[Federal Register Volume 61, Number 28 (Friday, February 9, 1996)]
[Rules and Regulations]
[Pages 4916-4918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2843]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 0 and 1

[ET Docket No. 93-266; FCC 95-493]


Review of the Pioneer's Preference Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: By this Memorandum Opinion and Order (MO&O), the Commission 
denies the petition for reconsideration filed by Qualcomm Incorporated 
(Qualcomm) to the Second Report and Order (Second R&O) in this 
proceeding, and grants the petition for reconsideration filed by Celsat 
America, Inc. (Celsat) to the Third Report and Order (Third R&O). The 
Commission finds that there is no need to reconsider its determination 
of what constitutes innovative technology, as requested by Qualcomm; 
and finds that it is desirable to reconsider its decision to apply 
certain new pioneer's preference regulations to pioneer's preference 
requests accepted for filing on or before September 1, 1994, as 
requested by Celsat. This action is intended to affirm the Commission's 
pioneer's preference policies, consistent with Congressional 
directives.

EFFECTIVE DATE: March 11, 1996.

FOR FURTHER INFORMATION CONTACT: Rodney Small, (202) 418-2452, Office 
of Engineering and Technology, Federal Communications Commission, 
Washington, DC 20554.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's MO&O 
adopted December 8, 1995, and released January 30, 1996. This action 
will not add to or decrease the public reporting burden. The full text 
of the Commission decision is available for inspection and copying 
during regular business hours in the FCC Reference Center (Room 239), 
1919 M Street, NW, Washington, DC. The complete text of this decision 
also may be purchased from the Commission's duplication contractor, 
International Transcription Service, Inc., (202) 857-3800, 2100 M 
Street, NW, Suite 140, Washington, DC 20037.

Summary of MO&O

    1. The pioneer's preference program provides preferential treatment 
in the Commission's licensing processes for parties that make 
significant contributions to the development of a new service or to the 
development of a new technology that substantially enhances an existing 
service. The program was established to foster new communications 
services and technologies and to encourage parties to submit innovative 
proposals in a timely manner. Under the pioneer's preference rules, a 
necessary condition for the award of a preference is that an applicant 
demonstrate that it has developed the capabilities or possibilities of 
a new technology or service, or has brought the technology or service 
to a more advanced or effective state. The applicant must also 
demonstrate that the new service or technology is technically feasible 
by submitting either the summarized results of an experiment or a 
technical showing. Finally, a preference is granted only if the service 
rules adopted are a reasonable outgrowth of the applicant's proposal 
and lend themselves to grant of a preference. A pioneer's preference 
recipient's license application is not subject to mutually exclusive 
applications.
    2. The Second R&O, 60 FR 13636 (March 14, 1995), addressed 
proposals set forth in the Notice of Proposed Rule Making, 58 FR 57578 
(October 26, 1993), in this proceeding and modified certain rules 
regarding the Commission's pioneer's preference program. Specifically, 
the Second R&O provided pioneers with a discount on license charges in 
services in which licenses are awarded by competitive bidding, and it 
also modified several administrative rules. In addition, the Second R&O 
also held that, where an ``innovative technology'' has developed or 
enhanced more than one service, the grant of a pioneer's preference in 
only one such service is sufficient incentive to encourage pioneering 
proposals to be submitted.
    3. Qualcomm states that the Commission should reconsider its 
determination of what constitutes ``innovative technology.'' Qualcomm 
contends that four aspects of the Second R&O are not clearly defined. 
First, Qualcomm maintains that a technology should not be considered 
ineligible for a pioneer's preference merely because that technology 
could be used in an existing service; second, it requests that the 
Commission clarify that an innovative technology that can be applied to 
more than one new service should be eligible for a preference in all 
services that are not existing services; third, it requests that an 
innovator who develops a new technology that both significantly 
improves an existing service and that may also be used to provide a new 
service in a different band be eligible for a preference in the new 
service; and fourth, it requests that the Commission clarify what it 
means by a ``new service'' operating in a higher band. Qualcomm states 
that there may be some confusion on this point with respect to 
broadband Personal Communications Services (PCS). No party filed 
comments on Qualcomm's petition.
    4. Legislation implementing domestically the General Agreement on 
Tariffs and Trade (GATT) was enacted on December 8, 1994, and contained 
an amendment to the Communications Act relating to the pioneer's 
preference program. Included in this amendment was Section 
309(j)(13)(D), which specified new requirements regarding criteria, 
peer review, and unjust enrichment for pioneer's preference requests 
that were accepted for filing after September 1, 1994. In the Third 
R&O, 60 FR 32116 (June 20, 1995), the Commission implemented the new 
requirements specified in Section 309(j)(13)(D) and extended them to 
pioneer's preference requests filed on or before September 1, 1994 in 
proceedings that have not reached the tentative decision stage. The 
Commission stated that such action would further its 

[[Page 4917]]
pioneer's preference policy in an auction environment. Also, the 
Commission imposed the requirement that pending pioneer's preference 
requests must be amended so as to conform to the new requirements--
including an additional requirement adopted in the Third R&O and a 
requirement adopted in the Second R&O--no later than 30 days from the 
effective date of the rules established by the Third R&O (i.e., by 
September 20, 1995).
    5. In its petition, Celsat requests that the Commission reconsider 
its decision to apply the new requirements regarding criteria, peer 
review, and unjust enrichment to pioneer's preference requests that 
were accepted for filing on or before September 1, 1994. Celsat also 
requests that the Commission defer the deadline for filing amendments 
to pioneer's preference requests until 30 days after the effective date 
of the Order that responds to its petition. No party filed comments on 
Celsat's petition or its request for deferral.
    6. The Commission emphasizes that the pioneer's preference program 
was established ``to foster a host of valuable new technologies and 
services to the public'' and ``to induce innovators to present their 
proposals to the Commission in a timely manner.'' To the extent that 
new technologies are being developed and presented to the Commission in 
a timely manner for use in existing services independently of the 
pioneer's preference program, the Commission sees no need to award 
preferences based upon the additional use of those technologies in new 
services. Therefore, it finds unpersuasive Qualcomm's argument that a 
technology that is first used in an existing service independently of 
the pioneer's preference program should be eligible for a preference in 
the new service. With respect to Qualcomm's argument regarding the 
eligibility of an innovative technology to multiple new services, it 
does not intend to reward the same technology with a preference in more 
than one service. Further, the Commission believes that such a 
technology should be eligible for a pioneer's preference only in the 
first new service that is proposed (provided that the technology has 
not previously been implemented in an existing service). To permit an 
applicant to use the same technology as the basis for a pioneer's 
preference in more than one new service would be administratively 
burdensome, because there may be numerous new services in which an 
innovative technology can be used and a party could repeatedly apply 
for a preference using that technology. Finally, with respect to new 
services operating in higher bands, Qualcomm does not present a valid 
reason to believe that there is confusion as to what constitutes a new 
service. Accordingly, the Commission finds no need to clarify its rules 
regarding new services.
    7. With regard to Celsat's petition, the Commission finds that 
applying the new pioneer's preference requirements regarding criteria, 
peer review, and unjust enrichment to pioneer's preference requests 
that were accepted for filing on or before September 1, 1994 is 
unnecessary to evaluate these requests and would be administratively 
burdensome on the Commission and on the applicants. The Commission 
believes that it has sufficient information on each of these requests 
to determine whether they are entitled to a pioneer's preference. 
Accordingly, it will not apply the new requirements regarding criteria, 
peer review, and unjust enrichment to these requests.
    8. The Commission notes, however, that all pending pioneer's 
preference applicants except Celsat in proceedings that have not 
reached the tentative decision stage were required by the Third R&O to 
submit by September 20, 1995 amended filings pertaining to these and 
other new pioneer's preference requirements adopted in the Second R&O 
and Third R&O. Even though a number of pending applicants supplemented 
their preference requests by that date, the Office of Management and 
Budget (OMB) has not yet approved a new information collection for 
pioneer's preference requests pursuant to the Paperwork Reduction Act. 
Accordingly, pursuant to that statute, the Commission is ordering that 
subsequent to approval by OMB of the new collection, the Chief, Office 
of Engineering and Technology announce a new date for the submission of 
amended pioneer's preference requests and publish that date in the 
Federal Register. Therefore, Celsat and other parties who may wish to 
amend their pioneer's preference requests will not be required to do so 
prior to the new filing date. On that date, a party that has not 
previously filed an amended pioneer's preference request will be 
required to do so by submitting a filing pertaining to the new 
requirements adopted in the Second R&O and Third R&O. Specifically, a 
party that filed a pioneer's preference request on or before September 
1, 1994, must submit a statement that a new allocation of spectrum is 
necessary for its innovation to be implemented. Further, if the 
applicant relied on experimental results to demonstrate the technical 
feasibility of its innovation, it must submit a summary of those 
experimental results. Additionally, for pioneer's preference requests 
filed after September 1, 1994, an applicant must submit a showing 
demonstrating that the Commission's public rulemaking process inhibits 
it from capturing the economic rewards of its innovation unless it is 
granted a pioneer's preference license; i.e., the applicant must show 
that it may lose its intellectual property protection because of the 
Commission's public process; that the damage to its intellectual 
property is likely to be more significant than in other contexts, such 
as the patent process; and that the guarantee of a license is a 
significant factor in its ability to capture the rewards from its 
innovation. Failure by any party to amend in a timely manner will 
result in the dismissal of its request.
    9. Accordingly, it is ordered that Parts 0 and 1 of the 
Commission's Rules are amended as specified below, effective March 11, 
1996. It is further ordered that the petition for reconsideration filed 
by Qualcomm Incorporated is denied. It is further ordered that the 
petition for reconsideration filed by Celsat America, Inc. is granted. 
It is further ordered that the request for deferral filed by Celsat 
America, Inc. is dismissed as moot. It is further ordered that the 
Chief, Office of Engineering and Technology announce a new date for the 
submission of amended pioneer's preference requests and publish that 
date in the Federal Register, subsequent to approval from the Office of 
Management and Budget of the new information collection for pioneer's 
preference requests. This action is taken pursuant to Sections 4(i), 
7(a), 303(g), and 303(r), of the Communications Act of 1934, as 
amended, 47 U.S.C. Sections 154(i), 157(a), 303(g), and 303(r).

List of Subjects

47 CFR Part 0

    Organization and functions (Government agencies).

47 CFR Part 1

    Pioneer's preference, Radio.

Federal Communications Commission
William F. Caton,
Acting Secretary.

Amendatory Text

    Parts 0 and 1 of Chapter I of Title 47 of the Code of Federal 
Regulations are amended as follows:

PART 0--COMMISSION ORGANIZATION

    1. The authority citation for Part 0 continues to read as follows:

 
[[Page 4918]]

    Authority: Sec. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 
225, unless otherwise noted.

    2. Section 0.241 is amended by revising paragraph (f) to read as 
follows:


Sec. 0.241  Authority delegated.

* * * * *
    (f) For pioneer's preference requests accepted for filing after 
September 1, 1994, the Chief, Office of Engineering and Technology 
(OET) is authorized to select, in appropriate cases on his/her own 
initiative or upon request by a pioneer's preference applicant or other 
interested person, a panel of experts consisting of persons who are 
knowledgeable about the specific technology set forth in a pioneer's 
preference request and who are neither employed by the Commission nor 
by any applicant seeking a pioneer's preference in the same or similar 
communications service. In consultation with the General Counsel, the 
Chief, OET, shall also impose other conflict-of-interest requirements 
that are necessary in the interest of attaining impartial, expert 
advice regarding the particular pioneer's preference request or 
requests.

PART 1--PRACTICE AND PROCEDURE

    1. The authority citation for Part 1 continues to read as follows:

    Authority: Secs. 4, 303, 48 Stat. 1066, 1082, as amended; 47 
U.S.C. 154, 303; Implement, 5 U.S.C. 552 and 21 U.S.C. 853a, unless 
otherwise noted.

    2. Section 1.402 is amended by revising paragraphs (h) and (i) to 
read as follows:


Sec. 1.402  Pioneer's preference.

* * * * *
    (h) For pioneer's preference requests accepted for filing after 
September 1, 1994, an opportunity for review and verification of the 
requests by experts who are not Commission employees will be provided 
by the Commission. The Chief, Office of Engineering and Technology 
(OET) may select a panel of experts consisting of persons who are 
knowledgeable about the specific technology set forth in a pioneer's 
preference request and who are neither employed by the Commission nor 
by any applicant seeking a pioneer's preference in the same or similar 
communications service. The panel of experts will generally be granted 
a period of up to 90 days, but no more than 180 days, to present their 
findings to the Commission. The Commission will generally establish, 
conduct, and seek the consensus of the panel pursuant to the Federal 
Advisory Committee Act, and will evaluate its recommendations in light 
of all the submissions and comments in the record. Panelists will have 
the authority to seek further information pertaining to preference 
requests and to perform field evaluations, as deemed appropriate by the 
Chief, OET.
    (i) For pioneer's preference requests accepted for filing after 
September 1, 1994, in order to qualify for a pioneer's preference in 
services in which licenses are awarded by competitive bidding, an 
applicant must demonstrate that the Commission's public rulemaking 
process inhibits it from capturing the economic rewards of its 
innovation unless it is granted a pioneer's preference license. The 
applicant must show that it may lose its intellectual property 
protection because of the Commission's public process; that the damage 
to its intellectual property is likely to be more significant than in 
other contexts, such as the patent process; and that the guarantee of a 
license is a significant factor in its ability to capture the rewards 
from its innovation. This demonstration will be required even if the 
Commission has not determined at the time a pioneer's preference 
request is filed whether assignments in the proposed service will be 
made by competitive bidding.
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[FR Doc. 96-2843 Filed 2-8-96; 8:45 am]
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