCS Competitive Bidding and the
Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 96-59,
Report and Order, 61 FR 33859 (1996); see also 47 CFR 24.720(b). For
Block F, an additional small business size standard for ``very small
business'' was added and is defined as an entity that, together with
their 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 347
C, D, E, and F Block licenses; there were 48 small business winning
bidders. Based on this information, the Commission concludes that the
number of small broadband PCS licensees will include the 90 winning C
Block bidders and the 93 qualifying bidders in the D, E, and F blocks
plus the 48 winning bidders in the re-auction, for a total of 231 small
entity PCS providers as defined by the SBA small business standards and
the Commission's auction rules. On January 26, 2001, the Commission
completed the auction of 422 C and F Broadband PCS licenses in Auction
No. 35. Of the 35 winning bidders in this auction, 29 qualified as
``small'' or ``very small'' businesses.
29. Narrowband PCS. The Commission has auctioned nationwide and
regional licenses for narrowband PCS. There are 11 nationwide and 30
regional licensees for narrowband PCS. The Commission does not have
sufficient information to determine whether any of these licensees are
small businesses within the SBA-approved definition for radiotelephone
companies. In March 2002, 106 MTA and BTA narrowband PCS licenses were
granted to 4 licensees. Each of the licensees are small or very small
businesses.
30. Specialized Mobile Radio (SMR). Pursuant to 47 CFR
90.814(b)(1), the Commission has established a small business size
standard for purposes of auctioning 900 MHz SMR licenses, 800 MHz SMR
licenses for the upper 200 channels, and 800 MHz SMR licenses for the
lower 230 channels on the 800 MHz band as a firm that has had average
annual gross revenues of $15 million or less in the three preceding
calendar years. 47 CFR 90.814(b)(1). The SBA has approved this small
business size standard for the 800 MHz and 900 MHz auctions. Sixty
winning bidders for geographic area licenses in the 900 MHz SMR band
qualified as small businesses under the $15 million size standard. The
auction of the 525 800 MHz SMR geographic area licenses for the upper
200 channels began on October 28, 1997, and was completed on December
8, 1997. Ten (10) winning bidders for geographic area licenses for the
upper 200 channels in the 800 MHz SMR band qualified as small
businesses under the $15 million size standard.
31. The auction of the 1,050 800 MHz SMR geographic area licenses
for the
[[Page 23422]]
General Category channels began on August 16, 2000, and was completed
on September 1, 2000. Eleven (11) winning bidders for 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.
Thus, 40 winning bidders for geographic licenses in the 800 MHz SMR
band qualified as small business. In addition, there are numerous
incumbent site-by-site SMR licensees on the 800 and 900 MHz band. The
Commission awards bidding credits in auctions for geographic area 800
MHz and 900 MHz SMR licenses to firms that had revenues of no more than
$15 million in each of the three previous calendar years. This analysis
applies to SMR providers in the 800 MHz and 900 MHz bands that either
hold geographic area licenses or have obtained extended implementation
authorizations. The Commission does 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.
The Commission assumes, 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
SBA.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
32. The 2nd R&O modifies the certification process that wireless
carriers must follow in order to obtain a tribal lands bidding credit.
The Commission extends the time period during which winning bidders can
negotiate to obtain the certification needed to obtain the credit,
however, the Commission declines to expand the credit beyond its
current scope.
Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered
33. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
developing its 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. 5
U.S.C. 603(c).
34. A certification period of 90 days was previously identified in
the final regulatory flexibility analysis in the R&O. In the 2nd R&O,
the Commission extends the time period in which an applicant must
obtain a certification from tribal governments regarding the siting of
facilities and deployment of service on tribal lands. The 2nd R&O
extends the certification period from 90 days to 180 days in order to
allow applicants more time to conduct necessary research and negotiate
with tribal governments. The change the Commission is adopting in the
certification process is minor, and will not have additional
significant economic impact on tribal governments or carriers seeking
to serve tribal lands. The extension of the certification period from
90 to 180 days benefits all carriers, particularly small entities.
35. Further, the 2nd R&O clarifies partitioning and disaggregation
rules specific to licensees electing to use the tribal lands bidding
credit. In clarifying these rules, the Commission considered whether or
not to apply its existing partitioning and disaggregation rules to
situations in which a tribal lands bidding credit is utilized. While
the partitioning and disaggregation rules are slightly more restrictive
in situations in which tribal lands bidding credits are involved, the
Commission believes these rules further its original goal of promoting
service to tribal lands by helping to ensure that those using bidding
credits fulfill their construction obligations.
36. Report to Congress: The Commission will send a copy of the 2nd
R&O, including the FRFA, in a report to be sent to Congress pursuant to
the Congressional Review Act. See 5 U.S.C. 801(a)(1)(A). In addition,
the Commission will send a copy of the 2nd R&O, including the FRFA, to
the Chief Counsel for Advocacy of the Small Business Administration. A
copy of the 2nd R&O and FRFA (or summaries thereof) will also be
published in the Federal Register.
IV. Ordering Clauses
37. Pursuant to the authority of sections 1, 4(i), 303(r), and
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i), 303(r), and 309(j), the rule changes specified below are
adopted.
38. The rule changes set forth below will become effective July 1,
2003.
List of Subjects in 47 CFR Part 1
Practice and procedure.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Rule Changes
0
For the reasons discussed in the Preamble, the Federal Communications
Commission amends 47 CFR part 1 as follows:
PART 1--PRACTICE AND PROCEDURE
0
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309
and 325(e).
0
2. Section 1.2110 is amended by revising paragraphs (f)(3)(i), (ii)
(vi), (vii), and (viii) to read as follows:
Sec. 1.2110 Designated entities.
* * * * *
(f) * * *
(3) * * *
(i) Qualifying tribal land means any federally recognized Indian
tribe's reservation, Pueblo, or Colony, including former reservations
in Oklahoma, Alaska Native regions established pursuant to the Alaska
Native Claims Settlement Act (85 Stat. 688), and Indian allotments,
that has a wireline telephone subscription rate equal to or less than
seventy (70) percent based on the most recently available U.S. Census
Data.
(ii) Certification. (A) Within 180 days after the filing deadline
for long-form applications, the winning bidder must amend its long-form
application and attach a certification from the tribal government
stating the following:
(1) The tribal government authorizes the winning bidder to site
facilities and provide service on its tribal land;
(2) The tribal area to be served by the winning bidder constitutes
qualifying tribal land; and
(3) The tribal government has not and will not enter into an
exclusive contract with the applicant precluding entry by other
carriers, and will not unreasonably discriminate among wireless
carriers seeking to provide service on the qualifying tribal land.
(B) In addition, within 180 days after the filing deadline for
long-form applications, the winning bidder must amend its long-form
application and file a certification that it will comply with
[[Page 23423]]
the construction requirements set forth in paragraph (f)(3)(vi) of this
section and consult with the tribal government regarding the siting of
facilities and deployment of service on the tribal land.
(C) If the winning bidder fails to submit the required
certifications within the 180-day period, the bidding credit will not
be awarded, and the winning bidder must pay the balance on the original
gross bid amount.
* * * * *
(vi) Post-construction certification. Within fifteen (15) days of
the third anniversary of the initial grant of its license, a recipient
of a bidding credit under this section shall file a certification that
the recipient has constructed and is operating a system capable of
serving seventy-five (75) percent of the population of the qualifying
tribal land for which the credit was awarded. The recipient must
provide the total population of the tribal area covered by its license
as well as the number of persons that it is serving in the tribal area.
(vii) Performance penalties. If a recipient of a bidding credit
under this section fails to provide the post-construction certification
required by paragraph (f)(3)(vi) of this section, then it shall repay
the bidding credit amount in its entirety, plus interest. The interest
will be based on the rate for ten-year U.S. Treasury obligations
applicable on the date the license is granted. Such payment shall be
made within thirty (30) days of the third anniversary of the initial
grant of its license. Failure to repay the bidding credit amount and
interest within the required time period will result in automatic
termination of the license without specific Commission action.
(viii) Partitioning and disaggregation. Parties seeking approval
for partitioning or disaggregation of tribal areas obtained pursuant to
the tribal lands bidding credit shall request an authorization for
partial assignment of a license pursuant to Sec. 1.948.
(A) Partitioning. A licensee of a market obtained using a tribal
lands bidding credit may partition the tribal lands within its market.
The partitioned area must include all tribal areas within the market
subject to the tribal lands bidding credit. The partitionee must
certify that it will satisfy the construction requirements set forth in
paragraph (f)(3)(vi) of this section.
(B) Disaggregation. Spectrum covering tribal lands may be
disaggregated in any amount. The disaggregated spectrum must include
all tribal areas within the market subject to the tribal lands bidding
credit. The original licensee must certify that it will satisfy the
construction requirements set forth in paragraph (f)(3)(vi) of this
section, unless the parties to the transaction inform the Commission
otherwise.
* * * * *
[FR Doc. 03-10736 Filed 5-1-03; 8:45 am]
BILLING CODE 6712-01-P