[Federal Register: February 28, 2005 (Volume 70, Number 38)]
[Proposed Rules]
[Page 9575-9606]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe05-23]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[MD Docket No. 05-59; FCC 05-35]
Assessment and Collection of Regulatory Fees for Fiscal Year 2005
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission will revise its Schedule of Regulatory Fees in
order to recover the amount of regulatory fees that Congress has
required it to collect for fiscal year 2005. Section 9 of the
Communications Act of 1934, as amended, provides for the annual
assessment and collection of regulatory fees under sections 9(b)(2) and
9(b)(3), respectively, for annual ``Mandatory Adjustments'' and
``Permitted Amendments'' to the Schedule of Regulatory Fees.
DATES: Comments are due March 8, 2005, and reply comments are due March
18, 2005. Written comments on the Paperwork Reduction Act proposed
information collection requirements must be submitted by the public,
Office of Management and Budget (OMB), and other interested parties on
or before April 29, 2005.
ADDRESSES: In addition to filing comments with the Secretary, a copy of
any comments on the Paperwork Reduction Act information collection
requirements contained herein should be submitted to Judith B. Herman,
Federal Communications Commission, Room 1-C804, 445 12th Street, SW.,
Washington, DC 20554, or via the Internet to Judith-B.Herman@fcc.gov,
and to Kristy L. LaLonde, OMB Desk Officer, Room 10234 NEOB, 725 17th
Street, NW., Washington, DC 20503, via the Internet to Kristy--L.
LaLonde@omb.eop.gov, or via fax at 202-395-5167.
FOR FURTHER INFORMATION CONTACT: Roland Helvajian, Office of Managing
Director at (202) 418-0444 or Rob Fream. Office of Managing Director at
(202) 418-0408. For additional information concerning the Paperwork
Reduction Act information collection requirements contained in this
document, contact Judith B. Herman at 202-418-0214, or via the Internet
at Judith-B.Herman@fcc.gov.
SUPPLEMENTARY INFORMATION: Initial Paperwork Reduction Act of 1995
Analysis: This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due April 29, 2005. Comments should address: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the
Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology. In addition, pursuant to the
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further
reduce the information collection burden for small business concerns
with fewer than 25 employees.''
OMB Control Number: 3060-1064.
Title: Regulatory Fee Assessment True-Ups.
Form No.: Not applicable.
Type of Review: Revision of currently approved collection.
Respondents: Businesses or other for-profit entities.
Estimated Number of Respondents: 1,650.
Estimated Time Per Response: .25 hours.
Frequency of Response: Annually.
Estimated Total Annual Burden: 413 hours.
Estimated Total Annual Costs: $0.
Privacy Act Impact Assessment: This information collection does not
affect individuals or households; thus, there is no impact under the
Privacy Act.
Needs and Uses: The Commission collects Congressionally-mandated
regulatory fees from its regulatees based upon a schedule of fees that
it establishes each year in an annual rulemaking proceeding. As part of
our modernization efforts, we are able to provide regulatory fee
assessments to select categories of regulatees: (1) Cable television
operators, (2) media services licensees and (3) commercial mobile radio
service (CMRS) licensees. Along with the fee assessment notices that we
intend to send to these three categories of regulatees, we will provide
them with a ``true-up'' opportunity to correct, update or otherwise
rectify their assessed fee amounts well before the actual due date for
payment of regulatory fees. This ``true-up'' collection of information
is necessary because it enables regulatees to confirm for themselves
what their regulatory fee payment obligations will be, well before
their fees are due. The ``true-up'' opportunity also serves to provide
the Commission with a higher degree of certainty in its regulatory fee
payment expectations for the fiscal year.
Adopted: February 11, 2005; Released: February 15, 2005.
By the Commission:
Table of Contents
I. Introduction
II. Discussion
A. Development of FY2005 Fees
1. Calculation of Revenue and Fee Requirements
2. Additional Adjustments to Payment Units
B. Commercial Mobile Radio Service (CMRS) Messaging Service
C. Local Multipoint Distribution Service (LMDS)
D. International Bearer Circuits
E. Multichannel Video Distribution and Data Service (MVDDS)
F. Broadband Radio Service (BRS) / Educational Broadband Service
(EBS), (formerly MDS/MMDS and ITFS)
G. Regulatory Fees for AM and FM Construction Permits
H. Clarification of Policies and Procedures
1. Ad Hoc Issues Concerning Our Regulatory Fee Exemption
Policies
2. Regulatory Fee Obligations for Digital Broadcasters
3. Regulatory Fee Obligations for AM Expanded Band Broadcasters
4. Effective Date of Payment of Multi-Year Wireless Fees
I. Proposals for Notification, Assessment and Collection of
Regulatory Fees
1. Interstate Telecommunications Service Providers (ITSPs)
2. Satellite Space Station Licensees
3. Media Services Licensees
4. Commercial Mobile Radio Service (CMRS) Cellular and Mobile
Services
5. Cable Television Subscribers
J. Future Streamlining of the Regulatory Fee Assessment and
Collection Process
III. Procedural Matters
A. Payment of Regulatory Fees
1. De Minimis Fee Payment Liability
2. Standard Fee Calculations and Payment Dates
[[Page 9576]]
B. Enforcement
C. Comment Period and Procedures
D. Ex Parte Rules
E. Paperwork Reduction Act Analysis
F. Initial Regulatory Flexibility Analysis
G. Authority and Further Information
Attachments
Attachment A Initial Regulatory Flexibility Analysis
Attachment B Sources of Payment Unit Estimates for FY2005
Attachment C Calculation of Revenue Requirements and Pro-Rata
Fees
Attachment D FY 2005 Schedule of Regulatory Fees
Attachment E Factors, Measurements, and Calculations that
Determine Station Contours and Population Coverages
Attachment F FY 2004 Schedule of Regulatory Fees
I. Introduction
1. In this Notice of Proposed Rulemaking (NPRM), we propose to
collect $280,098,000 in regulatory fees for Fiscal Year (FY) 2005.
These fees are mandated by Congress and are collected to recover the
regulatory costs associated with the Commission's enforcement, policy
and rulemaking, user information, and international activities.\1\
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\1\ 47 U.S.C. 159(a).
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II. Discussion
A. Development of FY2005 Fees
1. Calculation of Revenue and Fee Requirements
2. Each fiscal year, the Commission proportionally allocates the
total amount that must be collected via regulatory fees (Attachment
C).\2\ For FY 2005, this allocation was done using FY 2004 revenues as
a base. From this base, a revenue amount for each fee category was
calculated. Each fee category was then adjusted upward by 2.6 percent
to reflect the increase in regulatory fees from FY 2004 to FY 2005.
These FY 2005 amounts were then divided by the number of payment units
in each fee category to determine the unit fee.\3\ In instances of
small fees, such as licenses that are renewed over a multiyear term,
the resulting unit fee was also divided by the term of the license.
These unit fees were then rounded in accordance with 47 U.S.C.
159(b)(2).
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\2\ It is important to note that the required increase in
regulatory fee payments of approximately 2.6 percent in FY 2005 is
reflected in the revenue that is expected to be collected from each
service category. Because this expected revenue is adjusted each
year by the number of estimated payment units in a service category,
the actual fee itself is sometimes increased by a number other than
2.6 percent. For example, in industries where the number of units is
declining and the expected revenue is increasing, the impact of the
fee increase may be greater.
\3\ In most instances, the fee amount is a flat fee per licensee
or regulatee. However, in some instances the fee amount represents a
unit subscriber fee (such as for Cable, Commercial Mobile Radio
Service (CMRS) Cellular/Mobile and CMRS Messaging), a per unit fee
(such as for International Bearer Circuits), or a fee factor per
revenue dollar (Interstate Telecommunications Service Provider fee).
The payment unit is the measure upon which the fee is based, such as
a licensee, regulatee, subscriber fee, etc.
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2. Additional Adjustments to Payment Units
3. In calculating the FY 2005 regulatory fees proposed in
Attachment D, we further adjusted the FY2004 list of payment units
(Attachment B) based upon licensee databases and industry and trade
group projections. Whenever possible, we verified these estimates from
multiple sources to ensure the accuracy of these estimates. In some
instances, Commission licensee databases were used, while in other
instances, actual prior year payment records and/or industry and trade
association projections were used in determining the payment unit
counts.\4\ Where appropriate, we adjusted and/or rounded our final
estimates to take into consideration variables that may impact the
number of payment units, such as waivers and/or exemptions that may be
filed in FY 2005, and fluctuations in the number of licensees or
station operators due to economic, technical or other reasons.
Therefore, when we note that our estimated FY 2005 payment units are
based on FY 2004 actual payment units, we may have rounded the number
for FY 2005 or adjusted it slightly to account for these variables.
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\4\ The databases we consulted include, but are not limited to,
the Commission's Universal Licensing System (ULS), International
Bureau Filing System (IBFS), and Consolidated Database System
(CDBS). We also consulted industry sources including but not limited
to Television & Cable Factbook by Warren Publishing, Inc. and the
Broadcasting and Cable Yearbook by Reed Elsevier, Inc., as well as
reports generated within the Commission such as the Wireline
Competition Bureau's Trends in Telephone Service and the Wireless
Telecommunications Bureau's Numbering Resource Utilization Forecast
and Annual CMRS Competition Report. For additional information on
source material, see Attachment B.
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4. Additional factors are considered in determining regulatory fees
for AM and FM radio stations. These factors are facility attributes and
the population served by the radio station. The calculation of the
population served is determined by coupling current U.S. Census Bureau
data with technical and engineering data, as detailed in Attachment E.
Consequently, the population served, as well as the class and type of
service (AM or FM), determines the regulatory fee amount to be paid.
B. Commercial Mobile Radio Service (CMRS) Messaging Service
5. In our FY 2003 Report & Order (68 FR 48445, August 13, 2003), we
noted that in recent years there has been a significant decline in the
number of CMRS Messaging units--from 40.8 million in FY 1997 to 19.7
million in FY 2003--a decline of 51.7 percent.\5\ This trend is
continuing. For example, in the FY 2004 regulatory fee cycle, the
number of CMRS Messaging units for which regulatory fees were paid
declined to 13.5 million. This is consistent with our Ninth Annual CMRS
Competition Report, which estimates the number of paging-only
subscribers at the end of 2003 to be 11.2 million units.\6\ We also
note that in recent years there have been no significant changes in the
level of regulatory oversight for this fee category. For these reasons,
we propose to continue our policy of maintaining the CMRS Messaging
subscriber regulatory fee at the rate calculated in FY 2003 and FY 2004
to avoid further contributing to the financial hardships associated
with a declining subscriber base.
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\5\ See Assessment and Collection of Regulatory Fees for Fiscal
Year 2003, Report and Order, 18 FCC Rcd 15985, 15992, at paragraph
21 (2003) (FY 2003 Report and Order).
\6\ Implementation of Section 6002(b) of the Omnibus Budget
Reconciliation Act of 1993, Annual Report and Analysis of
Competitive Market Conditions with Respect to Commercial Mobile
Services, Ninth Report, FCC 04-216, released Sept. 28, 2004, at
paragraph 177 (Ninth Annual CMRS Competition Report).
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C. Local Multipoint Distribution Service (LMDS)
6. In the FY 2004 NPRM,\7\ we again sought comment on the
appropriate fee classification for LMDS.\8\ Commenters urged the
Commission to classify LMDS as a microwave service, arguing that LMDS
is operationally, functionally, and legally similar to 24 and 39 GHz
services in the microwave fee category. We rejected this argument
because
[[Page 9577]]
LMDS licenses are, as a factual matter, quite different than other Part
101 fixed microwave services in the upper frequency bands (above 15
GHz). While these three services are licensed on a geographic basis
allowing licensees to place multiple stations within the authorized
service areas, most microwave stations are currently licensed on a
site-by-site basis thereby requiring, depending on the frequency band,
multiple individual licenses to serve a particular geographic area or
multiple points therein.\9\ Even when the fees for LMDS licensees are
compared with the fees for licensees in the 24 and 39 GHz bands, we did
not find current fee assessments to impose a disproportionate burden on
LMDS licensees.
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\7\ See Assessment and Collection of Regulatory Fees for Fiscal
Year 2004, Notice of Proposed Rulemaking, 19 FCC Rcd 5795, 5797-8,
at paragraph 5 (2004) (FY 2004 NPRM).
\8\ In the FY 2003 NPRM, we sought comment on the appropriate
fee classification of the Local Multipoint Distribution Service
(LMDS). Some commenters urged that LMDS be classified in the
microwave fee category. We declined to do so because technological
developments and emerging commercial applications suggested that
usage of LMDS could evolve differently than services in the
microwave fee category. We recognized, however, that ``substantive
distinctions did exist between MDS and LMDS, and that they should
not be placed in the same fee category.'' Therefore, we created a
separate LMDS fee category and stated that we would ``initiate a
specific proceeding that addresses the policies and fee structure
governing LMDS and other wireless services.'' See FY 2003 Report and
Order, 18 FCC Rcd 15985, 15988-9, at paragraphs 6-10 (2003).
\9\ Id.
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7. However, we did identify an anomaly in FY 2004 between LMDS
Block A and LMDS Block B licenses. Block A licenses are authorized for
1150 MHz of spectrum, more than seven times the amount of spectrum
authorized for Block B licenses (150 MHz). Currently, LMDS regulatory
fees are assessed on a per-license basis. Using the authorized
bandwidth for each license as the basis for comparison, we noted that
the LMDS fee for Block A licenses in FY2004 was significantly lower on
a per megahertz basis than the fee for Block B licenses. For example,
on a per MHz basis, Block B licenses, which are authorized for 150 MHz
in the 31,000-31,075/31,225-31,300 MHz bands, paid $1.80 per MHz in
FY2004, whereas Block A licenses authorized for 1150 MHz of spectrum
paid $0.24 per MHz. Because this anomaly appears to create a
disproportionate fee obligation on LMDS Block B licenses, on our own
motion we propose in FY 2005 to exercise our authority pursuant to
section 9(b)(3) and amend the fee schedule to assess LMDS regulatory
fees on a per megahertz basis. This proposed action would thereby place
fee assessments on Block A and Block B licenses more in line with the
benefits received under the respective licenses in terms of their
authorized bandwidth, which varies substantially, as noted above.
8. Following auctions 17 and 23, half of all of the licenses were
Block A licenses and half were Block B licenses. Since then, some of
the original licenses have been divided among other licensees pursuant
to the Commission's license disaggregation and partitioning policies
and procedures and others have been surrendered back to the FCC. Based
on the FY 2005 revenue amount to be collected from the LMDS fee
category ($94,050),\10\ the per megahertz per unit fee is $0.44, which
is based on a total authorized bandwidth of 1,300 MHz and estimated
units of 165 Block A units and 165 Block B units.\11\ This methodology
of calculating LMDS regulatory fees incorporates the differences in
bandwidth use between Block A and Block B licenses, as well as
differences in the number of units between Block A and Block B
licenses. Using the per MHz per unit fee of $0.44, the regulatory fee
for LMDS Block A licenses is calculated to be $505 per license, and the
regulatory fee for LMDS Block B licenses is calculated to be $65 per
license.\12\
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\10\ See Attachment C.
\11\ The per megahertz per unit fee is calculated as follows:
165 Block A units times 1,150 MHz used = 189,750 (total MHz used
by Block A licensees).
165 Block B units times 150 MHz used = 24,750 (total MHz used by
Block B licensees).
Total = 214,500 (total MHz used by Block A & B licensees).
Per MHz Per Unit Fee = $94,050 divided by 214,500 = $0.44.
\12\ LMDS Block A Licenses: $0.44 per MHz per unit times 1,150
MHz bandwidth = $506, rounded to $505. LMDS Block B Licenses: $0.44
per MHz per unit times 150 MHz bandwidth = $66, rounded to $65.
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9. We seek comment on our proposal to use the above methodology for
calculating regulatory fees for LMDS. We are aware of the dramatic one-
year increase in regulatory fees that would result for Block A
licensees if we were to adopt the above per-MHz methodology. Therefore,
so as to minimize the impact of the fee increase, we seek comment on
whether we should graduate the increase in increments over a brief
period of years.
10. Additionally, we seek general comment on applying the per-MHz
methodology to LMDS Block A and Block B licenses that have been
partitioned and disaggregated. We also seek comment on whether to
continue to use a fee calculation process that does not distinguish
between LMDS Block A and LMDS Block B licenses. A fee calculation
process that does not distinguish between Block A and Block B licenses
would result in a regulatory fee of $285 per LMDS license.\13\ Finally,
we seek comment on other proposals to address the assessment of
regulatory fees for LMDS.
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\13\ A regulatory fee that does not distinguish between Block A
and Block B LMDS licenses is calculated as follows: $94,050 (total
expected FY 2005 revenue) divided by 330 (estimated units) = $285
per license.
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D. International Bearer Circuits
11. The Commission currently assesses regulatory fees on
international carriers based on the number of active international
bearer circuits the carrier had the previous year.\14\ In response to
our FY 2004 NPRM, several commenters requested that the Commission
change the regulatory fee regime for international carriers.\15\ In the
FY 2004 Report and Order we found that we needed a more complete record
on these issues and stated that we would seek comment on them in our
2005 regulatory fees proceeding.
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\14\ Regulatory fees for International Bearer Circuits are to be
paid by facilities-based common carriers for active international
bearer circuits in any transmission facility for the provision of
service to an end user or resale carrier, and also including active
circuits to themselves or their affiliates. In addition, non-common
carrier satellite operators must pay a fee for each circuit sold or
leased to any customer, including themselves or their affiliates,
other than an international common carrier authorized by the
Commission to provide U.S. international common carrier services.
Non-common carrier submarine cable operators are also to pay fees
for any and all international bearer circuits sold on an
indefeasible right of use (IRU) basis or leased to any customer,
including themselves or their affiliates, other than an
international common carrier authorized by the Commission to provide
U.S. international common carrier services. See Assessment and
Collection of Regulatory Fees for Fiscal Year 2001, MD Docket No.
01-76, Report and Order, 16 FCC Rcd 13525, 13593 (2001); Regulatory
Fees Fact Sheet: What You Owe--International and Satellite Services
Licensees for FY 2004 at 3 (released July 2004) (the fact sheet is
available on the FCC web-site at: http://hraunfoss.fcc.gov/ edocs--
public/attachmatch /DOC-249904A4.pdf).
\15\ See Assessment and Collection of Regulatory Fees for Fiscal
Year 2004, Report and Order, 19 FCC Rcd 11662, 11671-72, at
paragraphs 26-30 (2004) (FY 2004 Report and Order).
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12. In this proceeding we seek comment on possible changes to the
regulatory fees assessed on international carriers. Specifically we
seek comment on possible bases, other than active circuits, for
assessing regulatory fees on international carriers.\16\
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\16\ Because of the complexity of this issue, we will review the
comments and reply comments, but we will not implement any action in
FY 2005.
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13. Several carriers raised concerns with the use of international
bearer circuits as the basis for assessing regulatory fees in the 2004
regulatory fee proceeding. They argued that basing fees on the number
of active circuits an international carrier has favors older, lower-
capacity systems to the detriment of newer, higher-capacity systems.
Specifically the commenters argued that (1) the Commission's present
methodology does not take into account the reduced regulation of non-
common carrier (also known as ``private'') submarine cable operators,
and (2) imposing fees based on a company's ``lit and sold'' (also known
as ``active'') bearer circuit capacity is at odds with how non-common
carrier submarine cable operators actually sell capacity, thereby
requiring operators to spend
[[Page 9578]]
time determining if regulatory fees are applicable based on the
Commission's definition of ``active.''
14. Tyco proposed the following changes be made to the regulatory
regime: (1) Separate the non-common carrier submarine cable operator
subcategory from the existing international bearer circuit fee category
by creating a new non-common carrier submarine cable operator category;
(2) allocate the current revenue requirement for the bearer circuit fee
category between two new fee categories based on the regulatory burden
of each new category; and (3) adopt a flat, per-cable-landing-license
fee for non-common carrier submarine cable operators. Several
commenters supported Tyco's position. Several commenters also noted
that satellite operators provide international bearer circuits on a
non-common carrier basis, and that circuit fees should include both
non-common carriers as well as private submarine cable providers.
15. The Commission concluded in the FY 2004 Report and Order that
these arguments warranted further consideration, and that a fee system
based on cable landing licenses and international section 214
authorizations, rather than international bearer circuits, would be
administratively simpler for both the Commission and carriers.\17\ The
Commission also noted that a fee system based on licenses/
authorizations could provide an incentive for carriers to initiate new
services and to use new facilities more efficiently.\18\
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\17\ FY 2004 Report and Order at paragraph 29.
\18\ Id.
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16. The assessment of regulatory fees on international carriers
based on active international circuits is set out in the fee schedule
in section 9 of the Communications Act.\19\ The statute provides the
Commission with the authority to amend the fee schedule. 47 U.S.C.
159(b)(3). Section 9(b)(3) requires the Commission to amend the
schedule if the Commission determines that amendment is necessary to
comply with the general fee authority set forth in section 9(b)(1)(A)
of the Communications Act. Section 9(b)(3) also grants the Commission
authority to ``add, delete, or reclassify service in the Schedule to
reflect additions, deletions, or changes in the nature of its services
as a consequence of Commission rulemaking proceedings or changes in the
law.'' \20\ We seek comment on whether a change to the computation of
fees for the international bearer circuit category or a
reclassification of the category is warranted in light of the
Commission's authority to amend the fee schedule.\21\ If a
reclassification of the category is proposed, commenters should
specifically address the Commission rulemakings or changes in law that
justify the reclassification.
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\19\ 47 U.S.C. 159(g).
\20\ 47 U.S.C. 159(b)(3).
\21\ On December 15, 2004, counsel for Tyco Telecommunications
(US) Inc. submitted a letter addressing the Commission's legal
authority to amend the schedule of regulatory fees pursuant to
section 9(b)(3), 47 U.S.C. 159(b)(3). Letter from Kent D. Bressie,
Harris, Wiltshire & Grannis, to David Krech, FCC, dated December 15,
2004. A copy of the letter has been placed in the record for this
proceeding. We seek comment on the analysis presented in the letter.
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17. Commenters should address possible alternative methods of
assessing regulatory fees on international carriers, for example
whether regulatory fees should be assessed based on the holding of an
international section 214 authorization or a cable landing license. As
noted above, Tyco proposed to separate the non-common carrier submarine
cable operator subcategory from the existing international bearer
circuit fee category, thereby creating a new non-common carrier
submarine cable operator category. We seek comment on the Tyco
proposal. Commenters should address how to allocate the current
international bearer circuit revenue requirement between non-common
carrier submarine cable operators and the remaining circuit fee
category.
E. Multichannel Video Distribution and Data Service (MVDDS)
18. In 2002 the Commission established the Multichannel Video
Distribution and Data Service (MVDDS) in the 12.2-12.7 GHz band (12 GHz
band),\22\ totaling 500 megahertz of contiguous spectrum that is
licensed by 214 service areas (``MVDs''). MVDDS spectrum is used to
facilitate the delivery of new video and broadband communications
services, such as local television programming and high-speed Internet
access.\23\ The technical rules reflect a carefully crafted balance in
which the Commission affords protection to the Direct Broadcast
Satellite (DBS) service and the non-geostationary satellite orbit
(NGSO) fixed-satellite service (FSS) while allowing the entrance of
MVDDS.\24\
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\22\ Amendment of Parts 2 and 25 of the Commission's Rules to
Permit Operation of NGSO FSS Systems Co-Frequency with GSO and
Terrestrial Systems in the Ku-Band Frequency Range; Amendment of the
Commission's Rules to Authorize Subsidiary Terrestrial Use of the
12.2-12.7 GHz Band by Direct Broadcast Satellite Licensees and Their
Affiliates; and Applications of Broadwave USA, PDC Broadband
Corporation, and Satellite Receivers, Ltd. to Provide a Fixed
Service in the 12.2-12.7 GHz Band, ET Docket No. 98-206, Memorandum
Opinion and Order and Second Report and Order, 17 FCC Rcd 9614, 9680
(2002) (MVDDS Second R&O).
\23\ MVDDS licensees may use the 12.2-12.7 GHz band for any
digital fixed non-broadcast service (broadcast services are intended
for reception of the general public and not on a subscribership
basis) including one-way direct-to-home/office wireless service. See
47 CFR 101.1407 (Permissible operations for MVDDS).
\24\ See generally subpart P of 47 CFR Part 101.
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19. The Commission established MVDDS because it had concluded that
a fourth provider in the MVPD marketplace would generate significant
public interest benefits, such as lower prices, improved service
quality, increased innovation, and increased service to unserved or
underserved rural areas.\25\ However, the Commission found that ``open
eligibility for in-region cable operators [would] pose a significant
likelihood of substantial competitive harm'' because ``cable operators
have a strong incentive to prevent entry by new MVPD providers.''\26\
Therefore, cable operators and entities holding attributable interests
in cable operators must divest these interests within ninety days of
being granted an MVDDS license whose geographic service area
significantly overlaps the cable operator's service area.\27\
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\25\ 25 MVDDS Second R&O, 17 FCC Rcd at 9680.
\26\ 26 Id.
\27\ 47 CFR 101.1412(a). ``Cable operator'' means a company that
is franchised to provide cable service, as defined in 47 CFR
76.1000(e), in all or part of the MVDDS license area, id. Sec.
101.1412(b). ``Significant overlap'' occurs when a cable operator's
subscribers in the MVDDS license area make up 35 percent or more of
the households in that MVDDS license area which subscribe to one or
more Multichannel Video Program Distributors (MVPDs), as defined in
47 CFR 76.1000(e). See 47 CFR 101.1412(c) and (e). The winning
bidder for the MVDDS license of the New York service area (MVD001),
inter alia, requested and received a 270-day extension of the 90-day
divestiture deadline, see 47 CFR 101.1412(g)(4), of the Commission's
MVDDS/cable cross-ownership rule. See DTV Norwich, LLC, Application
for Multichannel Video Distribution and Data Service License,
MVD001-New York, Request for Waiver of Section 101.1412(g)(4) of the
Commission's Rules, Order, File No. 0001618606-MVD001, DA 04-3044
(released September 23, 2004) (DTV Norwich Waiver Order).
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20. On January 27, 2004, the Commission completed the auction of
the 214 MVDDS licenses (``Auction No. 53''), raising (in net bids) a
total of $118,721,835. In this auction, ten winning bidders won a total
of 192 MVDDS licenses, which the Commission issued later in 2004.\28\
[[Page 9579]]
MVDDS licenses are issued for a ten-year term beginning on the date the
initial authorization is granted.\29\ Licensees must provide
``substantial service'' within five years of the grant, which must be
documented at license renewal time.\30\ As of the third quarter 2004,
MVDDS equipment was still under development. Because MVDDS spectrum can
be used to provide non-video, i.e., broadband data services,\31\ the
Commission concluded that MVDDS does not fall within the Cable
Television and DBS Subscribers regulatory fee category, which raises
the question of whether MVDDS should be established as a new regulatory
fee category.
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\28\ See Wireless Telecommunications Bureau Grants Multichannel
Video Distribution and Data Service Licenses, Public Notice, DA 04-
2331 (released July 27, 2004) (granting 154 licenses); Wireless
Telecommunications Bureau Grants Multichannel Video Distribution and
Data Service Licenses to South.Com LLC, DA 04-2547, Public Notice,
(released August 18, 2004) (granting 37 licenses); and DTV Norwich
Waiver Order (granting license for MVD001). All of the grants are
subject to conditions.
\29\ 47 CFR 101.1413(a).
\30\ 30 47 CFR 101.1413(b) and (c).
\31\ MVDDS licensees may use this spectrum for any digital fixed
non-broadcast Service (broadcast services are intended for reception
of the general public and not on a subscribership basis) including
one-way direct-to-home/office wireless service. Licensees are
permitted to provide one-way video programming and data services on
a non-common carrier and/or on a common carrier basis. Mobile and
aeronautical services are not authorized. Two-way services may be
provided by using other spectrum or media for the return or upstream
path. See 47 CFR 101.1407.
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21. Since MVDDS equipment is still under development, we propose to
not establish regulatory fees for MVDDS as a new regulatory fee
category in FY 2005. We seek comment on this proposal. In the
alternative, if the Commission were to establish regulatory fees for
MVDDS in FY 2005, we seek comment on equitable ways to assess fees for
MVDDS based on the nature of this service, such as whether the fee
should be flat or be set on a per-MHz basis. We also seek comment on
whether the Commission should collect the fee on an annual basis, or
whether we should collect it in advance to cover the term of the
license fee when the application for license is filed.
F. Broadband Radio Service (BRS)/Educational Broadband Service (EBS),
(Formerly MDS/MMDS and ITFS)
22. On June 10, 2004, we adopted a Report & Order and Further
Notice of Proposed Rulemaking (R&O and FNPRM), 69 FR 72048 (December
10, 2004), and also referred to as the BRS/EBS proceeding) \32\ that
takes important steps to transform our rules and policies governing the
licensing of the Instructional Television Fixed Service (ITFS), the
Multipoint Distribution Service (MDS), and the Multichannel Multipoint
Distribution Service (MMDS) in the 2500-2690 MHz band.\33\ The actions
taken in this proceeding initiated a fundamental restructuring of the
band that will provide both existing ITFS and MDS licensees and
potential new entrants with greatly enhanced flexibility in order to
encourage the highest and best use of spectrum domestically and
internationally, and the growth and rapid deployment of innovative and
efficient communications technologies and services.\34\ The R&O renamed
the MDS service as the ``Broadband Radio Service'' (BRS). This new
designation connotes a more accurate description of the services we
anticipate will develop in the band.The R&O also renamed the ITFS
service as the Educational Broadband Service'' (EBS), which more
accurately describes the kinds of the services that we anticipate will
develop in the band.\35\ The R&O, among other things, implemented
geographic area licensing for all licensees in the band, which gives
licensees increased flexibility while greatly reducing administrative
burdens on both licensees and the Commission. We note that geographic
area licensing will reduce the total number of BRS licenses because, in
most cases, separate licenses will no longer be necessary for each
transmitter a licensee places in service.
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\32\ See Amendment of Parts 1, 21, 73, 74 and 101 of the
Commission's Rules to Facilitate the Provision of Fixed and Mobile
Broadband Access, Educational and Other Advanced Services in the
2150-2162 and 2500-2690 MHz Bands et al, Report & Order and Further
Notice of Proposed Rulemaking, 19 FCC Rcd 14165 (2004) (R&O and
FNPRM).
\33\ The terms MDS and MMDS are often used interchangeably. The
Commission coined the term ``MDS'' at a time when it was making only
two channels available for the service, at 2150-2162 MHz. The
Commission began using the term ``MMDS'' when formulating rules
making additional channels for the service available in the 2500-
2690 MHz band. In discussing this Report & Order and Further Notice
of Proposed Rulemaking, we will use the term ``MDS'' to signify both
services.
\34\ Federal Communications Commission, Strategic Plan FY 2003-
FY 2008 at 5 (2002) (Strategic Plan).
\35\ Federal Communications Commission, Strategic Plan FY 2003-
FY 2008 at 5 (2002) (Strategic Plan).
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23. In the FNPRM, we sought comment on issues relating to
regulatory fees.\36\ We note that, other than renaming our MDS/MMDS
regulatory fee category to BRS and adjusting its estimated number of
payment units, any other changes to the regulatory fee rules we adopt
in the BRS/EBS proceeding will not be adopted in time to take effect in
FY 2005. If new regulatory fee rules are adopted in the BRS/EBS
proceeding, the Commission will make appropriate adjustments in the
appropriate regulatory fee cycle, which will presumably be the cycle
for FY 2006 or beyond.
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\36\ See R&O and FNPRM, 19 FCC Rcd at 14293-97 paragraphs 351-
359.
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G. Regulatory Fees for AM and FM Construction Permits
24. At the inception of our regulatory fee program in FY 1994, the
regulatory fee amount for construction permits was set at an amount
that, when compared to licensed stations, was commensurate to the
limited nature of station operations under the terms of a construction
permit. Each year since FY 1994, the unit fee for AM, FM, and full-
service VHF and UHF television construction permits was calculated by
determining the proportion of the amount to be collected by each
respective fee category, divided by the number of estimated units, as
illustrated in Attachment C. However, since the inception of the
program in FY 1994, the amount of fees that we have been directed to
collect each year has steadily increased, while the number of estimated
payment units for these construction permits has steadily decreased.
This combination of increasing expected revenue and decreasing payment
units for these construction permits has resulted in a regulatory unit
fee that is higher than that of some licensed stations.
25. To rectify this situation, we propose beginning in FY 2005 to
set the AM, FM, VHF, and UHF construction permit fee to be no higher
than the regulatory fee associated with the lowest licensed station for
that fee category. Because there are unit and revenue variables in
assessing the per-unit regulatory fee, thereby causing the fee to
change each fiscal year, it may be necessary to make revenue
adjustments each fiscal year to keep the per unit regulatory fee for
construction permits at the level of the lowest licensed fee for AM,
FM, VHF, and UHF stations. We seek comment on whether construction
permit fees should be held at the level of the lowest licensed fee for
their respective fee categories (e.g. AM, FM, VHF, and UHF stations),
and whether any adjustments that have to be made to hold the
construction permit fee at the level of the lowest respective licensed
fee should be spread across only a narrow group of fee categories, such
as AM, FM, VHF, and UHF stations, or across all fee categories.
H. Clarification of Policies and Procedures
1. Ad Hoc Issues Concerning Our Regulatory Fee Exemption Policies
26. Pursuant to 47 CFR 1.1162, the Commission does not establish
regulatory fees for applicants, permittees and licensees who qualify as
government entities or non-profit entities. Despite the language of 47
CFR
[[Page 9580]]
1.1162, we still encounter frequent uncertainty and comments from
parties with respect to our fee exemption policies. Therefore, we
believe it would be helpful for us to provide clarification of these
policies.\37\
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\37\ In the ensuing discussion, ``facility'' includes
``station'' and ``licensee'' includes ``permittee.'' ``October 1''
means the close of business on October 1, the first day of the
government fiscal year. ``Fee Due Date'' means the close of business
on the day determined to be the final date by which regulatory fees
must be paid. The Fee Due Date usually occurs in August or
September. An ``Exempt Entity'' is a legal entity that is relieved
of the burden of paying annual regulatory fees.
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27. Determination of Fee Code for a Facility: The fee code is
determined by the operational status of the facility as of October 1 of
each year. This involves factors such as whether the facility is in
construction permit status or licensed status and a variety of other
factors. Every facility has a fee code. There is no prorating of
regulatory fees. For example, if a facility is in construction permit
status as of the close of business October 1, but a license is granted
on or after October 2, that facility is considered to be in
construction permit status for the entire year. Other facility changes
during the course of the year, such as technical changes, are treated
in the same manner.
28. Establishment of Exempt Status: State, local, and federal
government agencies and IRS-certified not-for-profit entities are
generally exempt from payment of regulatory fees. The Commission
requires that each exempt entity have on file a valid IRS Determination
Letter or certification from a government authority documenting its
exempt status. In instances where there is a question regarding the
exempt status of an entity, the FCC may request, at any time, for the
entity to submit an IRS Determination Letter or certification from a
government authority that documents its exempt status.
29. Subsidiaries of Exempt Entities: The licensee of a facility may
be distinct from the ultimate owner. Exempt entities may hold one or
more licenses for media facilities directly and/or through
subsidiaries. Facilities licensed directly to an exempt entity and its
exempt subsidiaries are excused from the regulatory fee obligation.
However, licensees that are for-profit subsidiaries of exempt entities
are subject to regulatory fees regardless of the exempt status of the
ultimate owner.
Examples: A University owns a commercial facility whose profits
are used to support the University and/or its programs. If the
facility is licensed to the University directly, or to an exempt
subsidiary of the University, it is exempt from regulatory fees. If,
however, the license is held by a for-profit subsidiary, regulatory
fees are owed, even though the University is an exempt entity.
A state pension fund is the majority owner of a for-profit
commercial broadcasting firm. The facilities licensed to the for-
profit broadcasting firm would be subject to regulatory fees, even
though it is owned by an exempt agency.
30. Responsible Party, and the Effects of Transfers of Control: The
entity holding the license for a facility as of the Fee Due Date is
responsible for the regulatory fee for that facility. Eligibility for a
regulatory fee exemption is determined by the status of the licensee as
of the Fee Due Date, regardless of the status of any previous
licensee(s).
2. Regulatory Fee Obligations for Digital Broadcasters
31. Our current schedule of regulatory fees does not include
service categories for digital broadcasters. Licensees in the broadcast
industry pay regulatory fees based on their analog facilities. For
licensees that broadcast in both the analog and digital formats, the
only regulatory fee obligation at present is for their analog facility.
Moreover, a licensee that has fully transitioned to digital
broadcasting and has surrendered its analog spectrum would have no
regulatory fee obligation.
32. At this time, we regard it as premature to establish regulatory
fee obligations for digital broadcasters. However, recognizing the
Commission's initiatives to transition analog broadcasters to digital
spectrum, we wish to begin to address these issues from a regulatory
fee perspective, so that both the Commission and licensees can prepare
for fee policy changes that may need to occur.
33. Therefore we seek comment on whether and when we should
establish regulatory fee service categories for digital broadcasters.
In particular, we seek comment on ways that we could most efficiently
and seamlessly adjust our schedule of regulatory fees to account for
the collection of fee revenue from digital broadcasters without harming
early transitioners to digital spectrum or late transitioners from
analog spectrum.
3. Regulatory Fee Obligations for AM Expanded Band Broadcasters
34. AM Expanded Band Radio Station: We are aware of uncertainty
among licensees as to whether or not regulatory fees are owed for AM
Expanded Band radio stations. The concept of the AM Expanded Band has
its basis in the Commission's rules regarding experimental
stations.\38\ The AM Expanded Band was created to reduce interference
in the upper standard band portion of the AM spectrum band by allowing
stations to voluntarily move their broadcasts from the standard band to
a point above 1605 kHz.\39\
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\38\ Definitions regarding AM Expanded Band stations are listed
in many places in the Commission rules, including 47 CFR 73.14,
73.21, 73.30, and 73.37.
\39\ See 47 CFR 73.14, 73.21, 73.30, and 73.37 of the
Commission' rules for information regarding AM Expanded Band
stations.
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35. Uncertainty about the fee status of AM Expanded Band stations
may exist because AM Expanded Band radio service is not among our
categories for general exemptions from regulatory fees, as defined in
47 CFR 1.1162. While not fitting a general exemption, we clarify here
that, at this time, licensees of AM Expanded Band radio stations--
stations authorized for broadcast in the 1605-1705 kHz range--are not
required to pay regulatory fees for such stations. Licensees that
operate a standard band AM station (540-1600 kHz) that is linked to an
AM Expanded Band station are subject to regulatory fees for their
standard band station only.
36. We also note that our decision not to require regulatory fee
payments for AM Expanded Band stations is not synonymous with giving AM
Expanded Band radio service a general exemption from regulatory fees.
Because the movement to the expanded band is voluntary and helps to
reduce interference in the standard bandwidth, we wish to continue our
policy of not subjecting this relatively small group of stations to
regulatory fees. However, at some future point when the migration of
standard band broadcasters to the Expanded Band has advanced, we will
consider establishing regulatory fee requirements for AM Expanded Band
stations.
4. Effective Date of Payment of Multi-Year Wireless Fees
37. The first eleven fee categories in our Attachment D, Schedule
of Regulatory Fees, constitute a general fee category known as multi-
year wireless fees. Regulatory fees for this category are generally
paid in advance, and for the amount of the entire 5-year or 10-year
term of the license. Because payment of these regulatory fees is linked
to the date of license renewal (or at the time of a new application),
these fees can be paid at any time during the fiscal year. As a result,
there has been some confusion as to the regulatory fee rate that should
apply at the time of license renewal. Current fiscal year regulatory
[[Page 9581]]
fees generally become effective 30 or 60 days after publication of the
fees Report & Order in the Federal Register, or in some instances, 90
days after delivery of the Report & Order to Congress. Because current
fiscal year regulatory fees have an effective date, only licensees
(including new licensees) whose license renewal dates fall on or after
this effective date pay regulatory fees at the new rate. Licensees
whose license renewal dates fall before the current year effective date
pay regulatory fees at the prior year rate, which, in other words, is
the rate currently in effect before the new rate becomes effective.
I. Proposals for Notification, Assessment and Collection of Regulatory
Fees
38. Each year, we generate public notices and fact sheets that
notify regulatees of the fee payment due date and provide additional
information regarding regulatory fee payment procedures. In prior
years, we disseminated these notices and fact sheets to regulatees
through surface mail. We discontinued this practice two years ago,
informing regulatees that with the widespread use of the Internet,
sending public notices by surface mail was not an efficient use of our
time and resources. We stated that we can better serve the public by
providing these general notices on our website, while exploring ways to
disseminate specific regulatory fee bills or assessments through
surface mail.
39. Accordingly, in FY 2005 we will provide our public notices,
fact sheets and all other relevant materials on our web site at http://www.fcc.gov/fees/regfees.html
, just as we have done for the past
several years. As a general practice, we will not send such information
through surface mail. However, in the event that regulatees do not have
access to the Internet, we will mail public notices and other relevant
materials upon request. Regulatees and the general public may request
such information by contacting the FCC CORES Help Desk at (877) 480-
3201, Option 4.
40. Although last year we did not send public notices and fact
sheets to regulatees en masse, we did send specific regulatory fee
assessments or bills by surface mail to a select group of fee
categories. Here, we believe that it is important to clarify the
distinction between an assessment and a bill. An assessment is a
proposed statement of the amount of regulatory fees owed by an entity
to the Commission (or proposed subscriber count to be ascribed for
purposes of setting the entity's regulatory fee) but it is not entered
into the Commission's accounts receivable system as a current debt. A
bill is distinct from an assessment in that it is automatically entered
into our financial records as a debt owed to the Commission. Bills
reflect the amount owed and have a due date of the last day of the fee
payment window. Consequently, if a bill is not paid by the due date, it
becomes delinquent and is subject to our debt collection
procedures.\40\
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\40\ See 47 CFR 1.1161(c), 1.1164(f)(5), and 1.1910.
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41. We are pursuing our billing initiatives as part of our effort
to modernize our financial practices. Eventually, we intend to expand
our billing initiatives to include all regulatory fee service
categories. For now, based on the results of our assessment and billing
initiatives from last year, and the resources currently available to
us, we propose to proceed with our various FY 2005 initiatives as
follows.
1. Interstate Telecommunications Service Providers (ITSPs)
42. In FY 2001, we began sending pre-completed FCC Form 159-W
assessments to carriers in an effort to assist them in paying the
Interstate Telecommunications Service Provider (ITSP) regulatory
fee.\41\ The fee amount on FCC Form 159-W was calculated from the FCC
Form 499-A report, which carriers are required to submit by April 1st
of each year. Throughout FY 2002 and FY 2003, we refined the FCC Form
159-W to simplify the regulatory fee payment process.\42\ In FY 2004,
we generated and mailed the same pre-completed FCC Form 159-W's to
carriers under the same dissemination procedures, but we informed them
that we will be treating the amount due on Form 159-W as a bill, rather
than as an assessment. Other than the manner in which Form 159-W
payments were entered into our financial system, carriers experienced
no procedural changes regarding the use of the FCC Form 159-W when
submitting payment of their FY 2004 ITSP regulatory fees.
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\41\ See FY 2001 Report and Order, 16 FCC Rcd 13590 (2001) at
paragraph 67. See also FCC Public Notice--Common Carrier Regulatory
Fees (August 3, 2001) at 4.
\42\ Beginning in FY2002, Form 159-W included a payment section
at the bottom of the form that allowed carriers the opportunity to
send in Form 159-W in lieu of completing Form 159 Remittance Advice
Form.
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43. For FY 2005, we propose to continue our Form 159-W billing
initiative for ITSPs. We seek comment on this proposal and on ways that
we could improve our billing initiative for ITSPs.
2. Satellite Space Station Licensees
44. Last year, for the first time, we mailed regulatory fee bills
through surface mail to all licensees in our two satellite space
station service categories. Specifically, geostationary orbit space
station (``GSO'') licensees received bills requesting regulatory fee
payment for satellites that (1) were licensed by the Commission and
operational on or before October 1, 2003; and (2) were not co-located
with and technically identical to another operational satellite on
October 1, 2003 (i.e., were not functioning as a spare satellite). Non-
geostationary orbit space station (``NGSO'') licensees received bills
requesting regulatory fee payment for systems that were licensed by the
Commission and operational on or before October 1, 2003.
45. For FY 2005, we propose to continue our billing initiative for
our two satellite space station categories: GSOs and NGSOs.
46. Finally, we emphasize that the bills that we propose to
generate for our GSO and NGSO licensees will be only for the satellite
or system aspects of their respective operations. GSO and NGSO
licensees typically have regulatory fee obligations in other service
categories (such as earth stations, broadcast facilities, etc.), and we
expect satellite operators to meet their full fee payment obligations
for their entire portfolio of FCC licenses. We seek comment on our
proposal to generate regulatory fee bills for our two satellite space
station service categories.
3. Media Services Licensees
47. In FY 2003 and FY 2004, we mailed fee assessment postcards to
media services entities on a per-facility basis. The postcards served
to notify licensees of the date when fee payments are due, the assessed
fee amount for the facility, as well as other data attributes that we
used in determining the fee amount.\43\ We propose to continue our
assessment initiative for media services licensees this year in a
similar fashion.
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\43\ Fee assessments were issued for AM and FM Radio Stations,
AM and FM Construction Permits, FM Translators/Boosters, VHF and UHF
Television Stations, VHF and UHF Television Construction Permits,
Satellite Television Stations, Low Power Television (LPTV) Stations,
and LPTV Translators/Boosters. Fee assessments were not issued for
broadcast auxiliary stations, nor will they be issued for them in FY
2005.
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48. As was the case last year, we propose to mail a single round of
postcards to licensees and their other known points of contact listed
in CDBS (Consolidated Database System) and in CORES (Commission
Registration System), the Commission's two official
[[Page 9582]]
databases for media services. By doing so, licensees and their other
points of contact will all be furnished with the same information for
each facility in question so that they can designate among themselves
the payer of this year's fee. Mailing postcards to all interested
parties at different addresses on file for each facility also
encourages all parties to visit our Commission-authorized web site to
update or correct information regarding the station, or to certify
their fee-exempt status, if appropriate. The web site will be available
again on-line throughout this summer.\44\ In addition to using the
postcards to direct parties to our authorized web site for updates and
corrections, the postcards will also direct licensees to the telephone
number of our FCC CORES Help Desk at (877) 480-3201, Option 4, where
licensees can call to obtain clarification on procedures. We seek
comment on our proposal to generate fee assessment postcards for media
services entities.
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\44\ The Commission-authorized web site is http: //
http://www.fccfees.com.
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49. Under our proposal, media services licensees would still be
required to submit a completed Form 159 with their fee payments,
despite having received an assessment postcard. We cannot guarantee
that your regulatory fees will be posted accurately against your
account if a Form 159 is not returned with your fee payment. We
emphasize that the assessment postcards that we propose to mail to
media services licensees are not to be used as a substitute to
completing Form 159. Rather, we hope licensees will use the postcards
as a tool to help them complete their Form 159.
50. We also emphasize that the most important data element that
media services licensees need to include on their Form 159 is their
station's facility ID. The facility ID is a unique identifier that
never changes over the course of a station's existence. Despite the
fact that we prominently display a station's facility ID on the
station's assessment postcard, and Form 159 filing instructions call
for each station's facility ID and call sign to be provided, we
typically receive many incomplete Form 159s that do not provide the
facility ID of the station whose fee is being paid.
4. Commercial Mobile Radio Service (CMRS) Cellular and Mobile Services
51. In our FY2004 NPRM, we proposed to mail assessments to
Commercial Mobile Radio Services (CMRS) cellular and mobile service
providers using information from the Numbering Resource Utilization
Forecast (NRUF) form.\45\ We proposed that subscriber data from the
NRUF form and the Local Number Portability (LNP) database be used to
compute and assess a regulatory fee obligation. Upon the suggestion of
some of our commenters to our NPRM, we decided to provide entities who
filed an NRUF form an opportunity to revise their subscriber counts
before making a regulatory fee payment.\46\ We propose to continue our
procedure of giving entities an opportunity to revise their subscriber
counts again this year by sending two rounds of assessment letters, an
initial assessment and a final assessment letter. If this exercise
again proves to be successful, we will be sending these letters next
year as ``bills'', which will have Debt Collection Improvement Act
(DCIA) implications if the assessment fee based on these subscriber
counts is not paid by the due date of next year's regulatory fees.
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\45\ See Assessment and Collection of Regulatory Fees for Fiscal
Year 2004, Notice of Proposed Rulemaking, 19 FCC Rcd 5795, 5801, at
paragraph 20 (2004) (FY 2004 NPRM).
\46\ See FY 2004 Report and Order, 19 FCC Rcd 11662, 11676-
11677, at paragraphs 48-49 (2004).
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52. As in FY 2004, we again propose to send an assessment letter
that is based on NRUF data \47\ that includes a list of the carrier's
Operating Company Numbers (OCNs) upon which the assessment is based.
The letters will not include assigned number counts by OCNs, but rather
an aggregate of assigned numbers for each carrier. If the number of
subscribers on the initial assessment letter differs from the
subscriber count they provided on the NRUF form, CMRS cellular and
mobile service providers can amend their initial assessment letter to
correctly identify their subscriber count as of December 31, 2004.
Assessment letters that are amended should indicate the specific reason
for the change, such as the purchase or the sale of a subsidiary, the
date of the transaction, and any other information that will help to
justify a reason for the change. If we receive no response to our
initial assessment letter, we will assume that the initial assessment
is correct and will expect the fee payment to be based on the number of
subscribers listed on the initial assessment. We will review all
responses and determine whether a change in the number of subscribers
is warranted. As in previous years, operators will certify their
subscriber counts in Block 30 of the FCC Form 159 Remittance Advice
when making their regulatory fee payments.
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\47\ Our proposal to continue to use NRUF data is subject to
action taken in response to a Petition for Reconsideration of the FY
2004 Fee Order filed by Cingular Wireless LLC filed on August 6,
2004.
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53. Although two assessment letters will be mailed to carriers that
have filed an NRUF form, it is conceivable that some carriers will not
be sent any letters of assessment because they did not file the NRUF
form. For these carriers, we again propose to use the methodology \48\
that is currently in place for CMRS Wireless services. They should use
their subscriber count as of December 31, 2004 and submit payment
accordingly on FCC Form 159. However, whether a carrier receives a
letter of assessment or computes the subscriber count itself, the
Commission reserves the right, under the Communications Act, to audit
the number of subscribers upon which regulatory fees are paid. In the
event that the Commission determines that the number of subscribers is
inaccurate or that an insufficient reason is given for making a
correction on the initial assessment letter, we again propose that we
reserve the right to assess the carrier for the difference between what
was paid and what should have been paid.
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\48\ Federal Communications Commission, Regulatory Fees Fact
Sheet, ``What You Owe--Commercial Wireless Services, July 2004, page
1.
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54. After having the benefit of using NRUF data last year, we will
clarify some of the issues raised last year. First, we propose to
derive the subscriber count from NRUF data based on ``assigned'' number
counts that have been adjusted for porting to net Type 0 ports (``in''
and ``out''), which should reflect a more accurate subscriber count.
Second, as a result of number pooling, many wireless carriers receive
their new numbers as thousand-number blocks and that, within each
block, up to 100 numbers can be retained by the donating carrier.
Because retained numbers are reported on the NRUF form as ``assigned''
to the holder of the thousand block, a concern was raised last year
that this anomaly would result in a lower count for the donating
carrier and a higher count for the recipient carrier. Although we are
unable to correct this anomaly at this time, we believe our proposal to
give carriers an opportunity to revise their subscriber count should
alleviate any potential harm resulting from this phenomenon. And
finally, because we are requiring carriers to confirm their subscriber
counts on an aggregate basis, a carrier should be able to identify its
subscriber count accurately as of December 31, 2004, regardless of
whether the carrier uses data in the NRUF report, a Securities and
Exchange (SEC) filing, the 477 report, or some other certified
financial statement. Because we have
[[Page 9583]]
found subscriber counts reported by carriers on the NRUF form to be
very accurate, we propose to continue to use the NRUF report \49\ as
the basis for our CMRS cellular/mobile provider assessments.
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\49\ Our proposal to continue to use NRUF data is subject to
action taken in response to a Petition for Reconsideration of the FY
2004 Fee Order filed by Cingular Wireless LLC filed on August 6,
2004.
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5. Cable Television Subscribers
55. Last year, we generated regulatory fee assessment letters for
that segment of the cable television industry that was listed in
selected publicly available data sources. The data sources that we
selected for reference were the Broadcasting and Cable Yearbook 2003-
2004 (``Yearbook'') \50\ and industry statistics published by the
National Cable and Telecommunications Association (``NCTA'').\51\ We
also permitted cable operators for the first time, regardless of
whether or not they were listed in the selected data sources, to make
regulatory fee payments based on their companies' aggregate subscriber
counts, rather than requiring them to sub-report subscriber counts on a
per community unit identifier (``CUID'') basis.
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\50\ Broadcasting and Cable Yearbook 2003-2004, by Reed
Elsevier, Inc., Newton, MA, 2003. Subscriber counts reported in
Section C, ``Multiple System Operators, Independent Owners and Cable
Systems,'' page C-3.
\51\ NCTA maintains an updated list of the 25 largest multiple-
system operators at its web site located at http://www.ncta.com.
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56. We generated assessment letters for each of the cable operators
listed in the Yearbook, as well as the 25 largest multiple-system
operators (``MSOs''), as listed on NCTA's web page. The cable operators
that received assessment letters were given the opportunity to respond
to the Commission to rectify their subscriber counts before making
their fee payments. The remainder of the cable television industry did
not receive assessment letters. Regardless of whether or not a company
was listed in the Yearbook or on NCTA's web page, all cable operators
were instructed to base their fee obligations on their basic subscriber
counts as of December 31, 2003, with the understanding that we would
corroborate the counts with other publicly available data sources.
57. This year, we propose to conduct a similar assessment
initiative, but with different procedures. Specifically, we will
generate fee assessment letters for the cable operators who are on file
as having paid regulatory fees last year for their basic cable
subscribers. Under our proposal, our letter to each operator would
announce the due date for payment of FY 2005 regulatory fees; reflect
the subscriber count for which the operator paid FY 2004 regulatory
fees; and request that the operator access a Commission-authorized web
site to provide its aggregate count of basic cable subscribers as of
December 31, 2004--the date that the Commission requires operators to
use as the basis for determining their regulatory fee obligations for
basic cable subscribers. If the number of subscribers as of December
31, 2004 differs from the amount paid for last year, operators would be
required to provide a brief explanation for the differing subscriber
counts and indicate when the difference occurred. Cable operators who
do not have access to the Internet would be able to contact the FCC
CORES Help Desk at (877) 480-3201, Option 4, to provide their
subscriber count as of December 31, 2004. We seek comment on our
proposed assessment initiative.
58. Some cable operators may not have made regulatory fee payments
last year. For example, a new company may have become operational after
the first day of the fiscal year and therefore they did not have a
regulatory fee obligation in FY 2004; or an existing company did not
make a payment because it filed a petition for waiver of regulatory
fees for FY 2004 based on financial hardship. Regardless of the
circumstance, we emphasize that not receiving a regulatory fee
assessment letter in FY 2005 would not excuse an operator from the
obligation to pay FY 2005 regulatory fees. We expect payment from all
non-exempt cable operators, not just those that made FY2004 payments
and/or received assessment letters for FY2005 fees.
59. Actual payment procedures for cable operators would be the same
as they were in previous years. Operators would continue to complete
the FCC Form 159 Remittance Advice when making their payment, and would
continue to certify their December 31, 2004 subscriber count in Block
30 of the Form 159.
60. Finally, we seek comment on a proposal to require the cable
industry to annually report their basic subscriber counts to the
Commission prior to paying regulatory fees for the fiscal year in
question. For example, by June 1st of a given fiscal year, we would
require that operators report the number of subscribers on December
31st of the preceding year. The Commission would then use the
subscriber counts received on June 1st to audit regulatory fee payments
that are collected later in the fiscal year.
61. Currently, subscriber counts are self-reported and certified by
cable operators when they make their regulatory fee payments to the
Commission at the end of each fiscal year. Self-reporting and
certifying subscriber counts does not furnish us with data that we can
use to audit regulatory fee payments. Therefore, we believe that a
cable industry reporting requirement specific to regulatory fees may be
necessary and we are therefore seeking comment on the proposal. We do
not intend to implement any such reporting requirement for the
collection of FY 2005 regulatory fees.
J. Future Streamlining of the Regulatory Fee Assessment and Collection
Process
62. We continue to welcome comments on a broad range of options
concerning our commitment to reviewing, streamlining and modernizing
our statutorily required fee-assessment and collection procedures. Our
areas of particular interest included: (1) The process for notifying
licensees about changes in the annual regulatory fee schedule and how
it can be improved; (2) the most effective way to disseminate
regulatory fee assessments and bills, i.e. through surface mail, e-
mail, or some other mechanism; (3) the fee payment process, including
how the agency's electronic payment system can be improved; and (4) the
timing of fee payments, including whether we should alter the existing
fee payment ``window'' in any way.
III. Procedural Matters
A. Payment of Regulatory Fees
1. De Minimis Fee Payment Liability
63. As in the past, regulatees whose total FY 2005 regulatory fee
liability, including all categories of fees for which payment is due by
an entity, amounts to less than $10 will be exempted from payment of FY
2005 regulatory fees.
2. Standard Fee Calculations and Payment Dates
64. Licensees are reminded that, under our current rules, the
responsibility for payment of fees by service category is as follows:
(a) Media Services: The responsibility for the payment of
regulatory fees rests with the holder of the permit or license as of
October 1, 2004. However, in instances where a license or permit is
transferred or assigned after October 1, 2004, responsibility for
payment rests with the holder of the license or permit at the time
payment is due.
(b) Wireline (Common Carrier) Services: Fees must be paid for any
authorization issued on or before October 1, 2004. However, where a
license or permit is transferred or
[[Page 9584]]
assigned after October 1, 2004, responsibility for payment rests with
the holder of the license or permit at the time payment is due.
(c) Wireless Services: Commercial Mobile Radio Service (CMRS)
cellular, mobile, and messaging services (fees based upon a subscriber,
unit or circuit count): Fees must be paid for any authorization issued
on or before October 1, 2004. The number of subscribers, units or
circuits on December 31, 2004 will be used as the basis from which to
calculate the fee payment. For small multi-year wireless services, the
regulatory fee will be due at the time of authorization or renewal of
the license, which is generally for a period of five or ten years and
paid throughout the year.
(d) Multichannel Video Programming Distributor Services (basic
cable television subscribers and CARS licenses): The number of
subscribers on December 31, 2004 will be used as the basis from which
to calculate the fee payment.\52\ For CARS licensees, fees must be paid
for any authorization issued on or before October 1, 2004. The
responsibility for the payment of regulatory fees for CARS licenses
rests with the holder of the permit or license on October 1, 2004.
However, in instances where a CARS license or permit is transferred or
assigned after October 1, 2004, responsibility for payment rests with
the holder of the license or permit at the time payment is due.
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\52\ Cable television system operators should compute their
basic subscribers as follows: Number of single family dwellings +
number of individual households in multiple dwelling unit
(apartments, condominiums, mobile home parks, etc.) paying at the
basic subscriber rate + bulk rate customers + courtesy and free
service. Note: Bulk-Rate Customers = Total annual bulk-rate charge
divided by basic annual subscription rate for individual households.
Operators may base their count on ``a typical day in the last full
week'' of December 2004, rather than on a count as of December 31,
2004.
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(e) International Services: For earth stations and geostationary
orbit space stations, payment is calculated on a per operational
station basis. For non-geostationary orbit satellite systems, payment
is calculated on a per operational system basis. The responsibility for
the payment of regulatory fees rests with the holder of the permit or
license on October 1, 2004. However, in instances where a license or
permit is transferred or assigned after October 1, 2004, responsibility
for payment rests with the holder of the license or permit at the time
payment is due. For international bearer circuits, payment is
calculated on a per active circuit basis as of December 31, 2004.
65. The Commission strongly recommends that entities submitting
more than twenty-five (25) Form 159-C's use the electronic Fee Filer
program when sending their regulatory fee payment. The Commission will,
for the convenience of payers, accept fee payments made in advance of
the normal formal window for the payment of regulatory fees.
B. Enforcement
66. As a reminder to all licensees, section 159(c) of the
Communications Act requires us to impose an additional charge as a
penalty for late payment of any regulatory fee. As in years past, a
late payment penalty of 25 percent of the amount of the required
regulatory fee will be assessed on the first day following the deadline
date for filing of these fees. Regulatory fee payment must be received
and stamped at the lockbox bank by the last day of the regulatory fee
filing window, and not merely postmarked by the last day of the window.
Failure to pay regulatory fees and/or any late penalty will subject
regulatees to sanctions, including the provisions set forth in the Debt
Collection Improvement Act of 1996 (``DCIA''). We also assess
administrative processing charges on delinquent debts to recover
additional costs incurred in processing and handling the related debt
pursuant to the DCIA and Sec. 1.1940(d) of the Commission's rules.
These administrative processing charges will be assessed on any
delinquent regulatory fee, in addition to the 25 percent late charge
penalty. Partial underpayments of regulatory fees are treated in the
following manner. The licensee will be given credit for the amount
paid, but if it is later determined that the fee paid is incorrect or
was submitted after the deadline date, the 25 percent late charge
penalty will be assessed on the portion that is submitted after the
filing window.
67. Furthermore, we recently amended our regulatory fee rules
effective November 1, 2004, to provide that we will withhold action on
any applications or other requests for benefits filed by anyone who is
delinquent in any non-tax debts owed to the Commission (including
regulatory fees) and will ultimately dismiss those applications or
other requests if payment of the delinquent debt or other satisfactory
arrangement for payment is not made. See 47 CFR 1.1161(c),
1.1164(f)(5), and 1.1910. Failure to pay regulatory fees can also
result in the initiation of a proceeding to revoke any and all
authorizations held by the delinquent payer.
C. Comment Period and Procedures
68. Pursuant to 47 CFR 1.415, 1.419, interested parties may file
comments on or before March 8, 2005, and reply comments on or before
March 18, 2005. Comments may be filed using the Commission's Electronic
Comment Filing System (ECFS) or by filing paper copies.\53\
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\53\ See Electronic Filing of Documents in Rulemaking
Proceedings, 63 FR 24121 (1998), available at < http://www.fcc.gov/Bureaus/OGC/Orders/1998/fcc98056.pdf
>.
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69. Comments filed through the ECFS are 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 submit 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, U.S. Postal Service mailing address, and the applicable docket or
rulemaking number. Parties may also submit an electronic comment by
Internet e-mail. To receive filing instructions for e-mail comments,
commenters should send an e-mail to ecfs@fcc.gov, and should include
the following words in the body of the message, ``get form < your e-mail
address.>'' A sample form and directions will be sent in reply.
70. Parties who choose to file by paper must file an original and
four copies of each filing. If more than one docket or rulemaking
number appear in the caption of this proceeding, commenters must submit
two additional copies for each additional docket or rulemaking number.
Filings can be hand delivered or by messenger delivery, sent by
commercial overnight courier, or mailed by first-class mail through the
U.S. Postal Service (please note that the Commission continues to
experience delays in receiving U.S. Postal Service mail). The
Commission's contractor will receive hand-delivered or messenger-
delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, N.E., Suite 110, Washington DC 20002. The filing
hours at this location are 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. 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
[[Page 9585]]
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, Marlene H. Dortch, Office of the Secretary, Federal
Communications Commission.
71. Parties who choose to file by paper must also submit their
comments on diskette. Two copies of the diskettes must be submitted.
One copy is to be sent to Qualex International, 445 12th Street, SW.,
Room CY-B402, Washington, DC 20554. The other copy is to be sent to
Office of Managing Director, Federal Communications Commission, 445
12th Street, SW., 1-C848, Washington, DC 20554. These submissions must
be in a Microsoft WindowsTM-compatible format on a 3.5''
floppy diskette. The diskette should be clearly labeled with the
commenter's name, proceeding (including the lead docket number MD
Docket No. 04-73), type of pleading (comment or reply comment), date of
submission, and the name of the electronic file on the diskette. The
label should also include the following phrase ``Copy--Not an
Original.'' Each diskette should contain only one party's pleadings,
preferably in a single electronic file.
72. The public may view the documents filed in this proceeding
during regular business hours in the FCC Reference Center, Federal
Communications Commission, Room CY-A257, 445 12th Street, SW.,
Washington, DC 20554, and through the Commission's Electronic Comment
Filing System (ECFS) http://www.gullfoss2.fcc.gov/prod/ecfs/comsrch_v2.cgi.
Those seeking materials in alternative formats (computer
diskette, large print, audio recording, and Braille) should contact
Brian Millin at (202) 418-7426 voice, (202) 418-7365 TTY, or
bmillin@fcc.gov.
D. Ex Parte Rules
73. This 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 pursuant to the
Commission's rules.\54\
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\54\ 47 CFR 1.1203 and 1.1206(b).
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E. Paperwork Reduction Act Analysis
74. This document contains proposed modified information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due April 29, 2005. Comments should address: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the
Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology. In addition, pursuant to the
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further
reduce the information collection burden for small business concerns
with fewer than 25 employees.''
F. Initial Regulatory Flexibility Analysis
75. As required by the Regulatory Flexibility Act,\55\ we have
prepared an Initial Regulatory Flexibility Analysis (IRFA) of the
possible impact on small entities of the proposals suggested in this
document. The IRFA is set forth as Attachment A. Written public
comments are requested with respect to the IRFA. These comments must be
filed in accordance with the same filing deadlines for comments on the
rest of the NPRM, and must have a separate and distinct heading,
designating the comments as responses to the IRFA. The Consumer
Information Bureau, Reference Information Center, shall send a copy of
this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration, in accordance with the Regulatory
Flexibility Act.
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\55\ See 5 U.S.C. 603.
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G. Authority and Further Information
76. Authority for this proceeding is contained in sections 4(i) and
(j), 8, 9, and 303(r) of the Communications Act of 1934, as amended. It
is ordered that this NPRM is adopted.\56\ It is further ordered that
the Commission's Consumer Information Bureau, Reference Information
Center, shall send a copy of this NPRM, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
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\56\ 47 U.S.C. 154(i)- (P28P1.XXX)(j), 159, & 303(r).
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Attachment A--Initial Regulatory Flexibility Analysis
77. As required by the Regulatory Flexibility Act (RFA),\57\ the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the policies and rules in the present Notice of Proposed Rulemaking, In
the Matter of Assessment and Collection of Regulatory Fees for Fiscal
Year 2004. Written public comments are requested on this IRFA. Comments
must be identified as responses to the IRFA and must be filed by the
deadlines for comments provided in paragraph 75. The Commission will
send a copy of the NPRM, including the IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration.\58\ In addition, the
NPRM and IRFA (or summaries thereof) will be published in the Federal
Register.\59\
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\57\ 5 U.S.C. 603. The RFA, 5 U.S.C. 601-612 has been amended by
the Contract With America Advancement Act of 1996, Public Law 104-
121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
\58\ 5 U.S.C. 603(a).
\59\ Id.
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I. Need for, and Objectives of, the Proposed Rules
78. This rulemaking proceeding is initiated to obtain comments
concerning the Commission's proposed amendment of its Schedule of
Regulatory Fees in the amount of $280,098,000, the amount that Congress
has required the Commission to recover. The Commission seeks to collect
the necessary amount through its proposed Schedule of Regulatory Fees
in the most efficient manner possible and without undue public burden.
II. Legal Basis
79. This action, including publication of proposed rules, is
authorized under sections (4)(i) and (j), 9, and 303(r) of the
Communications Act of 1934, as amended.\60\
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\60\ 47 U.S.C. 154(i) and (j), 159, and 303(r).
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III. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
80. 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 proposed rules and policies, if
[[Page 9586]]
adopted.\61\ The RFA generally defines the term ``small entity'' as
having the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction.'' \62\ In
addition, the term ``small business'' has the same meaning as the term
``small business concern'' under the Small Business Act.\63\ 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 SBA.\64\
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\61\ 5 U.S.C. 603(b)(3).
\62\ 5 U.S.C. 601(6).
\63\ 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). Pursuant to 5 U.S.C. 601(3), the statutory definition of a
small business applies ``unless an agency, after consultation with
the Office of Advocacy of the Small Business Administration and
after opportunity for public comment, establishes one or more
definitions of such term which are appropriate to the activities of
the agency and publishes such definition(s) in the Federal
Register.''
\64\ 15 U.S.C. 632.
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81. Small Businesses. Nationwide, there are a total of 22.4 million
small businesses, according to SBA data.\65\
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\65\ See SBA, Programs and Services, SBA Pamphlet No. CO-0028,
at page 40 (July 2002).
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82. Small Organizations. Nationwide, there are approximately 1.6
million small organizations.\66\
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\66\ Independent Sector, The New Nonprofit Almanac & Desk
Reference (2002).
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83. Small Governmental Jurisdictions. The term ``small governmental
jurisdiction'' is defined as ``governments of cities, towns, townships,
villages, school districts, or special districts, with a population of
less than fifty thousand.'' \67\ As of 1997, there were approximately
87,453 governmental jurisdictions in the United States.\68\ This number
includes 39,044 county governments, municipalities, and townships, of
which 37,546 (approximately 96.2%) have populations of fewer than
50,000, and of which 1,498 have populations of 50,000 or more. Thus, we
estimate the number of small governmental jurisdictions overall to be
84,098 or fewer.
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\67\ 5 U.S.C. 601(5).
\68\ U.S. Census Bureau, Statistical Abstract of the United
States: 2000, Section 9, pages 299-300, Tables 490 and 492.
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84. We have included small incumbent local exchange carriers in
this present RFA analysis. As noted above, a ``small business'' under
the RFA is one that, inter alia, meets the pertinent small business
size standard (e.g., a telephone communications business having 1,500
or fewer employees), and ``is not dominant in its field of operation.''
\69\ The SBA's Office of Advocacy contends that, for RFA purposes,
small incumbent local exchange carriers are not dominant in their field
of operation because any such dominance is not ``national'' in
scope.\70\ We have therefore included small incumbent local exchange
carriers in this RFA analysis, although we emphasize that this RFA
action has no effect on Commission analyses and determinations in
other, non-RFA contexts.
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\69\ 15 U.S.C. 632.
\70\ Letter from Jere W. Glover, Chief Counsel for Advocacy,
SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small
Business Act contains a definition of ``small-business concern,''
which the RFA incorporates into its own definition of ``small
business.'' See 15 U.S.C. 632(a) (Small Business Act); 5 U.S.C.
601(3) (RFA). SBA regulations interpret ``small business concern''
to include the concept of dominance on a national basis. See 13 CFR
121.102(b).
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85. Incumbent Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. The appropriate
size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business
is small if it has 1,500 or fewer employees.\71\ According to
Commission data,\72\ 1,337 carriers have reported that they are engaged
in the provision of incumbent local exchange services. Of these 1,337
carriers, an estimated 1,032 have 1,500 or fewer employees and 305 have
more than 1,500 employees. Consequently, the Commission estimates that
most providers of incumbent local exchange service are small businesses
that may be affected by our proposed action.
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\71\ 13 CFR 121.201, North American Industry Classification
System (NAICS) code 517110 (changed from 513310 in October 2002).
\72\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
Page 5-5 (Aug. 2003) (hereinafter ``Trends in Telephone Service'').
This source uses data that are current as of December 31, 2001.
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86. Competitive Local Exchange Carriers (CLECs), Competitive Access
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other
Local Service Providers.'' Neither the Commission nor the SBA has
developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the
category Wired Telecommunications Carriers. Under that size standard,
such a business is small if it has 1,500 or fewer employees.\73\
According to Commission data,\74\ 609 carriers have reported that they
are engaged in the provision of either competitive access provider
services or competitive local exchange carrier services. Of these 609
carriers, an estimated 458 have 1,500 or fewer employees and 151 have
more than 1,500 employees. In addition, 16 carriers have reported that
they are ``Shared-Tenant Service Providers,'' and all 16 are estimated
to have 1.500 or fewer employees. In addition, 35 carriers have
reported that they are ``Other Local Service Providers.'' Of the 35, an
estimated 34 have 1,500 or fewer employees and one has more than 1,500
employees. Consequently, the Commission estimates that most providers
of competitive local exchange service, competitive access providers,
``Shared-Tenant Service Providers,'' and ``Other Local Service
Providers'' are small entities that may be affected by our proposed
action.
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\73\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
October 2002).
\74\ ``Trends in Telephone Service'' at Table 5.3.
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87. Local Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees.\75\ According to Commission data,\76\ 133 carriers have
reported that they are engaged in the provision of local resale
services. Of these, an estimated 127 have 1,500 or fewer employees and
six have more than 1,500 employees. Consequently, the Commission
estimates that the majority of local resellers are small entities that
may be affected by our proposed action.
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\75\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in
October 2002).
\76\ ``Trends in Telephone Service'' at Table 5.3.
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88. Toll Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees.\77\ According to Commission data,\78\ 625 carriers have
reported that they are engaged in the provision of toll resale
services. Of these, an estimated 590 have 1,500 or fewer employees and
35 have more than 1,500 employees. Consequently, the Commission
estimates that the majority of toll resellers are small entities that
may be affected by our proposed action.
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\77\ 13 CFR 121.201, NAICS code 517310 (changed to 513330 in
October 2002).
\78\ ``Trends in Telephone Service'' at Table 5.3.
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89. Payphone Service Providers (PSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
payphone services providers. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that
size standard, such
[[Page 9587]]
a business is small if it has 1,500 or fewer employees.\79\ According
to Commission data,\80\ 761 carriers have reported that they are
engaged in the provision of payphone services. Of these, an estimated
757 have 1,500 or fewer employees and four have more than 1,500
employees. Consequently, the Commission estimates that the majority of
payphone service providers are small entities that may be affected by
our proposed action.
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\79\ 3 CFR 121.201, NAICS code 517110 (changed from 513310 in
October 2002).
\80\ ``Trends in Telephone Service'' at Table 5.3.
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90. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a small business size standard specifically for
providers of interexchange services. The appropriate size standard
under SBA rules is for the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees.\81\ According to Commission data,\82\ 261 carriers
have reported that they are engaged in the provision of interexchange
service. Of these, an estimated 223 have 1,500 or fewer employees and
38 have more than 1,500 employees. Consequently, the Commission
estimates that the majority of IXCs are small entities that may be
affected by our proposed action.
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\81\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
October 2002).
\82\ ``Trends in Telephone Service'' at Table 5.3.
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91. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees.\83\ According to Commission data,\84\ 23 carriers have
reported that they are engaged in the provision of operator services.
Of these, an estimated 22 have 1,500 or fewer employees and one has
more than 1,500 employees. Consequently, the Commission estimates that
the majority of OSPs are small entities that may be affected by our
proposed action.
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\83\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
October 2002).
\84\ ``Trends in Telephone Service'' at Table 5.3.
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92. Prepaid Calling Card Providers. Neither the Commission nor the
SBA has developed a small business size standard specifically for
prepaid calling card providers. The appropriate size standard under SBA
rules is for the category Telecommunications Resellers. Under that size
standard, such a business is small if it has 1,500 or fewer
employees.\85\ According to Commission data,\86\ 37 carriers have
reported that they are engaged in the provision of prepaid calling
cards. Of these, an estimated 36 have 1,500 or fewer employees and one
has more than 1,500 employees. Consequently, the Commission estimates
that the majority of prepaid calling card providers are small entities
that may be affected by our proposed action.
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\85\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in
October 2002).
\86\ ``Trends in Telephone Service'' at Table 5.3.
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93. 800 and 800-Like Service Subscribers.\87\ Neither the
Commission nor the SBA has developed a small business size standard
specifically for 800 and 800-like service (``toll free'') subscribers.
The appropriate size standard under SBA rules is for the category
Telecommunications Resellers. Under that size standard, such a business
is small if it has 1,500 or fewer employees.\88\ The most reliable
source of information regarding the number of these service subscribers
appears to be data the Commission collects on the 800, 888, and 877
numbers in use.\89\ According to our data, at the end of January, 1999,
the number of 800 numbers assigned was 7,692,955; the number of 888
numbers assigned was 7,706,393; and the number of 877 numbers assigned
was 1,946,538. We do not have data specifying the number of these
subscribers that are not independently owned and operated or have more
than 1,500 employees, and thus are unable at this time to estimate with
greater precision the number of toll free subscribers that would
qualify as small businesses under the SBA size standard. Consequently,
we estimate that there are 7,692,955 or fewer small entity 800
subscribers; 7,706,393 or fewer small entity 888 subscribers; and
1,946,538 or fewer small entity 877 subscribers.
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\87\ We include all toll-free number subscribers in this
category, including those for 888 numbers.
\88\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in
October 2002).
\89\ FCC, Common Carrier Bureau, Industry Analysis Division,
Study on Telephone Trends, Tables 21.2, 21.3, and 21.4 (Feb. 19,
1999).
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94. International Service Providers. The Commission has not
developed a small business size standard specifically for providers of
international service. The appropriate size standards under SBA rules
are for the two broad categories of Satellite Telecommunications and
Other Telecommunications. Under both categories, such a business is
small if it has $12.5 million or less in average annual receipts.\90\
For the first category of Satellite Telecommunications, Census Bureau
data for 1997 show that there were a total of 324 firms that operated
for the entire year.\91\ Of this total, 273 firms had annual receipts
of under $10 million, and an additional 24 firms had receipts of $10
million to $24,999,999. Thus, the majority of Satellite
Telecommunications firms can be considered small.
---------------------------------------------------------------------------
\90\ 13 CFR.121.201, NAICS codes 517410 and 517910 (changed from
513340 and 513390 in October 2002).
\91\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 4, NAICS code 513340 (issued October 2000).
---------------------------------------------------------------------------
95. The second category--Other Telecommunications--includes
``establishments primarily engaged in * * * providing satellite
terminal stations and associated facilities operationally connected
with one or more terrestrial communications systems and capable of
transmitting telecommunications to or receiving telecommunications from
satellite systems.'' \92\ According to Census Bureau data for 1997,
there were 439 firms in this category that operated for the entire
year.\93\ Of this total, 424 firms had annual receipts of $5 million to
$9,999,999 and an additional six firms had annual receipts of $10
million to $24,999,990. Thus, under this second size standard, the
majority of firms can be considered small.
---------------------------------------------------------------------------
\92\ Office of Management and Budget, North American Industry
Classification System, page 513 (1997) (NAICS code 513390, changed
to 517910 in October 2002).
\93\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 4, NAICS code 513390 (issued October 2000).
---------------------------------------------------------------------------
96. Wireless Service Providers. The SBA has developed a small
business size standard for wireless firms within the two broad economic
census categories of ``Paging'' \94\ and ``Cellular and Other Wireless
Telecommunications.''\95\ Under both SBA categories, a wireless
business is small if it has 1,500 or fewer employees. For the census
category of Paging, Census Bureau data for 1997 show that there were
1,320 firms in this category, total, that operated for the entire
year.\96\ Of this total, 1,303 firms had employment of 999 or fewer
employees, and an additional 17 firms had employment of 1,000 employees
or
[[Page 9588]]
more.\97\ Thus, under this category and associated small business size
standard, the great majority of firms can be considered small. For the
census category Cellular and Other Wireless Telecommunications, Census
Bureau data for 1997 show that there were 977 firms in this category,
total, that operated for the entire year.\98\ Of this total, 965 firms
had employment of 999 or fewer employees, and an additional 12 firms
had employment of 1,000 employees or more.\99\ Thus, under this second
category and size standard, the great majority of firms can, again, be
considered small.
---------------------------------------------------------------------------
\94\ 13 CFR 121.201, NAICS code 513321 (changed to 517211 in
October 2002).
\95\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\96\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
\97\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
The census data do not provide a more precise estimate of the number
of firms that have employment of 1,500 or fewer employees; the
largest category provided is ``Firms with 1000 employees or more.''
\98\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
\99\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
The census data do not provide a more precise estimate of the number
of firms that have employment of 1,500 or fewer employees; the
largest category provided is ``Firms with 1000 employees or more.''
---------------------------------------------------------------------------
97. Internet Service Providers. The SBA has developed a small
business size standard for Internet Service Providers. This category
comprises establishments ``primarily engaged in providing direct access
through telecommunications networks to computer-held information
compiled or published by others.'' \100\ Under the SBA size standard,
such a business is small if it has average annual receipts of $21
million or less.\101\ According to Census Bureau data for 1997, there
were 2,751 firms in this category that operated for the entire
year.\102\ Of these, 2,659 firms had annual receipts of under $10
million, and an additional 67 firms had receipts of between $10 million
and $24,999,999.\103\ Thus, under this size standard, the great
majority of firms can be considered small entities.
---------------------------------------------------------------------------
\100\ Office of Management and Budget, North American Industry
Classification System, page 515 (1997). NAICS code 514191, ``On-Line
Information Services'' (changed to current name and to code 518111
in October 2002).
\101\ 13 CFR 121.201, NAICS code 518111.
\102\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 4, Receipts Size of Firms Subject to Federal
Income Tax: 1997, NAICS code 514191 (issued October 2000).
\103\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 4, Receipts Size of Firms Subject to Federal
Income Tax: 1997, NAICS code 514191 (issued October 2000).
---------------------------------------------------------------------------
98. Cellular Licensees. The SBA has developed a small business size
standard for wireless firms within the broad economic census category
``Cellular and Other Wireless Telecommunications.'' \104\ Under this
SBA category, a wireless business is small if it has 1,500 or fewer
employees. For the census category Cellular and Other Wireless
Telecommunications firms, Census Bureau data for 1997 show that there
were 977 firms in this category, total, that operated for the entire
year.\105\ Of this total, 965 firms had employment of 999 or fewer
employees, and an additional 12 firms had employment of 1,000 employees
or more.\106\ Thus, under this category and size standard, the great
majority of firms can be considered small. According to the most recent
Trends in Telephone Service data, 719 carriers reported that they were
engaged in the provision of cellular service, personal communications
service, or specialized mobile radio telephony services, which are
placed together in the data.\107\ We have estimated that 294 of these
are small, under the SBA small business size standard.\108\
---------------------------------------------------------------------------
\104\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\105\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
\106\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
The census data do not provide a more precise estimate of the number
of firms that have employment of 1,500 or fewer employees; the
largest category provided is ``Firms with 1000 employees or more.''
\107\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
\108\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
---------------------------------------------------------------------------
99. Common Carrier Paging. The SBA has developed a small business
size standard for wireless firms within the broad economic census
categories of ``Cellular and Other Wireless Telecommunications.'' \109\
Under this SBA category, a wireless business is small if it has 1,500
or fewer employees. For the census category of Paging, Census Bureau
data for 1997 show that there were 1,320 firms in this category, total,
that operated for the entire year.\110\ Of this total, 1,303 firms had
employment of 999 or fewer employees, and an additional 17 firms had
employment of 1,000 employees or more.\111\ Thus, under this category
and associated small business size standard, the great majority of
firms can be considered small.
---------------------------------------------------------------------------
\109\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\110\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
\111\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
The census data do not provide a more precise estimate of the number
of firms that have employment of 1,500 or fewer employees; the
largest category provided is ``Firms with 1000 employees or more.''
---------------------------------------------------------------------------
100. In the Paging Second Report and Order, the Commission adopted
a size standard for ``small businesses'' for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments.\112\ 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.\113\
The SBA has approved this definition.\114\ An auction of Metropolitan
Economic Area (MEA) licenses commenced on February 24, 2000, and closed
on March 2, 2000. Of the 2,499 licenses auctioned, 985 were sold.\115\
Fifty-seven companies claiming small business status won 440
licenses.\116\ An auction of MEA and Economic Area (EA) licenses
commenced on October 30, 2001, and closed on December 5, 2001. Of the
15,514 licenses auctioned, 5,323 were sold.\117\ One hundred thirty-two
companies claiming small business status purchased 3,724 licenses. A
third auction, consisting of 8,874 licenses in each of 175 EAs and
1,328 licenses in all but three of the 51 MEAs commenced on May 13,
2003, and closed on May 28, 2003. Seventy-seven bidders claiming small
or very small business status won 2,093 licenses.\118\
[[Page 9589]]
Currently, there are approximately 74,000 Common Carrier Paging
licenses. According to the most recent Trends in Telephone Service, 608
private and common carriers reported that they were engaged in the
provision of either paging or ``other mobile'' services.\119\ Of these,
we estimate that 589 are small, under the SBA-approved small business
size standard.\120\ We estimate that the majority of common carrier
paging providers would qualify as small entities under the SBA
definition.
---------------------------------------------------------------------------
\112\ Revision of Part 22 and Part 90 of the Commission's Rules
to Facilitate Future Development of Paging Systems, Second Report
and Order, 12 FCC Rcd 2732, 2811-2812, paragraphs 178-181 (Paging
Second Report and Order); see also Revision of Part 22 and Part 90
of the Commission's Rules to Facilitate Future Development of Paging
Systems, Memorandum Opinion and Order on Reconsideration, 14 FCC Rcd
10030, 10085-10088, paragraphs 98-107 (1999).
\113\ Paging Second Report and Order, 12 FCC Rcd at 2811,
paragraph 179.
\114\ See Letter to Amy Zoslov, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, from Aida
Alvarez, Administrator, Small Business Administration, dated
December 2, 1998.
\115\ See ``929 and 931 MHz Paging Auction Closes,'' Public
Notice, 15 FCC Rcd 4858 (WTB 2000).
\116\ See ``929 and 931 MHz Paging Auction Closes,'' Public
Notice, 15 FCC Rcd 4858 (WTB 2000).
\117\ See ``Lower and Upper Paging Band Auction Closes,'' Public
Notice, 16 FCC Rcd 21821 (WTB 2002).
\118\ See ``Lower and Upper Paging Bands Auction Closes,''
Public Notice, 18 FCC Rcd 11154 (WTB 2003).
\119\ 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).
\120\ 13 CFR 121.201, NAICS code 517211.
---------------------------------------------------------------------------
101. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years.\121\ The SBA has
approved these definitions.\122\ The Commission auctioned geographic
area licenses in the WCS service. In the auction, which commenced on
April 15, 1997 and closed on April 25, 1997, there were seven bidders
that won 31 licenses that qualified as very small business entities,
and one bidder that won one license that qualified as a small business
entity. An auction for one license in the 1670-1674 MHz band commenced
on April 30, 2003 and closed the same day. One license was awarded. The
winning bidder was not a small entity.
---------------------------------------------------------------------------
\121\ 121 Amendment of the Commission's Rules to Establish Part
27, the Wireless Communications Service (WCS), Report and Order, 12
FCC Rcd 10785, 10879, paragraph 194 (1997).
\122\ See Letter to Amy Zoslov, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, from Aida Alvarez, Administrator, Small
Business Administration, dated December 2, 1998.
---------------------------------------------------------------------------
102. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. The SBA has developed a small business size
standard for ``Cellular and Other Wireless Telecommunications''
services.\123\ Under the SBA small business size standard, a business
is small if it has 1,500 or fewer employees.\124\ According to the most
recent Trends in Telephone Service data, 719 carriers reported that
they were engaged in wireless telephony.\125\ We have estimated that
294 of these are small under the SBA small business size standard.
---------------------------------------------------------------------------
\123\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\124\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\125\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
---------------------------------------------------------------------------
103. Broadband Personal Communications Service. The broadband
personal communications services (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.\126\ For Block F, an additional small business size standard for
``very small business'' was added and is defined as an entity that,
together with its affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years.\127\ These
small business size standards, in the context of broadband PCS
auctions, have been approved by the SBA.\128\ 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.\129\ On March 23,
1999, the Commission reauctioned 155 C, D, E, and F Block licenses;
there were 113 small business winning bidders.\130\
---------------------------------------------------------------------------
\126\ See Amendment of Parts 20 and 24 of the Commission's
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile
Radio Service Spectrum Cap, Report and Order, 11 FCC Rcd 7824, 7850-
7852, paragraphs 57-60 (1996); see also 47 CFR 24.720(b).
\127\ See Amendment of Parts 20 and 24 of the Commission's
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile
Radio Service Spectrum Cap, Report and Order, 11 FCC Rcd 7824, 7852,
paragraph 60.
\128\ See Letter to Amy Zoslov, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, from Aida Alvarez, Administrator, Small
Business Administration, dated December 2, 1998.
\129\ FCC News, ``Broadband PCS, D, E and F Block Auction
Closes,'' No. 71744 (released January 14, 1997).
\130\ See ``C, D, E, and F Block Broadband PCS Auction Closes,''
Public Notice, 14 FCC Rcd 6688 (WTB 1999).
---------------------------------------------------------------------------
104. 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.\131\ Subsequent events, concerning Auction 35, including
judicial and agency determinations, resulted in a total of 163 C and F
Block licenses being available for grant.
---------------------------------------------------------------------------
\131\ See ``C and F Block Broadband PCS Auction Closes; Winning
Bidders Announced,'' Public Notice, 16 FCC Rcd 2339 (2001).
---------------------------------------------------------------------------
105. Narrowband Personal Communications Services. The Commission
held an auction for Narrowband PCS licenses that commenced on July 25,
1994, and closed on July 29, 1994. A second auction commenced on
October 26, 1994 and closed on November 8, 1994. For purposes of the
first two Narrowband PCS auctions, ``small businesses'' were entities
with average gross revenues for the prior three calendar years of $40
million or less.\132\ Through these auctions, the Commission awarded a
total of 41 licenses, 11 of which were obtained by four small
businesses.\133\ To ensure meaningful participation by small business
entities in future auctions, the Commission adopted a two-tiered small
business size standard in the Narrowband PCS Second Report and
Order.\134\ A ``small business'' is an entity that, together with
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $40 million.\135\ A ``very
small business'' is an entity that, together with affiliates and
controlling interests, has average gross revenues for the three
preceding years of not more than $15 million.\136\ The SBA has approved
these small business size standards.\137\ A third auction
[[Page 9590]]
commenced on October 3, 2001 and closed on October 16, 2001. Here, five
bidders won 317 (Metropolitan Trading Areas and nationwide)
licenses.\138\ Three of these claimed status as a small or very small
entity and won 311 licenses.
---------------------------------------------------------------------------
\132\ Implementation of Section 309(j) of the Communications
Act--Competitive Bidding Narrowband PCS, Third Memorandum Opinion
and Order and Further Notice of Proposed Rulemaking, 10 FCC Rcd 175,
196, paragraph 46 (1994).
\133\ See ``Announcing the High Bidders in the Auction of ten
Nationwide Narrowband PCS Licenses, Winning Bids Total
$617,006,674,'' Public Notice, PNWL 94-004 (released Aug. 2, 1994);
``Announcing the High Bidders in the Auction of 30 Regional
Narrowband PCS Licenses; Winning Bids Total $490,901,787,'' Public
Notice, PNWL 94-27 (released Nov. 9, 1994).
\134\ Amendment of the Commission's Rules to Establish New
Personal Communications Services, Narrowband PCS, Second Report and
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd
10456, 10476, paragraph 40 (2000).
\135\ Amendment of the Commission's Rules to Establish New
Personal Communications Services, Narrowband PCS, Second Report and
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd
10456, 10476, paragraph 40 (2000).
\136\ Amendment of the Commission's Rules to Establish New
Personal Communications Services, Narrowband PCS, Second Report and
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd
10456, 10476, paragraph 40 (2000).
\137\ See Letter to Amy Zoslov, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, from Aida Alvarez, Administrator, Small
Business Administration, dated December 2, 1998.
\138\ See ``Narrowband PCS Auction Closes,'' Public Notice, 16
FCC Rcd 18663 (WTB 2001).
---------------------------------------------------------------------------
106. Lower 700 MHz Band Licenses. We adopted criteria for defining
three groups of small businesses for purposes of determining their
eligibility for special provisions such as bidding credits.\139\ We
have defined a ``small business'' as an entity that, together with its
affiliates and controlling principals, has average gross revenues not
exceeding $40 million for the preceding three years.\140\ 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.\141\
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.\142\ The SBA has approved these
small size standards.\143\ An auction of 740 licenses (one license in
each of the 734 MSAs/RSAs and one license in each of the six Economic
Area Groupings (EAGs)) commenced on August 27, 2002, and closed on
September 18, 2002. Of the 740 licenses available for auction, 484
licenses were sold to 102 winning bidders. Seventy-two of the winning
bidders claimed small business, very small business or entrepreneur
status and won a total of 329 licenses.\144\ A second auction commenced
on May 28, 2003, and closed on June 13, 2003, and included 256
licenses: 5 EAG licenses and 476 Cellular Market Area licenses.\145\
Seventeen winning bidders claimed small or very small business status
and won 60 licenses, and nine winning bidders claimed entrepreneur
status and won 154 licenses.\146\
---------------------------------------------------------------------------
\139\ See Reallocation and Service Rules for the 698-746 MHz
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC
Rcd 1022 (2002).
\140\ See Reallocation and Service Rules for the 698-746 MHz
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC
Rcd 1022, 1087-88, paragraph 172 (2002).
\141\ See Reallocation and Service Rules for the 698-746 MHz
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC
Rcd 1022, 1087-88, paragraph 172 (2002).
\142\ See Reallocation and Service Rules for the 698-746 MHz
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC
Rcd 1022, 1088, paragraph 173 (2002).
\143\ See Letter to Thomas Sugrue, Chief, Wireless
Telecommunications Bureau, Federal Communications Commission, from
Aida Alvarez, Administrator, Small Business Administration, dated
August 10, 1999.
\144\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice,
17 FCC Rcd 17272 (WTB 2002).
\145\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice,
18 FCC Rcd 11873 (WTB 2003).
\146\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice,
18 FCC Rcd 11873 (WTB 2003).
---------------------------------------------------------------------------
107. Upper 700 MHz Band Licenses. The Commission released a Report
and Order, authorizing service in the upper 700 MHz band.\147\ This
auction, previously scheduled for January 13, 2003, has been
postponed.\148\
---------------------------------------------------------------------------
\147\ Service Rules for the 746-764 and 776-794 MHz Bands, and
Revisions to Part 27 of the Commission's Rules, Second Memorandum
Opinion and Order, 16 FCC Rcd 1239 (2001).
\148\ See ``Auction of Licenses for 747-762 and 777-792 MHz
Bands (Auction No. 31) Is Rescheduled,'' Public Notice, 16 FCC Rcd
13079 (WTB 2003).
---------------------------------------------------------------------------
108. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order,
we adopted size standards for ``small businesses'' and ``very small
businesses'' for purposes of determining their eligibility for special
provisions such as bidding credits and installment payments.\149\ A
small business in this service is an entity that, together with its
affiliates and controlling principals, has average gross revenues not
exceeding $40 million for the preceding three years.\150\ 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.\151\ SBA approval
of these definitions is not required.\152\ An auction of 52 Major
Economic Area (MEA) licenses commenced on September 6, 2000, and closed
on September 21, 2000.\153\ Of the 104 licenses auctioned, 96 licenses
were sold to nine bidders. Five of these bidders were small businesses
that won a total of 26 licenses. A second auction of 700 MHz Guard Band
licenses commenced on February 13, 2001, and closed on February 21,
2001. All eight of the licenses auctioned were sold to three bidders.
One of these bidders was a small business that won a total of two
licenses.\154\
---------------------------------------------------------------------------
\149\ See Service Rules for the 746-764 MHz Bands, and Revisions
to Part 27 of the Commission's Rules, Second Report and Order, 15
FCC Rcd 5299 (2000).
\150\ See Service Rules for the 746-764 MHz Bands, and Revisions
to Part 27 of the Commission's Rules, Second Report and Order, 15
FCC Rcd 5299, 5343, paragraph 108 (2000).
\151\ See Service Rules for the 746-764 MHz Bands, and Revisions
to Part 27 of the Commission's Rules, Second Report and Order, 15
FCC Rcd 5299, 5343, paragraph 108 (2000).
\152\ See Service Rules for the 746-764 MHz Bands, and Revisions
to Part 27 of the Commission's Rules, Second Report and Order, 15
FCC Rcd 5299, 5343, paragraph 108 n.246 (for the 746-764 MHz and
776-794 MHz bands, the Commission is exempt from 15 U.S.C. section
632, which requires Federal agencies to obtain SBA approval before
adopting small business size standards).
\153\ See ``700 MHz Guard Bands Auction Closes: Winning Bidders
Announced,'' Public Notice, 15 FCC Rcd 18026 (2000).
\154\ See ``700 MHz Guard Bands Auction Closes: Winning Bidders
Announced,'' Public Notice, 16 FCC Rcd 4590 (WTB 2001).
---------------------------------------------------------------------------
109. Specialized Mobile Radio. The Commission awards ``small
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR)
geographic area licenses in the 800 MHz and 900 MHz bands to firms that
had revenues of no more than $15 million in each of the three previous
calendar years.\155\ The Commission awards ``very small entity''
bidding credits to firms that had revenues of no more than $3 million
in each of the three previous calendar years.\156\ The SBA has approved
these small business size standards for the 900 MHz Service.\157\ The
Commission has held auctions for geographic area licenses in the 800
MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5,
1995, and closed on April 15, 1996. Sixty bidders claiming that they
qualified as small businesses under the $15 million size standard won
263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR
auction for the upper 200 channels began on October 28, 1997, and was
completed on December 8, 1997. Ten bidders claiming that they qualified
as small businesses under the $15 million size standard won 38
geographic area licenses for the upper 200 channels in the 800 MHz SMR
band.\158\ A second auction for the 800 MHz band was held on January
10, 2002 and closed on January 17, 2002 and included 23 BEA licenses.
One bidder
[[Page 9591]]
claiming small business status won five licenses.\159\
---------------------------------------------------------------------------
\155\ 47 CFR 90.814(b)(1).
\156\ 47 CFR 90.814(b)(1).
\157\ See Letter to Thomas Sugrue, Chief, Wireless
Telecommunications Bureau, Federal Communications Commission, from
Aida Alvarez, Administrator, Small Business Administration, dated
August 10, 1999. We note that, although a request was also sent to
the SBA requesting approval for the small business size standard for
800 MHz, approval is still pending.
\158\ See ``Correction to Public Notice DA 96-586 'FCC Announces
Winning Bidders in the Auction of 1020 Licenses to Provide 900 MHz
SMR in Major Trading Areas,''' Public Notice, 18 FCC Rcd 18367 (WTB
1996).
\159\ See ``Multi-Radio Service Auction Closes,'' Public Notice,
17 FCC Rcd 1446 (WTB 2002).
---------------------------------------------------------------------------
110. The auction of the 1,053 800 MHz SMR geographic area licenses
for the General Category channels began on August 16, 2000, and was
completed on September 1, 2000. Eleven bidders won 108 geographic area
licenses for the General Category channels in the 800 MHz SMR band
qualified as small businesses under the $15 million size standard.\160\
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.\161\ Of the 22 winning bidders, 19 claimed small business status
and won 129 licenses. Thus, combining all three auctions, 40 winning
bidders for geographic licenses in the 800 MHz SMR band claimed status
as small business.
---------------------------------------------------------------------------
\160\ See, ``800 MHz Specialized Mobile Radio (SMR) Service
General Category (851-854 MHz) and Upper Band (861-865 MHz) Auction
Closes; Winning Bidders Announced,'' Public Notice, 15 FCC Rcd 17162
(2000).
\161\ See, ``800 MHz SMR Service Lower 80 Channels Auction
Closes; Winning Bidders Announced,'' Public Notice, 16 FCC Rcd 1736
(2000).
---------------------------------------------------------------------------
111. In addition, there are numerous incumbent site-by-site SMR
licensees and licensees with extended implementation authorizations in
the 800 and 900 MHz bands. We do not know how many firms provide 800
MHz or 900 MHz geographic area SMR pursuant to extended implementation
authorizations, nor how many of these providers have annual revenues of
no more than $15 million. One firm has over $15 million in revenues. We
assume, for purposes of this analysis, that all of the remaining
existing extended implementation authorizations are held by small
entities, as that small business size standard is approved by the SBA.
112. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service
has both Phase I and Phase II licenses. Phase I licensing was conducted
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized
to operate in the 220 MHz band. The Commission has not developed a
definition of small entities specifically applicable to such incumbent
220 MHz Phase I licensees. To estimate the number of such licensees
that are small businesses, we apply the small business size standard
under the SBA rules applicable to ``Cellular and Other Wireless
Telecommunications'' companies. This category provides that a small
business is a wireless company employing no more than 1,500
persons.\162\ According to the Census Bureau data for 1997, only twelve
firms out of a total of 1,238 such firms that operated for the entire
year in 1997, had 1,000 or more employees.\163\ If this general ratio
continues in the context of Phase I 220 MHz licensees, the Commission
estimates that nearly all such licensees are small businesses under the
SBA's small business standard.
---------------------------------------------------------------------------
\162\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\163\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 5, NAICS code 513322 (October 2000).
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113. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service
has both Phase I and Phase II licenses. The Phase II 220 MHz service is
a new service, and is subject to spectrum auctions.
In the 220 MHz Third Report and Order, we adopted a small business
size standard for defining ``small'' and ``very small'' businesses for
purposes of determining their eligibility for special provisions such
as bidding credits and installment payments.\164\ 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.\165\ 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.\166\ The SBA has approved these small size standards.\167\
Auctions of Phase II licenses commenced on September 15, 1998, and
closed on October 22, 1998.\168\ In the first auction, 908 licenses
were auctioned in three different-sized geographic areas: three
nationwide licenses, 30 Regional Economic Area Group (EAG) Licenses,
and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693
were sold.\169\ Thirty-nine small businesses won 373 licenses in the
first 220 MHz auction. A second auction included 225 licenses: 216 EA
licenses and 9 EAG licenses. Fourteen companies claiming small business
status won 158 licenses.\170\ A third auction included four licenses: 2
BEA licenses and 2 EAG licenses in the 220 MHz Service. No small or
very small business won any of these licenses.\171\
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\164\ 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, Third Report and Order, 12 FCC Rcd 10943, 11068-70,
paragraphs 291-295 (1997).
\165\ Id. at 11068, paragraph 291.
\166\ Id.
\167\ See Letter to Daniel Phythyon, Chief, Wireless
Telecommunications Bureau, Federal Communications Commission, from
Aida Alvarez, Administrator, Small Business Administration, dated
January 6, 1998.
\168\ See generally ``220 MHz Service Auction Closes,'' Public
Notice, 14 FCC Rcd 605 (WTB 1998).
\169\ See ``FCC Announces It is Prepared to Grant 654 Phase II
220 MHz Licenses After Final Payment is Made,'' Public Notice, 14
FCC Rcd 1085 (WTB 1999).
\170\ See ``Phase II 220 MHz Service Spectrum Auction Closes,''
Public Notice, 14 FCC Rcd 11218 (WTB 1999).
\171\ See ``Multi-Radio Service Auction Closes,'' Public Notice,
17 FCC Rcd 1446 (WTB 2002).
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114. Private Land Mobile Radio (PLMR). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. These radios are used by companies of all
sizes operating in all U.S. business categories, and are often used in
support of the licensee's primary (non-telecommunications) business
operations. For the purpose of determining whether a licensee of a PLMR
system is a small business as defined by the SBA, we could use the
definition for ``Cellular and Other Wireless Telecommunications.'' This
definition provides that a small entity is any such entity employing no
more than 1,500 persons.\172\ The Commission does not require PLMR
licensees to disclose information about number of employees, so the
Commission does not have information that could be used to determine
how many PLMR licensees constitute small entities under this
definition. Moreover, because PMLR licensees generally are not in the
business of providing cellular or other wireless telecommunications
services but instead use the licensed facilities in support of other
business activities, we are not certain that the Cellular and Other
Wireless Telecommunications category is appropriate for determining how
many PLMR licensees are small entities for this analysis. Rather, it
may be more appropriate to assess PLMR licensees under the standards
applied to the particular industry subsector to which the licensee
belongs.\173\
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\172\ See 13 CFR 121.201, NAICS code 517212.
\173\ See generally 13 CFR 121.201.
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115. The Commission's 1994 Annual Report on PLMRs \174\ indicates
that at the end of fiscal year 1994, there were 1,087,267 licensees
operating 12,481,989 transmitters in the PLMR bands below 512 MHz.
Because any entity engaged in a commercial activity is eligible to hold
a PLMR license, the revised rules in this context could
[[Page 9592]]
potentially impact every small business in the United States.
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\174\ Federal Communications Commission, 60th Annual Report,
Fiscal Year 1994, at paragraph 116.
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116. Fixed Microwave Services. Fixed microwave services include
common carrier,\175\ private operational-fixed,\176\ and broadcast
auxiliary radio services.\177\ At present, there are approximately
22,015 common carrier fixed licensees and 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the
microwave services. The Commission has not created a size standard for
a small business specifically with respect to fixed microwave services.
For purposes of this analysis, the Commission uses the SBA small
business size standard for the category ``Cellular and Other
Telecommunications,'' which is 1,500 or fewer employees.\178\ The
Commission does not have data specifying the number of these licensees
that have more than 1,500 employees, and thus are unable at this time
to estimate with greater precision the number of fixed microwave
service licensees that would qualify as small business concerns under
the SBA's small business size standard. Consequently, the Commission
estimates that there are up to 22,015 common carrier fixed licensees
and up to 61,670 private operational-fixed licensees and broadcast
auxiliary radio licensees in the microwave services that may be small
and may be affected by the rules and policies proposed herein. We
noted, however, that the common carrier microwave fixed licensee
category includes some large entities.
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\175\ See 47 CFR 101 et seq. (formerly, Part 21 of the
Commission's Rules) for common carrier fixed microwave services
(except Multipoint Distribution Service).
\176\ Persons eligible under parts 80 and 90 of the Commission's
Rules can use Private Operational-Fixed Microwave services. See 47
CFR Parts 80 and 90. Stations in this service are called
operational-fixed to distinguish them from common carrier and public
fixed stations. Only the licensee may use the operational-fixed
station, and only for communications related to the licensee's
commercial, industrial, or safety operations.
\177\ Auxiliary Microwave Service is governed by Part 74 of
Title 47 of the Commission's Rules. See 47 CFR Part 74. This service
is available to licensees of broadcast stations and to broadcast and
cable network entities. Broadcast auxiliary microwave stations are
used for relaying broadcast television signals from the studio to
the transmitter, or between two points such as a main studio and an
auxiliary studio. The service also includes mobile television
pickups, which relay signals from a remote location back to the
studio.
\178\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
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117. 39 GHz Service. The Commission created a special small
business size standard for 39 GHz licenses--an entity that has average
gross revenues of $40 million or less in the three previous calendar
years.\179\ An additional size standard for ``very small business'' is:
An entity that, together with affiliates, has average gross revenues of
not more than $15 million for the preceding three calendar years.\180\
The SBA has approved these small business size standards.\181\ The
auction of the 2,173 39 GHz licenses began on April 12, 2000 and closed
on May 8, 2000. The 18 bidders who claimed small business status won
849 licenses. Consequently, the Commission estimates that 18 or fewer
39 GHz licensees are small entities that may be affected by the rules
and polices proposed herein.
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\179\ See Amendment of the Commission's Rules Regarding the
37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket No. 95-183, Report
and Order, 12 FCC Rcd 18600 (1997), 63 Fed.Reg. 6079 (Feb. 6, 1998).
\180\ Id.
\181\ See Letter to Kathleen O'Brien Ham, Chief, Auctions and
Industry Analysis Division, Wireless Telecommunications Bureau, FCC,
from Aida Alvarez, Administrator, SBA (Feb. 4, 1998) (VoIP); See
Letter to Margaret Wiener, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, Federal Communications
Commission, from Hector Barreto, Administrator, Small Business
Administration, dated January 18, 2002 (WTB).
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118. Local Multipoint Distribution Service. Local Multipoint
Distribution Service (LMDS) is a fixed broadband point-to-multipoint
microwave service that provides for two-way video
telecommunications.\182\ The auction of the 986 Local Multipoint
Distribution Service (LMDS) licenses began on February 18, 1998 and
closed on March 25, 1998. The Commission established a small business
size standard for LMDS licenses as an entity that has average gross
revenues of less than $40 million in the three previous calendar
years.\183\ An additional small business size standard for ``very small
business'' was added as an entity that, together with its affiliates,
has average gross revenues of not more than $15 million for the
preceding three calendar years.\184\ The SBA has approved these small
business size standards in the context of LMDS auctions.\185\ There
were 93 winning bidders that qualified as small entities in the LMDS
auctions. A total of 93 small and very small business bidders won
approximately 277 A Block licenses and 387 B Block licenses. On March
27, 1999, the Commission re-auctioned 161 licenses; there were 32 small
and very small business winning that won 119 licenses.
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\182\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and
Policies for Local Multipoint Distribution Service and for Fixed
Satellite Services, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC
Rcd 12545, 12689-90, paragraph 348 (1997).
\183\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and
Policies for Local Multipoint Distribution Service and for Fixed
Satellite Services, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC
Rcd 12545, 12689-90, paragraph 348 (1997).
\184\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and
Policies for Local Multipoint Distribution Service and for Fixed
Satellite Services, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC
Rcd 12545, 12689-90, paragraph 348 (1997).
\185\ See Letter to Dan Phythyon, Chief, Wireless
Telecommunications Bureau, FCC, from Aida Alvarez, Administrator,
SBA (Jan. 6, 1998).
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119. 218-219 MHz Service. The first auction of 218-219 MHz
(previously referred to as the Interactive and Video Data Service or
IVDS) spectrum resulted in 178 entities winning licenses for 594
Metropolitan Statistical Areas (MSAs).\186\ Of the 594 licenses, 567
were won by 167 entities qualifying as a small business. For that
auction, we defined a small business as an entity that, together with
its affiliates, has no more than a $6 million net worth and, after
federal income taxes (excluding any carry over losses), has no more
than $2 million in annual profits each year for the previous two
years.\187\ In the 218-219 MHz Report and Order and Memorandum Opinion
and Order, we defined a small business as an entity that, together with
its affiliates and persons or entities that hold interests in such an
entity and their affiliates, has average annual gross revenues not
exceeding $15 million for the preceding three years.\188\ A very small
business is defined as an entity that, together with its affiliates and
persons or entities that hold interests in such an entity and its
affiliates, has average annual gross revenues not exceeding $3 million
for the preceding three years.\189\ The SBA has approved of these
definitions.\190\ At this time, we cannot estimate the number of
licenses that will be won by entities qualifying as small or very small
businesses under our rules in future
[[Page 9593]]
auctions of 218-219 MHz spectrum. Given the success of small businesses
in the previous auction, and the prevalence of small businesses in the
subscription television services and message communications industries,
we assume for purposes of this analysis that in future auctions, many,
and perhaps all, of the licenses may be awarded to small businesses.
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\186\ See ``Interactive Video and Data Service (IVDS)
Applications Accepted for Filing,'' Public Notice, 9 FCC Rcd 6227
(1994).
\187\ Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, Fourth Report and Order, 9 FCC Rcd 2330
(1994).
\188\ Amendment of Part 95 of the Commission's Rules to Provide
Regulatory Flexibility in the 218-219 MHz Service, Report and Order
and Memorandum Opinion and Order, 15 FCC Rcd 1497 (1999).
\189\ Id.
\190\ See Letter to Daniel Phythyon, Chief, Wireless
Telecommunications Bureau, Federal Communications Commission, from
Aida Alvarez, Administrator, Small Business Administration, dated
January 6, 1998.
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120. Location and Monitoring Service (LMS). Multilateration LMS
systems use non-voice radio techniques to determine the location and
status of mobile radio units. For purposes of auctioning LMS licenses,
the Commission has defined ``small business'' as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the preceding three years not exceeding $15
million.\191\ A ``very small business'' is defined as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the preceding three years not exceeding $3
million.\192\ These definitions have been approved by the SBA.\193\ An
auction for LMS licenses commenced on February 23, 1999, and closed on
March 5, 1999. Of the 528 licenses auctioned, 289 licenses were sold to
four small businesses. We cannot accurately predict the number of
remaining licenses that could be awarded to small entities in future
LMS auctions.
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\191\ Amendment of Part 90 of the Commission's Rules to Adopt
Regulations for Automatic Vehicle Monitoring Systems, Second Report
and Order, 13 FCC Rcd 15182, 15192, paragraph 20 (1998); See also 47
CFR 90.1103.
\192\ Amendment of Part 90 of the Commission's Rules to Adopt
Regulations for Automatic Vehicle Monitoring Systems, Second Report
and Order, 13 FCC Rcd at 15192, paragraph 20; See also 47 CFR
90.1103.
\193\ See Letter to Thomas Sugrue, Chief, Wireless
Telecommunications Bureau, Federal Communications Commission, from
Aida Alvarez, Administrator, Small Business Administration, dated
February 22, 1999.
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121. Rural Radiotelephone Service. The Commission has not adopted a
size standard for small businesses specific to the Rural Radiotelephone
Service.\194\ A significant subset of the Rural Radiotelephone Service
is the Basic Exchange Telephone Radio System (BETRS).\195\ The
Commission uses the SBA's small business size standard applicable to
``Cellular and Other Wireless Telecommunications,'' i.e., an entity
employing no more than 1,500 persons.\196\ There are approximately
1,000 licensees in the Rural Radiotelephone Service, and the Commission
estimates that there are 1,000 or fewer small entity licensees in the
Rural Radiotelephone Service that may be affected by the rules and
policies proposed herein.
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\194\ The service is defined in section 22.99 of the
Commission's rules, 47 CFR 22.99.
\195\ BETRS is defined in Sec. 22.757 and 22.759 of the
Commission's rules, 47 CFR 22.757 and 22.759.
\196\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
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122. Air-Ground Radiotelephone Service. The Commission has not
adopted a small business size standard specific to the Air-Ground
Radiotelephone Service.\197\ We will use SBA's small business size
standard applicable to ``Cellular and Other Wireless
Telecommunications,'' i.e., an entity employing no more than 1,500
persons.\198\ There are approximately 100 licensees in the Air-Ground
Radiotelephone Service, and we estimate that almost all of them qualify
as small under the SBA small business size standard.
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\197\ The service is defined in Sec. 22.99 of the Commission's
rules, 47 CFR 22.99.
\198\ 13 CFR 121.201, NAICS codes 513322 (changed to 517212 in
October 2002).
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123. Aviation and Marine Radio Services. Small businesses in the
aviation and marine radio services use a very high frequency (VHF)
marine or aircraft radio and, as appropriate, an emergency position-
indicating radio beacon (and/or radar) or an emergency locator
transmitter. The Commission has not developed a small business size
standard specifically applicable to these small businesses. For
purposes of this analysis, the Commission uses the SBA small business
size standard for the category ``Cellular and Other
Telecommunications,'' which is 1,500 or fewer employees.\199\ Most
applicants for recreational licenses are individuals. Approximately
581,000 ship station licensees and 131,000 aircraft station licensees
operate domestically and are not subject to the radio carriage
requirements of any statute or treaty. For purposes of our evaluations
in this analysis, we estimate that there are up to approximately
712,000 licensees that are small businesses (or individuals) under the
SBA standard. In addition, between December 3, 1998 and December 14,
1998, the Commission held an auction of 42 VHF Public Coast licenses in
the 157.1875-157.4500 MHz (ship transmit) and 161.775-162.0125 MHz
(coast transmit) bands. For purposes of the auction, the Commission
defined a ``small'' business as an entity that, together with
controlling interests and affiliates, has average gross revenues for
the preceding three years not to exceed $15 million dollars.\200\ In
addition, a ``very small'' business is one that, together with
controlling interests and affiliates, has average gross revenues for
the preceding three years not to exceed $3 million dollars. There are
approximately 10,672 licensees in the Marine Coast Service, and the
Commission estimates that almost all of them qualify as ``small''
businesses under the above special small business size standards.
---------------------------------------------------------------------------
\199\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\200\ Amendment of the Commission's Rules Concerning Maritime
Communications, PR Docket No. 92-257, Third Report and Order and
Memorandum Opinion and Order, 13 FCC Rcd 19853 (1998).
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124. Offshore Radiotelephone Service. This service operates on
several ultra high frequencies (UHF) television broadcast channels that
are not used for television broadcasting in the coastal areas of states
bordering the Gulf of Mexico.\201\ There are presently approximately 55
licensees in this service. We are unable to estimate at this time the
number of licensees that would qualify as small under the SBA's small
business size standard for ``Cellular and Other Wireless
Telecommunications'' services.\202\ Under that SBA small business size
standard, a business is small if it has 1,500 or fewer employees.\203\
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\201\ This service is governed by Subpart I of Part 22 of the
Commission's rules. See 47 CFR 22.1001-22.1037.
\202\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\203\ Id.
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125. Multiple Address Systems (MAS). Entities using MAS spectrum,
in general, fall into two categories: (1) Those using the spectrum for
profit-based uses, and (2) those using the spectrum for private
internal uses. With respect to the first category, the Commission
defines ``small entity'' for MAS licenses as an entity that has average
gross revenues of less than $15 million in the three previous calendar
years.\204\ ``Very small business'' is defined as an entity that,
together with its affiliates, has average gross revenues of not more
than $3 million for the preceding three calendar years.\205\ The SBA
has approved of these definitions.\206\ The majority of these entities
will most likely be licensed in bands where the Commission has
implemented a geographic area licensing approach that would require the
use of competitive bidding procedures to resolve mutually exclusive
applications. The
[[Page 9594]]
Commission's licensing database indicates that, as of January 20, 1999,
there were a total of 8,670 MAS station authorizations. Of these, 260
authorizations were associated with common carrier service. In
addition, an auction for 5,104 MAS licenses in 176 EAs began November
14, 2001, and closed on November 27, 2001.\207\ Seven winning bidders
claimed status as small or very small businesses and won 611 licenses.
---------------------------------------------------------------------------
\204\ See Amendment of the Commission's Rules Regarding Multiple
Address Systems, Report and Order, 15 FCC Rcd 11956, 12008,
paragraph 123 (2000).
\205\ Id.
\206\ See Letter to Thomas Sugrue, Chief, Wireless
Telecommunications Bureau, Federal Communications Commission, from
Aida Alvarez, Administrator, Small Business Administration, dated
June 4, 1999.
\207\ See ``Multiple Address Systems Spectrum Auction Closes,''
Public Notice, 16 FCC Rcd 21011 (2001).
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126. With respect to the second category, which consists of
entities that use, or seek to use, MAS spectrum to accommodate internal
communications needs, we note that MAS serves an essential role in a
range of industrial, safety, business, and land transportation
activities. MAS radios are used by companies of all sizes, operating in
virtually all U.S. business categories, and by all types of public
safety entities. For the majority of private internal users, the
definitions developed by the SBA would be more appropriate. The
applicable definition of small entity in this instance appears to be
the ``Cellular and Other Wireless Telecommunications'' definition under
the SBA rules. This definition provides that a small entity is any
entity employing no more than 1,500 persons.\208\ The Commission's
licensing database indicates that, as of January 20, 1999, of the 8,670
total MAS station authorizations, 8,410 authorizations were for private
radio service, and of these, 1,433 were for private land mobile radio
service.
---------------------------------------------------------------------------
\208\ See 13 CFR 121.201, NAICS code 517212.
---------------------------------------------------------------------------
127. Incumbent 24 GHz Licensees. This analysis may affect incumbent
licensees who were relocated to the 24 GHz band from the 18 GHz band,
and applicants who wish to provide services in the 24 GHz band. The
applicable SBA small business size standard is that of ``Cellular and
Other Wireless Telecommunications'' companies. This category provides
that such a company is small if it employs no more than 1,500
persons.\209\ According to Census Bureau data for 1997, there were 977
firms in this category, total, that operated for the entire year.\210\
Of this total, 965 firms had employment of 999 or fewer employees, and
an additional 12 firms had employment of 1,000 employees or more.\211\
Thus, under this size standard, the great majority of firms can be
considered small. These broader census data notwithstanding, we believe
that there are only two licensees in the 24 GHz band that were
relocated from the 18 GHz band, Teligent \212\ and TRW, Inc. It is our
understanding that Teligent and its related companies have less than
1,500 employees, though this may change in the future. TRW is not a
small entity. Thus, only one incumbent licensee in the 24 GHz band is a
small business entity.
---------------------------------------------------------------------------
\209\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\210\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Employment Size of Firms Subject to Federal Income
Tax: 1997,'' Table 5, NAICS code 513322 (issued October 2000).
\211\ Id. The census data do not provide a more precise estimate
of the number of firms that have employment of 1,500 or fewer
employees; the largest category provided is ``Firms with 1,000
employees or more.''
\212\ Teligent acquired the DEMS licenses of FirstMark, the only
licensee other than TRW in the 24 GHz band whose license has been
modified to require relocation to the 24 GHz band.
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128. Future 24 GHz Licensees. With respect to new applicants in the
24 GHz band, we have defined ``small business'' as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the three preceding years not exceeding $15
million.\213\ ``Very small business'' in the 24 GHz band is defined as
an entity that, together with controlling interests and affiliates, has
average gross revenues not exceeding $3 million for the preceding three
years.\214\ The SBA has approved these definitions.\215\ The Commission
will not know how many licensees will be small or very small businesses
until the auction, if required, is held.
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\213\ Amendments to Parts 1, 2, 87 and 101 of the Commission's
Rules To License Fixed Services at 24 GHz, Report and Order, 15 FCC
Rcd 16934, 16967, paragraph 77 (2000) (24 GHz Report and Order); See
also 47 CFR 101.538(a)(2).
\214\ 24 GHz Report and Order, 15 FCC Rcd at 16967, paragraph
77; See also 47 CFR 101.538(a)(1).
\215\ See Letter to Margaret W. Wiener, Deputy Chief, Auctions
and Industry Analysis Division, Wireless Telecommunications Bureau,
Federal Communications Commission, from Gary M. Jackson, Assistant
Administrator, Small Business Administration, dated July 28, 2000.
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129. Multipoint Distribution Service, Multichannel Multipoint
Distribution Service, and Instructional Television Fixed Service.
Multichannel Multipoint Distribution Service (MMDS) systems, often
referred to as ``wireless cable,'' transmit video programming to
subscribers using the microwave frequencies of the Multipoint
Distribution Service (MDS) and Instructional Television Fixed Service
(ITFS).\216\ In connection with the 1996 MDS auction, the Commission
defined ``small business'' as an entity that, together with its
affiliates, has average gross annual revenues that are not more than
$40 million for the preceding three calendar years.\217\ The SBA has
approved of this standard.\218\ The MDS auction resulted in 67
successful bidders obtaining licensing opportunities for 493 Basic
Trading Areas (BTAs).\219\ Of the 67 auction winners, 61 claimed status
as a small business. At this time, we estimate that of the 61 small
business MDS auction winners, 48 remain small business licensees. In
addition to the 48 small businesses that hold BTA authorizations, there
are approximately 392 incumbent MDS licensees that have gross revenues
that are not more than $40 million and are thus considered small
entities.\220\
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\216\ Amendment of Parts 21 and 74 of the Commission's Rules
with Regard to Filing Procedures in the Multipoint Distribution
Service and in the Instructional Television Fixed Service and
Implementation of Section 309(j) of the Communications Act &
Competitive Bidding, Report and Order, 10 FCC Rcd 9589, 9593,
paragraph 7 (1995) (MDS Auction R&O).
\217\ 47 CFR 21.961(b)(1).
\218\ See Letter to Margaret Wiener, Chief, Auctions and
Industry Analysis Division, Wireless Telecommunications Bureau,
Federal Communications Bureau, from Gary Jackson, Assistant
Administrator for Size Standards, Small Business Administration,
dated March 20, 2003 (noting approval of $40 million size standard
for MDS auction).
\219\ Basic Trading Areas (BTAs) were designed by Rand McNally
and are the geographic areas by which MDS was auctioned and
authorized. See MDS Auction R&O, 10 FCC Rcd at 9608, paragraph 34.
\220\ 47 U.S.C. 309(j). Hundreds of stations were licensed to
incumbent MDS licensees prior to implementation of Section 309(j) of
the Communications Act of 1934, 47 U.S.C. 309(j). For these pre-
auction licenses, the applicable standard is SBA's small business
size standard for ``other telecommunications'' (annual receipts of
$12.5 million or less). See 13 CFR 121.201, NAICS code 517910.
---------------------------------------------------------------------------
130. In addition, the SBA has developed a small business size
standard for Cable and Other Program Distribution,\221\ which includes
all such companies generating $12.5 million or less in annual
receipts.\222\ According to Census Bureau data for 1997, there were a
total of 1,311 firms in this category, total, that had operated for the
entire year.\223\ Of this total, 1,180 firms had annual receipts of
under $10 million, and an additional 52 firms had receipts of $10
million or more but less than $25 million.\224\ Consequently, we
estimate that the majority of providers in this service category are
small businesses that may be affected by the proposed rules and
policies.
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\221\ 13 CFR 121.201, NAICS code 517510.
\222\ Id.
\223\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 4 (issued October 2000).
\224\ Id.
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131. Finally, while SBA approval for a Commission-defined small
business size standard applicable to ITFS is
[[Page 9595]]
pending, educational institutions are included in this analysis as
small entities.\225\ There are currently 2,032 ITFS licensees, and all
but 100 of these licenses are held by educational institutions. Thus,
we tentatively conclude that at least 1,932 ITFS licensees are small
businesses.
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\225\ In addition, the term ``small entity'' under SBREFA
applies to small organizations (nonprofits) and to small
governmental jurisdictions (cities, counties, towns, townships,
villages, school districts, and special districts with populations
of less than 50,000). 5 U.S.C. 601(4)-(6). We do not collect annual
revenue data on ITFS licensees.
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132. Cable and Other Program Distribution. This category includes
cable systems operators, closed circuit television services, direct
broadcast satellite services, multipoint distribution systems,
satellite master antenna systems, and subscription television services.
The SBA has developed small business size standard for this census
category, which includes all such companies generating $12.5 million or
less in revenue annually.\226\ According to Census Bureau data for
1997, there were a total of 1,311 firms in this category, total, that
had operated for the entire year.\227\ Of this total, 1,180 firms had
annual receipts of under $10 million and an additional 52 firms had
receipts of $10 million or more but less than $25 million.
Consequently, the Commission estimates that the majority of providers
in this service category are small businesses that may be affected by
the rules and policies proposed herein.
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\226\ 13 CFR 121.201, NAICS code 513220 (changed to 517510 in
October 2002).
\227\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization)'', Table 4, NAICS code 513220 (issued October 2000).
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133. Cable System Operators (Rate Regulation Standard). The
Commission has developed its own small business size standard for cable
system operators, for purposes of rate regulation. Under the
Commission's rules, a ``small cable company'' is one serving fewer than
400,000 subscribers nationwide.\228\ The most recent estimates indicate
that there were 1,439 cable operators who qualified as small cable
system operators at the end of 1995.\229\ Since then, some of those
companies may have grown to serve over 400,000 subscribers, and others
may have been involved in transactions that caused them to be combined
with other cable operators. Consequently, the Commission estimates that
there are now fewer than 1,439 small entity cable system operators that
may be affected by the rules and policies proposed herein.
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\228\ 47 CFR 76.901(e). The Commission developed this definition
based on its determination that a small cable system operator is one
with annual revenues of $100 million or less. Implementation of
Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393 (1995),
60 FR 10534 (February 27, 1995).
\229\ Paul Kagan Associates, Inc., Cable TV Investor, February
29, 1996 (based on figures for December 30, 1995).
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134. Cable System Operators (Telecom Act Standard). The
Communications Act of 1934, as amended, also contains a size standard
for small cable system operators, which is ``a cable operator that,
directly or through an affiliate, serves in the aggregate fewer than 1
percent of all subscribers in the United States and is not affiliated
with any entity or entities whose gross annual revenues in the
aggregate exceed $250,000,000.'' \230\ The Commission has determined
that there are 67,700,000 subscribers in the United States.\231\
Therefore, an operator serving fewer than 677,000 subscribers shall be
deemed a small operator, if its annual revenues, when combined with the
total annual revenues of all its affiliates, do not exceed $250 million
in the aggregate.\232\ Based on available data, the Commission
estimates that the number of cable operators serving 677,000
subscribers or fewer, totals 1,450.\233\ The Commission neither
requests nor collects information on whether cable system operators are
affiliated with entities whose gross annual revenues exceed $250
million,\234\ and therefore are unable, at this time, to estimate more
accurately the number of cable system operators that would qualify as
small cable operators under the size standard contained in the
Communications Act of 1934.
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\230\ 47 U.S.C. 543(m)(2).
\231\ See FCC Announces New Subscriber Count for the Definition
of Small Cable Operator, Public Notice, DA-01-158 (January 24,
2001).
\232\ 47 CFR 76.901(f).
\233\ See FCC Announces New Subscriber Count for the Definition
of Small Cable Operators, Public Notice, DA-01-0158 (released
January 24, 2001).
\234\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's
finding that the operator does not qualify as a small cable operator
pursuant to section 76.901(f) of the Commission's rules. See 47 CFR
76.909(b).
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135. Open Video Services. Open Video Service (OVS) systems provide
subscription services.\235\ The SBA has created a small business size
standard for Cable and Other Program Distribution.\236\ This standard
provides that a small entity is one with $12.5 million or less in
annual receipts. The Commission has certified approximately 25 OVS
operators to serve 75 areas, and some of these are currently providing
service.\237\ Affiliates of Residential Communications Network, Inc.
(RCN) received approval to operate OVS systems in New York City,
Boston, Washington, DC, and other areas. RCN has sufficient revenues to
assure that they do not qualify as a small business entity. Little
financial information is available for the other entities that are
authorized to provide OVS and are not yet operational. Given that some
entities authorized to provide OVS service have not yet begun to
generate revenues, the Commission concludes that up to 24 OVS operators
(those remaining) might qualify as small businesses that may be
affected by the rules and policies proposed herein.
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\235\ See 47 U.S.C. 573.
\236\ 13 CFR 121.201, NAICS code 513220 (changed to 517510 in
October 2002).
\237\ See http://www.fcc.gov/csb/ovs/csovscer.html (current as
of March 2002).
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136. Cable Television Relay Service. This service includes
transmitters generally used to relay cable programming within cable
television system distribution systems. The SBA has defined a small
business size standard for Cable and other Program Distribution,
consisting of all such companies having annual receipts of no more than
$12.5 million.\238\ According to Census Bureau data for 1997, there
were 1,311 firms in the industry category Cable and Other Program
Distribution, total, that operated for the entire year.\239\ Of this
total, 1,180 firms had annual receipts of $10 million or less, and an
additional 52 firms had receipts of $10 million or more but less than
$25 million.\240\ Thus, under this standard, we estimate that the
majority of providers in this service category are small businesses
that may be affected by the proposed rules and policies.
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\238\ 13 CFR 121.201, NAICS code 517510.
\239\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 4 (issued October 2000).
\240\ Id.
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137. Multichannel Video Distribution and Data Service. MVDDS is a
terrestrial fixed microwave service operating in the 12.2-12.7 GHz
band. No auction has yet been held in this service, although an action
has been scheduled for January 14, 2004.\241\ Accordingly, there are no
licensees in this service.
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\241\ ``Auctions of Licenses in the Multichannel Video
Distribution and Data Service Rescheduled for January 14, 2004,''
Public Notice, DA 03-2354 (August 28, 2003).
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138. Amateur Radio Service. These licensees are believed to be
individuals, and therefore are not small entities.
139. Aviation and Marine Services. Small businesses in the aviation
and marine radio services use a very high frequency (VHF) marine or
aircraft radio and, as appropriate, an emergency position-indicating
radio beacon (and/or
[[Page 9596]]
radar) or an emergency locator transmitter. The Commission has not
developed a small business size standard specifically applicable to
these small businesses. For purposes of this analysis, the Commission
uses the SBA small business size standard for the category ``Cellular
and Other Telecommunications,'' which is 1,500 or fewer employees.\242\
Most applicants for recreational licenses are individuals.
Approximately 581,000 ship station licensees and 131,000 aircraft
station licensees operate domestically and are not subject to the radio
carriage requirements of any statute or treaty. For purposes of our
evaluations in this analysis, we estimate that there are up to
approximately 712,000 licensees that are small businesses (or
individuals) under the SBA standard. In addition, between December 3,
1998 and December 14, 1998, the Commission held an auction of 42 VHF
Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and
161.775-162.0125 MHz (coast transmit) bands. For purposes of the
auction, the Commission defined a ``small'' business as an entity that,
together with controlling interests and affiliates, has average gross
revenues for the preceding three years not to exceed $15 million
dollars. In addition, a ``very small'' business is one that, together
with controlling interests and affiliates, has average gross revenues
for the preceding three years not to exceed $3 million dollars.\243\
There are approximately 10,672 licensees in the Marine Coast Service,
and the Commission estimates that almost all of them qualify as
``small'' businesses under the above special small business size
standards.
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\242\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\243\ Amendment of the Commission's Rules Concerning Maritime
Communications, Third Report and Order and Memorandum Opinion and
Order, 13 FCC Rcd 19853 (1998).
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140. Personal Radio Services. Personal radio services provide
short-range, low power radio for personal communications, radio
signaling, and business communications not provided for in other
services. The Personal Radio Services include spectrum licensed under
Part 95 of our rules.\244\ These services include Citizen Band Radio
Service (CB), General Mobile Radio Service (GMRS), Radio Control Radio
Service (R/C), Family Radio Service (FRS), Wireless Medical Telemetry
Service (WMTS), Medical Implant Communications Service (MICS), Low
Power Radio Service (LPRS), and Multi-Use Radio Service (MURS).\245\
There are a variety of methods used to license the spectrum in these
rule parts, from licensing by rule, to conditioning operation on
successful completion of a required test, to site-based licensing, to
geographic area licensing. Under the RFA, the Commission is required to
make a determination of which small entities are directly affected by
the rules being proposed. Since all such entities are wireless, we
apply the definition of cellular and other wireless telecommunications,
pursuant to which a small entity is defined as employing 1,500 or fewer
persons.\246\ Many of the licensees in these services are individuals,
and thus are not small entities. In addition, due to the mostly
unlicensed and shared nature of the spectrum utilized in many of these
services, the Commission lacks direct information upon which to base an
estimation of the number of small entities under an SBA definition that
might be directly affected by the proposed rules.
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\244\ 47 CFR Part 90.
\245\ The Citizens Band Radio Service, General Mobile Radio
Service, Radio Control Radio Service, Family Radio Service, Wireless
Medical Telemetry Service, Medical Implant Communications Service,
Low Power Radio Service, and Multi-Use Radio Service are governed by
Subpart D, Subpart A, Subpart C, Subpart B, Subpart H, Subpart I,
Subpart G, and Subpart J, respectively, of Part 95 of the
Commission's rules. See generally 47 CFR Part 95.
\246\ 13 CFR 121.201, NAICS Code 517212.
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141. Public Safety Radio Services. Public Safety radio services
include police, fire, local government, forestry conservation, highway
maintenance, and emergency medical services.\247\ There are a total of
approximately 127,540 licensees in these services. Governmental
entities \248\ as well as private businesses comprise the licensees for
these services. All governmental entities with populations of less than
50,000 fall within the definition of a small entity.\249\
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\247\ With the exception of the special emergency service, these
services are governed by Subpart B of part 90 of the Commission's
Rules, 47 CFR 90.15-90.27. The police service includes approximately
27,000 licensees that serve state, county, and municipal enforcement
through telephony (voice), telegraphy (code) and teletype and
facsimile (printed material). The fire radio service includes
approximately 23,000 licensees comprised of private volunteer or
professional fire companies as well as units under governmental
control. The local government service that is presently comprised of
approximately 41,000 licensees that are state, county, or municipal
entities that use the radio for official purposes not covered by
other public safety services. There are approximately 7,000
licensees within the forestry service which is comprised of
licensees from state departments of conservation and private forest
organizations who set up communications networks among fire lookout
towers and ground crews. The approximately 9,000 state and local
governments are licensed to highway maintenance service provide
emergency and routine communications to aid other public safety
services to keep main roads safe for vehicular traffic. The
approximately 1,000 licensees in the Emergency Medical Radio Service
(EMRS) use the 39 channels allocated to this service for emergency
medical service communications related to the delivery of emergency
medical treatment. 47 CFR 90.15-90.27. The approximately 20,000
licensees in the special emergency service include medical services,
rescue organizations, veterinarians, handicapped persons, disaster
relief organizations, school buses, beach patrols, establishments in
isolated areas, communications standby facilities, and emergency
repair of public communications facilities. 47 CFR 90.33-90.55.
\248\ 47 CFR 1.1162.
\249\ 5 U.S.C. 601(5).
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IV. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
142. With certain exceptions, the Commission's Schedule of
Regulatory Fees applies to all Commission licensees and regulatees.
Most licensees will be required to count the number of licenses or call
signs authorized, complete and submit an FCC Form 159 (``FCC Remittance
Advice''), and pay a regulatory fee based on the number of licenses or
call signs.\250\ Interstate telephone service providers must compute
their annual regulatory fee based on their interstate and international
end-user revenue using information they already supply to the
Commission in compliance with the Form 499-A, Telecommunications
Reporting Worksheet, and they must complete and submit the FCC Form
159. Compliance with the fee schedule will require some licensees to
tabulate the number of units (e.g., cellular telephones, pagers, cable
TV subscribers) they have in service, and
[[Page 9597]]
complete and submit an FCC Form 159. Licensees ordinarily will keep a
list of the number of units they have in service as part of their
normal business practices. No additional outside professional skills
are required to complete the FCC Form 159, and it can be completed by
the employees responsible for an entity's business records.
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\250\ The following categories are exempt from the Commission's
Schedule of Regulatory Fees: Amateur radio licensees (except
applicants for vanity call signs) and operators in other non-
licensed services (e.g., Personal Radio, part 15, ship and
aircraft). Governments and non-profit (exempt under section 501(c)
of the Internal Revenue Code) entities are exempt from payment of
regulatory fees and need not submit payment. Non-commercial
educational broadcast licensees are exempt from regulatory fees as
are licensees of auxiliary broadcast services such as low power
auxiliary stations, television auxiliary service stations, remote
pickup stations and aural broadcast auxiliary stations where such
licenses are used in conjunction with commonly owned non-commercial
educational stations. Emergency Alert System licenses for auxiliary
service facilities are also exempt as are instructional television
fixed service licensees. Regulatory fees are automatically waived
for the licensee of any translator station that: (1) Is not licensed
to, in whole or in part, and does not have common ownership with,
the licensee of a commercial broadcast station; (2) does not derive
income from advertising; and (3) is dependent on subscriptions or
contributions from members of the community served for support.
Receive only earth station permittees are exempt from payment of
regulatory fees. A regulatee will be relieved of its fee payment
requirement if its total fee due, including all categories of fees
for which payment is due by the entity, amounts to less than $10.
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143. Each licensee must submit the FCC Form 159 to the Commission's
lockbox bank after computing the number of units subject to the fee.
Licensees may also file electronically to minimize the burden of
submitting multiple copies of the FCC Form 159. Applicants who pay
small fees in advance and provide fee information as part of their
application must use FCC Form 159.
144. Licensees and regulatees are advised that failure to submit
the required regulatory fee in a timely manner will subject the
licensee or regulatee to a late payment penalty of 25 percent in
addition to the required fee.\251\ If payment is not received, new or
pending applications may be dismissed, and existing authorizations may
be subject to rescission.\252\ Further, in accordance with the Debt
Collection Improvement Act of 1996, federal agencies may bar a person
or entity from obtaining a federal loan or loan insurance guarantee if
that person or entity fails to pay a delinquent debt owed to any
federal agency.\253\ Nonpayment of regulatory fees is a debt owed the
United States pursuant to 31 U.S.C. 3711 et seq., and the Debt
Collection Improvement Act of 1996, Public Law 194-134. Appropriate
enforcement measures as well as administrative and judicial remedies,
may be exercised by the Commission. Debts owed to the Commission may
result in a person or entity being denied a federal loan or loan
guarantee pending before another federal agency until such obligations
are paid.\254\
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\251\ 47 CFR 1.1164.
\252\ 47 CFR 1.1164(c).
\253\ Public Law 104-134, 110 Stat. 1321 (1996).
\254\ 31 U.S.C. 7701(c)(2)(B).
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145. The Commission's rules currently provide for relief in
exceptional circumstances. Persons or entities may request a waiver,
reduction or deferment of payment of the regulatory fee.\255\ However,
timely submission of the required regulatory fee must accompany
requests for waivers or reductions. This will avoid any late payment
penalty if the request is denied. The fee will be refunded if the
request is granted. In exceptional and compelling instances (where
payment of the regulatory fee along with the waiver or reduction
request could result in reduction of service to a community or other
financial hardship to the licensee), the Commission will defer payment
in response to a request filed with the appropriate supporting
documentation.
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\255\ 47 CFR 1.1166.
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V. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
146. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives: (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. As described in Section III of this IRFA, supra, we have
created procedures in which all fee-filing licensees and regulatees use
a single form, FCC Form 159, and have described in plain language the
general filing requirements. We have sought comment on other
alternatives that might simplify our fee procedures or otherwise
benefit small entities, while remaining consistent with our statutory
responsibilities in this proceeding.
147. The Omnibus Appropriations Act for FY 2005, Public Law 108-
447, requires the Commission to revise its Schedule of Regulatory Fees
in order to recover the amount of regulatory fees that Congress,
pursuant to Section 9(a) of the Communications Act, as amended, has
required the Commission to collect for Fiscal Year (FY) 2005.\256\ As
noted, we seek comment on the proposed methodology for implementing
these statutory requirements and any other potential impact of these
proposals on small entities.
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\256\ 47 U.S.C. 159(a).
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148. We have previously used cost accounting data for computation
of regulatory fees, but found that some fees which were very small in
previous years would have increased dramatically and would have a
disproportionate impact on smaller entities. The methodology we are
proposing in this Notice of Proposed Rulemaking minimizes this impact
by limiting the amount of increase and shifting costs to other services
which, for the most part, are larger entities.
149. Several categories of licensees and regulatees are exempt from
payment of regulatory fees. See, e.g., footnote 250, supra.
VI. Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rules
150. None.
Attachment B--Sources of Payment Unit Estimates For FY 2005
In order to calculate individual service fees for FY 2005, we
adjusted FY 2004 payment units for each service to more accurately
reflect expected FY 2005 payment liabilities. We obtained our updated
estimates through a variety of means. For example, we used Commission
licensee data bases, actual prior year payment records and industry and
trade association projections when available. The databases we
consulted include the Commission's Universal Licensing System (ULS),
International Bureau Filing System (IBFS), and Consolidated Database
System (CDBS). The industry sources we consulted include, but are not
limited to, Television & Cable Factbook by Warren Publishing, Inc. and
the Broadcasting and Cable Yearbook by Reed Elsevier, Inc, as well as
reports generated within the Commission such as the Wireline
Competition Bureau's Trends in Telephone Service and the Wireless
Telecommunications Bureau's Numbering Resource Utilization Forecast.
We tried to obtain verification for these estimates from multiple
sources and, in all cases; we compared FY 2005 estimates with actual FY
2004 payment units to ensure that our revised estimates were
reasonable. Where appropriate, we adjusted and/or rounded our final
estimates to take into consideration the fact that certain variables
that impact on the number of payment units cannot yet be estimated
exactly. These include an unknown number of waivers and/or exemptions
that may occur in FY 2005 and the fact that, in many services, the
number of actual licensees or station operators fluctuates from time to
time due to economic, technical or other reasons. Therefore, when we
note, for example, that our estimated FY 2005 payment units are based
on FY 2004 actual payment units, it does not necessarily mean that our
FY 2005 projection is exactly the same number as FY 2004. It means that
we have either rounded the FY 2005 number or adjusted it slightly to
account for these variables.
BILLING CODE 6712-05-P
[[Page 9598]]
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[[Page 9599]]
Attachment C--Calculation of FY 2005 Revenue Requirements and Pro-Rata
Fees
Regulatory fees for the first ten fee categories below are
collected by the Commisison in advance to cover the term of the license
and are submitted along with the application at the time the
application is filed.
[GRAPHIC] [TIFF OMITTED] TP28FE05.057
[[Page 9600]]
[GRAPHIC] [TIFF OMITTED] TP28FE05.058
[[Page 9601]]
[GRAPHIC] [TIFF OMITTED] TP28FE05.059
[[Page 9602]]
Attachment D--FY 2005 Schedule of Regulatory Fees
Regulatory fees for the first eleven fee categories below are
collected by the Commission in advance to cover the term of the license
and are submitted along with the application at the time the
application is filed.
[GRAPHIC] [TIFF OMITTED] TP28FE05.060
[[Page 9603]]
[GRAPHIC] [TIFF OMITTED] TP28FE05.061
[[Page 9604]]
Attachment E--Factors, Measurements and Calculations That Go Into
Determining Station Signal Contours and Associated Population Coverages
AM Stations
For stations with nondirectional daytime antennas, the theoretical
radiation was used at all azimuths. For stations with directional
daytime antennas, specific information on each day tower, including
field ratio, phasing, spacing and orientation was retrieved, as well as
the theoretical pattern root-mean-square of the radiation in all
directions in the horizontal plane (RMS) figure milliVolt per meter
standard if pertinent, horizontal plane radiation pattern was
calculated using techniques and methods specified in Sec. Sec. 73.150
and 73.152 of the Commission's rules.\257\ Radiation values were
calculated for each of 360 radials around the transmitter site. Next,
estimated soil conductivity data was retrieved from a database
representing the information in FCC Figure R3.\258\ Using the
calculated horizontal radiation values, and the retrieved soil
conductivity data, the distance to the city grade (5 mV/m) contour was
predicted for each of the 360 radials. The resulting distance to city
grade contours were used to form a geographical polygon. Population
counting was accomplished by determining which 2000 block centroids
were contained in the polygon. (A block centroid is the center point of
a small area containing population as computed by the U.S. Census
Bureau.) The sum of the population figures for all enclosed blocks
represents the total population for the predicted city grade coverage
area.
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\257\ 47 CFR 73.150 and 73.152.
\258\ See Map of Estimated Effective Ground Conductivity in the
United States, 47 CFR 73.190 Figure R3.
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FM Stations
The greater of the horizontal or vertical effective radiated power
(ERP) (kW) and respective height above average terrain (HAAT) (m)
combination was used. Where the antenna height above mean sea level
(HAMSL) was available, it was used in lieu of the average HAAT figure
to calculate specific HAAT figures for each of 360 radials under study.
Any available directional pattern information was applied as well, to
produce a radial-specific ERP figure. The HAAT and ERP figures were
used in conjunction with the Field Strength (50-50) propagation curves
specified in 47 CFR 73.313 of the Commission's rules to predict the
distance to the city grade (70 dBu (decibel above 1 microVolt per
meter) or 3.17 mV/m) contour for each of the 360 radials.\259\ The
resulting distance to city grade contours were used to form a
geographical polygon. Population counting was accomplished by
determining which 2000 block centroids were contained in the polygon.
The sum of the population figures for all enclosed blocks represents
the total population for the predicted city grade coverage area.
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\259\ 47 CFR 73.313.
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BILLING CODE 6712-05-P
Attachment F--FY 2004 Schedule of Regulatory Fees
[[Page 9605]]
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[[Page 9606]]
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[FR Doc. 05-3822 Filed 2-25-05; 8:45 am]
BILLING CODE 6712-05-C