[Federal Register: May 2, 2003 (Volume 68, Number 85)]
[Proposed Rules]
[Page 23431-23438]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02my03-23]
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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: Notice of proposed rulemaking.
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SUMMARY: In this document, the Commission seeks comment regarding ways
to adjust its current tribal lands bidding credit program in order to
encourage further deployment by carriers of wireless services on tribal
lands. The Commission also seeks comment on possible adjustments to the
program based on use of data from the 2000 Census that was not
available when the program was initiated. Further, the Commission
requests comment on a limited expansion of the credit program that
would allow carriers who obtain bidding credits to serve qualifying
tribal lands to obtain additional credit for extending their coverage
to immediately adjacent non-tribal areas that also have low penetration
rates.
DATES: Submit comments on or before June 2, 2003. Submit reply comments
on or before June 16, 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 Further Notice of Proposed
Rulemaking (2nd FNPRM), FCC 03-51, adopted March 7, 2003, and released
March 14, 2003. The full text of the 2nd FNPRM 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 Further Notice of Proposed Rulemaking
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 changing the
scope of the bidding credit program.
[[Page 23432]]
II. Discussion
5. In this 2nd FNPRM, the Commission solicits comment on whether it
is necessary to modify the Commission's existing tribal lands bidding
credit program in order to further facilitate the use of the bidding
credit. The tribal lands bidding credit program is still in its early
stages and few carriers have taken advantage of the bidding credit thus
far. The record, however, is unclear regarding the reasons behind the
lack of response to the bidding credit. Because the record in this
proceeding thus far is not sufficient to make reasoned decisions as to
what steps, if any, the Commission should take to further encourage
carriers to provide coverage to tribal lands, the Commission seeks
additional comment regarding this issue.
A. Modifying the Construction Requirements of the Tribal Lands Bidding
Credit
6. The Commission's rules currently impose more stringent
construction requirements on carriers who seek the tribal lands bidding
credit than those who do not. All carriers taking advantage of the
bidding credit are required to serve 75 percent of the population of
the qualifying tribal land for which the credit was awarded, and must
do so within three years of license grant. The Commission initially set
out the more stringent performance requirement because it believed that
the accelerated buildout requirement ensures that: (1) Only entities
making a serious commitment to serving tribal lands will receive
bidding credits; and (2) telecommunications services will be rapidly
deployed to unserved tribal areas.
7. It is possible, however, that one reason behind the lack of
participation in the tribal lands bidding credit program is that
carriers find that difficulties involved in meeting the enhanced
construction requirements are not sufficiently mitigated by the
existing bidding credit. For example, there may be conditions, such as
technical obstacles, economic factors, or other difficulties, that may
make it difficult for carriers to satisfy the stricter construction
requirement. Circumstances may exist on remote tribal lands such as low
population density, rough terrain, and other factors that can
negatively affect the ability of carriers to provide the requisite
coverage to facilities in those areas. Accordingly, the Commission
seeks comment as to whether it should reconsider the buildout
obligations imposed on carriers utilizing the tribal lands bidding
credit. Given that the public has now had a period of time to evaluate
the bidding credit program, the Commission seeks comment on whether the
requirement that carriers cover 75 percent of the population within
three years remains feasible, or whether it should moderate the
buildout criteria. Specifically, the Commission requests comment on
what factors or circumstances exist that warrant an across-the-board
relaxation of the bidding credit construction requirements.
8. In the event that the Commission determines that the
construction requirements should be eased, it seeks comment on how the
requirements should be modified. For example, should the population of
the qualifying tribal land covered by a carrier be lessened (i.e.
reduced to a number below 75 percent)? Alternatively, should the time
period in which to provide coverage to 75 percent of the tribal
population be extended to a construction period longer than three
years? Or is the appropriate remedy a combination of a reduced
population coverage requirement and an expanded construction period?
Should the Commission adopt a variation of the combination method, such
as a tiered approach in which construction would occur in phases, e.g.,
a certain percentage of the total tribal population must be covered in
three years, and a greater percentage would be covered at the five-year
mark. The Commission seeks comment regarding these alternatives, as
well as any other options. The Commission notes that any across-the-
board revision of the construction requirements must balance its desire
to implement achievable construction requirements with the underlying
purpose of the requirements, that is, to ensure that service is
actually deployed on tribal lands.
9. The Commission is also aware that a comprehensive change of the
construction requirements may not be the appropriate solution. It may
be that satisfying the tribal lands buildout requirement may be more
difficult in certain tribal areas in the country than in others. There
may be difficulties or conditions specific to certain tribal lands,
that may make it difficult for carriers to satisfy the stricter
construction requirement, while other carriers deploying the same type
of service may have no difficulties in meeting the construction
requirements in other tribal areas. Similarly, the ability to comply
with the tribal lands bidding credit may depend on the particular
wireless service at issue. The Commission's rules governing general
construction and operation obligations of licensees reflect several
approaches that match a type of license (i.e. site-based versus
geographic market) or service (e.g. PCS or lower band 700 MHz) with a
specific buildout requirement. It may therefore be preferable to deal
with these situations on a case-by-case or service-by-service basis
rather than an across-the-board method. The Commission therefore seeks
comment on whether it should resolve any buildout difficulties using an
ad hoc or waiver approach.
B. Increasing the Bidding Credit Limit
10. The Commission established the tribal lands bidding credit in
order to encourage participation in auctions by carriers who are in a
position to provide service to tribal lands, and to help mitigate the
economic risks associated with the deployment of such service. In
recognition of the underlying economic difficulties in providing
service to high cost areas, the Commission sought to fashion a bidding
credit that bore a correlation to the infrastructure investment
necessary to deploy facilities on tribal lands.
11. As noted, it is not clear why few applicants have thus far
taken advantage of the tribal lands bidding credit. In addition to the
required construction requirements, another possibility for the poor
response may be that the existing bidding credit may not provide
carriers sufficient incentive to deploy facilities on tribal lands.
Although no applicant has yet requested a larger credit than the one
called for under the Commission's tribal lands bidding credit
methodology, it may be that the current bidding credit amounts are not
adequate to allow carriers to recoup a significant portion of
infrastructure costs. Accordingly, the Commission seeks comment on
whether the existing tribal lands bidding credit remains effective in
encouraging carriers to provide service in tribal areas. The Commission
also requests comment on whether and how the bidding credit amount and
methodology should be modified to provide a greater incentive for
carriers to deploy facilities on tribal lands.
C. Adjustment of the Bidding Credit Based on 2000 Census Data
12. The Commission initiated this proceeding in recognition of the
unusually low telephone service penetration rates on tribal lands as
identified by the 1990 Census. See Extending Wireless
Telecommunications Services to Tribal Lands, WT Docket No. 99-266,
Notice of Proposed Rulemaking, 64 FR 49128 (Sept. 10, 1999) (NPRM). In
the NPRM,
[[Page 23433]]
the Commission cited 1990 Census data indicating that, although the
nationwide average penetration rate for those with incomes below $5,000
living in rural areas was 78.7 percent, the telephone penetration rates
for individuals on tribal lands at the same income level averaged 46.6
percent. Further, the 1990 Census found that only 53 percent of those
living on tribal lands had basic telephone service, as opposed to 94
percent for the country as a whole.
13. Recently, the Census Bureau has begun to issue data from the
2000 Census indicating that average telephone penetration rates on
tribal lands have increased appreciably from the levels reported in
1990. The average telephone penetration rate for all tribal areas
reported by the 2000 Census is 83.1 percent. U.S. Bureau of the Census,
``Occupancy, Equipment, and Utilization Characteristics of Occupied
Housing Units: 2000,'' Table GCT-H8. However, despite the improvement
that this census data indicates in access to basic telephone service
experienced in some tribal areas, the data also reveals that telephone
penetration rates on virtually all tribal lands remain well below the
97.6 percent penetration rate now found in the country as a whole.
Indeed, certain tribal lands continue to have unusually low telephone
penetration levels despite gains in subscribership numbers since the
1990 Census. For example, although the penetration rates of tribal
areas such as the Navajo Reservation, Fort Apache Reservation, and
Mississippi Choctaw Reservation and Trust Lands each increased by over
20 percent since the 1990 Census, these tribal lands continue to have
very low penetration rates (39.9 percent, 57.2 percent, and 62.6
percent, respectively). The Commission therefore believes that it is
appropriate to continue to develop and apply policies aimed at
promoting further deployment of wireless services to tribal lands. In
this regard, the Commission seeks comment on whether and to what extent
it should use the updated information now available regarding tribal
penetration rates to modify certain aspects of the bidding credit.
First, should the credit formula be adjusted to require the use of 2000
Census figures instead of 1990 Census figures in calculating tribal
penetration for purposes of determining eligibility for the credit?
Second, to the extent that the 2000 census indicates that penetration
rates in some tribal areas have risen above 70 percent but remain below
the national average, should the Commission modify the bidding credit
formula so that tribal areas with penetration rates greater than 70
percent but some percentage below the national average are eligible for
the credit? If the Commission concludes that it is desirable to raise
the level at which tribal areas are eligible for a credit, what should
the benchmark be? Further, with respect to tribal lands that have been
identified by the 2000 Census as continuing to have unusually low
penetration rates, the Commission requests comment on whether it should
make adjustments to the bidding credit to create additional and more
targeted incentives for wireless carriers to provide services in such
areas.
D. Extending the Tribal Lands Bidding Credit to Adjacent Non-Tribal
Areas With Low Penetration Rates
14. The Commission also solicits comment on whether it should
extend bidding credits to non-tribal areas with penetration rates that
fall below the percentage threshold used to calculate eligibility for
the tribal credit. Specifically, the Commission seeks comment on
whether it should allow a limited expansion of the tribal lands bidding
credit program that would allow carriers who obtain bidding credits in
order to serve qualifying tribal lands to seek additional credit for
extending their coverage to immediately adjacent non-tribal areas that
have comparably low penetration rates.
15. In the R&O, the Commission limited the bidding credit program
to qualifying tribal areas with penetration rates of 70 percent or less
because the Commission determined that this limitation would target the
tribal communities with the greatest need for access to
telecommunications services. The Commission concluded that it would be
appropriate to limit application of the bidding credit to tribal lands
because the Commission believed that, even though there are non-tribal
areas with penetration rates below the national average of 94 percent
(as reported in the 1990 Census), almost all non-tribal areas have
telephone penetration rates higher than 70 percent. In reviewing this
proceeding, however, the Commission recognizes that there may be
certain areas abutting tribal lands that also lack adequate access to
telecommunications services. It is likely that some non-tribal areas
share with their neighboring tribal communities the same barriers to
access, such as geographic remoteness, sparse population clusters, and
low income levels. Further, it is likely that areas adjacent to tribal
communities also have significant Native American populations.
16. Extending the bidding credit to underserved non-tribal areas
could serve dual purposes. First, extending the credit furthers the
objectives of the Communications Act which directs the Commission to
ensure the rapid and efficient deployment of wire and radio
communications ``to all the people of the United States.'' See 47
U.S.C. 151. Further, allowing applicants to seek bidding credits for
non-tribal areas immediately adjacent to tribal communities may make it
more likely that entities will seek bidding credits to serve tribal
lands. Accordingly, the Commission seeks comment on whether it should
give those applicants who commit to serve a qualifying tribal area the
ability to augment the bidding credit for also serving adjacent non-
tribal areas.
17. In the event that the bidding credit is extended to non-tribal
areas, the Commission seeks comment on how to define the geographic
areas that would trigger eligibility for an additional credit amount.
For example, is it suitable to use county-wide penetration rates to
establish eligibility, or, given the large size of certain counties,
would the use of county-wide figures fail to accurately gauge the
penetration level of some specific areas? Alternatively, the Commission
seeks comment on whether measuring telephone penetration based on
smaller geographic areas would more accurately reflect underserved
areas. For example, the Census Bureau tabulates data according to a
variety of small geographic areas, such as census tracts or census
blocks.
18. The Commission also requests comment on the appropriate
certification process; e.g. is it sufficient that the applicant itself
certify that the applicable non-tribal area has a telephone penetration
rate that meets the percentage threshold to qualify for the credit? In
particular, the Commission requests comment on the possible method(s)
that would enable it to accurately target the non-tribal areas that
share the same characteristics of tribal lands and are thus appropriate
to target for support through bidding credits. Although it is likely
that areas adjacent to tribal lands have significant tribal
populations, and may possess characteristics (e.g. geographic
remoteness, low subscribership) that similarly warrant support, the
Commission recognizes that certain areas immediately adjacent to tribal
lands include highly populated, urban areas. The Commission therefore
requests comment on any widely applicable methodology that would enable
the Commission to easily distinguish between urban/highly
[[Page 23434]]
populated areas with high telephone penetration rates and those that
have characteristics warranting support. The Commission seeks comment
on any other measures or conditions that should be adopted that will
safeguard the integrity of the Commission's bidding credit program.
19. Further, the Commission tentatively concludes that, in the
event it extends the bidding credit's applicability to adjoining non-
tribal lands, it should use the existing formula to calculate the
additional credit. In order to determine the total credit for a market,
the applicable ``square kilometers'' of the relevant non-tribal area
would be added to the qualifying tribal area within the license market.
The Commission seeks comment on this approach, and on any alternative
ways to calculate the credit.
20. In the R&O, the Commission concluded that it has the authority
to establish the tribal lands bidding credit because the Act, inter
alia, directs the Commission to: (1) Facilitate the rapid and efficient
deployment of wire and radio communications ``to all the people of the
United States;'' (2) foster ``the development and rapid deployment of
new technologies, products, and services for the benefit of the public,
including those residing in rural areas;'' and, (3) promote the
``efficient and intensive use of the electromagnetic spectrum.'' See
R&O, citing 47 U.S.C. 151, 47 U.S.C. 309(j)(3)(A), and 47 U.S.C.
309(j)(3)(D). The Commission further concluded that section 706(A) of
the Act authorizes bidding credits designed to remove or reduce
economic barriers to infrastructure investment. The Commission
tentatively concludes that these provisions also allow the Commission
to extend the bidding credit to cover adjacent non-tribal areas. The
Commission requests comment on this analysis.
III. Procedural Matters
A. Ex Parte Rules--Permit-But-Disclose Proceeding
21. This proceeding is a permit-but-disclose notice and comment
rulemaking 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.
B. Initial Paperwork Reduction Act Analysis
22. The 2nd FNPRM has been analyzed with respect to the Paperwork
Reduction Act and found to impose no new or modified reporting and
recordkeeping requirements or burdens on the public.
C. Initial Regulatory Flexibility Analysis
23. The Commission has prepared an Initial Regulatory Flexibility
Analysis (IRFA) for the 2nd FNPRM, as required by the Regulatory
Flexibility Act. The Commission requests written public comment on the
analysis. Comments must be filed in accordance with the same filing
deadlines as comments filed in response to the 2nd FNPRM, and must have
a separate and distinct heading designating them as responses to the
IRFA. The Commission will send a copy of the 2nd FNPRM, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). See 5 U.S.C. 603(a).
Need for, and Objectives of, the 2nd FNPRM
24. The tribal lands bidding credit program is still in its early
stages and few carriers have taken advantage of the bidding credit thus
far. The record, however, is unclear regarding the reasons behind the
lack of response to the bidding credit. Because the record in this
proceeding thus far is not sufficient to make reasoned decisions as to
what steps, if any, should be taken to further encourage carriers to
provide coverage to tribal lands, the Commission seeks additional
comment regarding this issue.
25. Modifying the construction requirements of the tribal lands
bidding credit. The Commission's rules currently impose more stringent
construction requirements on carriers who seek the tribal lands bidding
credit than those who do not. All carriers taking advantage of the
bidding credit are required to serve 75 percent of the population of
the qualifying tribal land for which the credit was awarded, and must
do so within three years of license grant. One possible reason behind
the lack of participation in the bidding credit program is that
carriers find that difficulties involved in meeting the enhanced
construction requirements are not sufficiently mitigated by the
existing bidding credit. For example, there may be conditions, such as
technical obstacles, economic factors, or other difficulties, that may
make it difficult for carriers to satisfy the stricter construction
requirement. Circumstances may exist on remote tribal lands such as low
population density, rough terrain, and other factors that can
negatively affect the ability of carriers to provide the requisite
coverage to facilities in those areas. Accordingly, the Commission
seeks comment as to whether it should reconsider the buildout
obligations imposed on carriers utilizing the tribal lands bidding
credit. The Commission seeks comment on whether the requirement that
carriers cover 75 percent of the population within three years remains
feasible, or whether it should moderate the buildout criteria.
Specifically, the Commission requests comment on what factors or
circumstances exist that warrant an across-the-board relaxation of the
bidding credit construction requirements.
26. In the event that it is determined that the construction
requirements should be eased, the Commission seeks comment on how the
requirements should be modified. For example, should the population of
the qualifying tribal land covered by a carrier be lessened (i.e.
reduced to a number below 75 percent)? Alternatively, should the time
period in which to provide coverage to 75 percent of the tribal
population be extended to a construction period longer than three
years? Or is the appropriate remedy a combination of a reduced
population coverage requirement and an expanded construction period?
Should the Commission adopt a variation of the combination method such
as a tiered approach? In other words, construction would occur in
phases, e.g., a certain percentage of the total tribal population must
be covered in three years, and a greater percentage would be covered at
the five-year mark.
27. A comprehensive change of the construction requirements may not
be the appropriate solution. It may be that satisfying the tribal lands
buildout requirement may be more difficult in certain tribal areas in
the country than in others. There may be difficulties or conditions
specific to certain tribal lands, that may make it difficult for
carriers to satisfy the stricter construction requirement, while other
carriers deploying the same type of service may have no difficulties in
meeting the construction requirements in other tribal areas. Similarly,
the ability to comply with the tribal lands bidding credit may depend
on the particular wireless service at issue. The Commission's rules
governing general construction and operation obligations of licensees
reflect several approaches that match a type of license (i.e. site-
based versus geographic market) or service (e.g. PCS or lower band 700
MHz) with a specific buildout requirement. It may therefore be
preferable to deal with these situations on a case-by-case or service-
by-service basis rather than an across-the board
[[Page 23435]]
method. The Commission therefore seeks comment on whether buildout
difficulties should be resolved using an ad hoc or waiver approach.
28. Increasing the bidding credit limit. In addition to the
required construction requirements, another possibility for the poor
response may be that the existing bidding credit may not provide
carriers sufficient incentive to deploy facilities on tribal lands.
Although no applicant has yet requested a larger credit than the one
called for under the tribal lands bidding credit methodology, it may be
that the current bidding credit amounts are not adequate to allow
carriers to recoup a significant portion of infrastructure costs.
Accordingly, the Commission seeks comment on whether the existing
tribal lands bidding credit remains effective in encouraging carriers
to provide service in tribal areas. The Commission also requests
comment on whether and how the bidding credit amount and methodology
should be modified to provide a greater incentive for carriers to
deploy facilities on tribal lands.
29. Adjustment of the Bidding Credit based on 2000 Census Data.
Recently issued data from the 2000 Census indicates that telephone
penetration rates on tribal lands have increased appreciably from the
levels reported in 1990. However, despite the improvement in access to
basic telephone service experienced by many tribal areas, the census
information reveals that telephone penetration rates on tribal lands
remain well below the 97.6 percent penetration rate found in the
country as a whole. Certain tribal lands continue to have unusually low
telephone penetration levels despite gains in subscribership numbers
since the 1990 Census. Accordingly, the Commission seeks comment on
whether the improved tribal penetration rates require that certain
aspects of the bidding credit be modified. For example, should the
credit formula be adjusted using 2000 Census figures instead of 1990
Census figures? While some of the more populous tribal areas continue
to have penetration rates below 70 percent, many tribal lands now have
penetration rates above 70 percent. Accordingly, to the extent that
tribal penetration rates have improved, but remain below the national
average, should the bidding credit formula be modified so that tribal
areas with penetration rates greater than 70 percent but below the
national average are eligible for the credit? What should the benchmark
be? Further, with respect to tribal lands that have been identified by
the 2000 Census as continuing to have unusually low penetration rates,
the Commission requests comment on whether the Commission should make
adjustment to the bidding credit to provide additional incentives for
such areas.
30. Extending the Tribal Lands Bidding Credit to Adjacent Non-
tribal Areas with Low Penetration Rates. The Commission recognizes that
there may be certain areas abutting tribal lands that also lack
adequate access to telecommunications services. It is likely that some
non-tribal areas share with their neighboring tribal communities the
same barriers to access, such as geographic remoteness, sparse
population clusters, and low income levels. Further, it is likely that
areas adjacent to tribal communities also have significant Native
American populations. Accordingly, in the 2nd FNPRM, the Commission
solicits comment on whether bidding credits should be extended to non-
tribal areas with penetration rates of less than 70 percent.
Specifically, the Commission seeks comment on whether it should allow a
limited expansion of the tribal lands bidding credit program that would
allow carriers who seek bidding credits in order to serve qualifying
tribal lands to obtain additional credit for extending their coverage
to immediately adjacent non-tribal areas that also have penetration
rates of less than 70 percent.
Legal Basis
31. The Commission tentatively concludes that it has authority
under sections 4(i), 303(r), 309(j) and 706 of the Communications Act
of 1934, as amended, 47 U.S.C. 154(i), 303(r), 309(j) and 706, to adopt
the proposals set forth in the 2nd FNPRM.
Description and Estimate of the Number of Small Entities to which
the rules will apply.
32. 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.
33. 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.
34. 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
[[Page 23436]]
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.
35. 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.
36. 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 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.
37. 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.
38. 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.
39. 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% of the 1,479 licenses for Blocks
D, E, and F. On March 23, 1999, the Commission
[[Page 23437]]
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.
40. 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.
41. 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.
42. 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 (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.
43. The 2nd FNPRM does not propose any specific reporting,
recordkeeping or compliance requirements. However, the Commission seeks
comment on what, if any, requirements it should impose if it adopts the
proposals set forth in the 2nd FNPRM. Steps Taken to Minimize
Significant Economic Impact on Small Entities, and Significant
Alternatives Considered.
44. 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).
45. The 2nd FNPRM seeks comment regarding ways to adjust the
current tribal lands bidding credit program in order to encourage
further deployment by carriers, as well as on additional uses of the
bidding credit program to facilitate the provision of service to
underserved non-tribal areas adjacent to tribal communities. The 2nd
FNPRM does not make specific implementation proposals, but seeks
guidance from the public on how to further expand the Commission's
bidding policies. The Commission tentatively concludes that these
proposals should not have a significant economic impact on small
carriers.
D. Comment Dates
46. The Commission invites comment on the issues and questions set
forth in the 2nd FNPRM, Paperwork Reduction Analysis, and IRFA
contained herein. Pursuant to sections 1.415 and 1.419 of the
Commission's rules, interested parties may file comments on or before
June 2, 2003, and reply comments on or before June 16, 2003. Comments
may be filed using the Commission's Electronic Comment Filing System
(ECFS) or by filing paper copies. See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 24121 (1998).
47. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit
electronic comments 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 .'' A sample form and
directions will be sent in reply. Or you may obtain a copy of the ASCII
Electronic Transmittal From (FORM-ET) at http://www.fcc.gov/e-file/email.html
.
48. Parties who choose to file by paper must file an original and
four copies of each filing. Filings can be sent by hand or messenger
delivery, by commercial overnight courier, or by first-class or
overnight U.S. Postal Service mail (although the Commission continues
to experience delays in receiving U.S. Postal Service mail). The
Commission's contractor, Vistronix,
[[Page 23438]]
Inc., will receive hand-delivered or messenger-delivered paper filings
for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite
110, Washington, DC 20002. The filing hours at this location will be 8
a.m. to 7 p.m. All hand deliveries must be held together with rubber
bands or fasteners. Any envelopes must be disposed of before entering
the building.
49. Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail,
Express Mail, and Priority Mail should be addressed to 445 12th Street,
SW., Washington, DC 20554. All filings must be addressed to the
Commission's Secretary, Office of the Secretary, Federal Communications
Commission.
------------------------------------------------------------------------
If you are sending this type of document It should be addressed for
or using this delivery method . . . delivery to . . .
------------------------------------------------------------------------
Hand-delivered or messenger-delivered 236 Massachusetts Avenue, NE.,
paper filings for the Commission's Suite 110, Washington, DC
Secretary. 20002 (8 a.m. to 7 p.m.).
Other messenger-delivered documents, 9300 East Hampton Drive,
including documents sent by overnight Capitol Heights, MD 20743 (8
mail (other than United States Postal a.m. to 5:30 p.m.).
Service Express Mail and Priority Mail).
United States Postal Service first-class 445 12th Street, SW.,
mail, Express Mail, and Priority Mail. Washington, DC 20554.
------------------------------------------------------------------------
50. Regardless of whether parties choose to file electronically or
by paper, parties should also file one copy of any documents filed in
this docket with the Commission's copy contractor, Qualex
International, Portals II, 445 12th Street, SW., CY-B402, Washington,
DC 20554 (see alternative addresses above for delivery by hand or
messenger) (telephone 202-863-2893; facsimile 202-863-2898) or via e-
mail at qualexint@aol.com. 51. The full text of this document is available for public
inspection and copying during regular business hours at the FCC
Reference Information Center, Portals II, 445 12th Street, SW., Room
CY-A257, Washington, DC 20554. This document may also be purchased from
the Commission's duplicating contractor, 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 qualexint@aol.com.
Alternative formats (computer diskette, large print, audio cassette and
Braille) are available to persons with disabilities by contacting Brian
Millin at (202) 418-7426, TTY (202) 418-7365, or at bmillin@fcc.gov.
IV. Ordering Clauses
52. Pursuant to sections 1, 4(i), 303(r), 309(j) and 706 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 303(r),
309(j), and 706, the Second Further Notice of Proposed Rulemaking is
adopted.
53. The Commission's Consumer and Governmental Affairs Bureau,
Reference Information Center, shall send a copy of this Second Further
Notice 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. 03-10737 Filed 5-1-03; 8:45 am]
BILLING CODE 6712-01-P