[Federal Register Volume 61, Number 33 (Friday, February 16, 1996)]
[Proposed Rules]
[Pages 6199-6210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3657]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 22 and 90

[WT Docket No. 96-18; PP Docket No. 93-253; FCC 96-52]


Future Development of Paging Systems and Implementation of 
Section 309(j) of the Communications Act--Competitive Bidding

AGENCY: Federal Communications Commission.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: In this Notice of Proposed Rule Making in WT Docket No. 96-18 
and PP Docket No. 93-253 (Notice), the Commission proposes to implement 
geographic licensing for paging services to streamline licensing 
procedures for Common Carrier Paging (CCP) and Private Carrier Paging 
(PCP). The Commission proposes to transition to a geographic licensing 
approach, and issue licenses for geographic areas, rather than on a 
transmitter-by-transmitter basis. The Commission also proposes to adopt 
competitive bidding rules to select among mutually exclusive paging 
applications.
    The Commission also addresses how paging applications should be 
treated during the pendency of this rulemaking. The Commission proposes 
to hold in abeyance and not process applications for paging channels 
received after the adoption date of this Notice, except during the 
pendency of this proceeding incumbent licensees may add sites to 
existing systems or modify existing sites, so long as such additions or 
modifications do not expand the interference contour of the incumbent's 
existing system. With respect to CCP and PCP licensees who have 
obtained nationwide exclusivity, the Commission will allow applications 
for additional sites, without restrictions.
    With respect to paging applications that were filed prior to the 
February 8, 1996 adoption date of this Notice and remain pending, the 
Commission proposes to process such applications provided that they are 
not mutually exclusive with other applications, and the relevant period 
for filing competing applications has expired as of the adoption date 
of this Notice. The processing of mutually exclusive pending 
applications and applications for which the relevant period for filing 
competing applications has not yet expired will be held in abeyance 
until the conclusion of this proceeding. In the Notice, the Commission 
examines ways to promote continued growth and preserve vigorous 
competition in the paging industry through revisions to the common 
carrier and private carrier paging regulations. The Commission seeks to 
establish a comprehensive and consistent regulatory scheme that will 
simplify and streamline licensing procedures. To reach this objective, 
the Commission proposes to transition to geographic licensing and to 
adopt competitive bidding rules for mutually exclusive paging 
applications.

DATES: Comments are to be filed on or before March 18, 1996. Reply 
Comments are to be filed on or before April 2, 1996. Comments on the 
Interim Licensing Proposal are to be filed on or before March 1, 1996. 
Reply Comments on the Interim Licensing Proposal are to be filed on or 
before March 11, 1996.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., 
Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Mika Savir or Rhonda Lien, Commercial 
Wireless Division, Wireless Telecommunications Bureau, at (202) 418-
0620.

SUPPLEMENTARY INFORMATION: This Notice of Proposed Rule Making in WT 
Docket No. 96-18 and PP Docket No. 93-253, adopted February 8, 1996, 
and released February 9, 1996, is available for inspection and copying 
during normal business hours in the FCC Dockets Branch, Room 230, 1919 
M Street, N.W., Washington, D.C. The complete text may be purchased 
from the Commission's copy contractor, International Transcription 
Service, Inc., 2100 M Street, N.E., Suite 140, Washington, D.C. 20037 
(202) 857-3800).
    Synopsis of Notice of Proposed Rule Making:

I. Background

    1. The Commission first allocated spectrum for the CCP service in 
1949. The Commission responded to the growth of the paging market in 
1982 by allocating 40 new channels in the 931 MHz band exclusively for 
use by CCP operators and dedicating three of these channels for use by 
nationwide systems.
    2. PCP was established by the Commission, and authorized on 
specified channels within each private radio service category, with 
licensees authorized either to operate systems for their own internal 
use or to provide service to limited categories of eligible users. In 
1982, the Commission allocated 40 channels in the 929 MHz band for PCP, 
with some channels to be licensed for internal-use systems and others 
for PCP systems that could provide commercial paging service to 
eligible users under Part 90. In 1993, the Commission allowed PCP 
operators to provide service to the public on virtually the same 
unrestricted basis as CCP operators.
    3. The Omnibus Budget Reconciliation Act of 1993 amended the 
Communications Act of 1934, as amended (the Act) to divide all mobile 
services into two categories: Commercial Mobile Radio Services (CMRS) 
and private mobile radio service (PMRS), and mandated that 
``substantially similar'' mobile services receive comparable regulatory 
treatment. The Commission concluded in the CMRS Second Report and 
Order, Implementation of Sections 3(n) and 332 of the Communications 
Act, Second Report and Order, GN Docket No. 93-252, 59 Fed. Reg. 18493 
(April 19, 1994) (CMRS Second Report and Order), that PCP services were 
subject to reclassification as CMRS as of August 10, 1996. In the CMRS 
Third Report and Order, Implementation of Sections 3(n) and 332 of the 
Communications Act, Third Report and Order, GN Docket No. 93-252, 59 
Fed. Reg. 59945 (Nov. 21, 1994) (CMRS Third Report and Order), the 
Commission concluded that PCP and CCP are substantially similar 
services that should be subject to comparable regulation to the extent 
feasible, and that geographic licensing should be considered in both 
services. 

[[Page 6200]]


A. Common Carrier Paging

a. Current Licensing Procedures
    4. Under current rules, a CCP channel is assigned to a single 
licensee in each area on an exclusive basis. Licensees' protected 
service areas are based upon predicted coverage of the transmitters in 
their systems; licensees must apply for additional transmitter 
locations when expanding their systems. On all CCP allocations other 
than 931 MHz, known as lower band CCP channels, applicants specify 
which channels they want. Applications filed within the designated 
filing window for the same channel in the same area are, by definition, 
mutually exclusive. The 931 MHz band applications are not channel-
specific. Therefore, when there are more available channels in an area 
than there are applications for new channel assignments, 931 MHz 
applications are not mutually exclusive. In most major markets, the 
number of applications often exceeds the number of available channels, 
resulting in all applications being treated as mutually exclusive.
b. Part 22 Rewrite Order
    5. In the Part 22 Rewrite Order, Revision of Part 22 of the 
Commission's Rules Governing the Public Mobile Services, Report and 
Order, CC Docket No. 92-115, 59 Fed. Reg. 59502 (Nov. 17, 1994) (Part 
22 Rewrite Order), the Commission revised its licensing rules for all 
Part 22 services, including adoption of new licensing rules for 931 MHz 
paging frequencies. The Part 22 Rewrite Order provided that, as of 
January 1, 1995, all 931 MHz applicants, including those who had 
applications pending under the old rules, would be required to specify 
channels in their applications. After a 60-day filing window for such 
channel-specific applications, the Commission would grant those 
applications that were not mutually exclusive and use competitive 
bidding to select among the mutually exclusive applications.

B. Private Carrier Paging

a. Current Licensing Procedures
    6. Historically, PCP channels have been licensed on a shared basis, 
such that licensees would not obtain exclusive rights to a particular 
channel and may be required to share the channel with others in the 
same area. Under the current rules, PCP applicants for all non-929 MHz 
PCP channels and five of the forty 929 MHz channels must submit their 
applications to a frequency coordinator who recommends a channel to be 
assigned by the Commission. PCP applicants are not currently subject to 
competing applications or mutual exclusivity selection procedures, such 
as lotteries, comparative hearings, or auctions.
    7. As a result of the Commission's adoption of the PCP Exclusivity 
Order, Amendment of the Commission's Rules to Provide Channel 
Exclusivity to Qualified Private Paging Systems at 929-930 MHz, Report 
and Order, PR Docket No. 93-35, 58 Fed. Reg. 62289 (Nov. 26, 1993) (PCP 
Exclusivity Order), thirty-five of the forty 929 MHz PCP channels may 
be licensed on an exclusive basis. Licensees whose systems operate on 
these channels were allowed to earn exclusivity on a local, regional, 
or nationwide basis, by constructing multi-transmitter systems meeting 
certain build out criteria. The remaining incumbent licensees are 
allowed to continue operating without being forced to change channels 
or location. Applicants for exclusive PCP channels continue to submit 
their applications to a frequency coordinator, and applications are 
processed on a first-come, first-served basis.

II. Discussion

A. Geographic Licensing Proposal

a. Overview
    8. Paging operators currently choose the areas they seek to serve 
by applying for licenses on a site-by-site basis. The boundary of the 
licensee's service area is derived from the composite service areas of 
existing base stations. Geographic licensing for paging channels would 
enhance regulatory symmetry with other CMRS services. In this Notice, 
the Commission considers geographic licensing in the context of all 
paging channels, including 931 MHz, 929 MHz, and lower band CCP and PCP 
channels.
    9. The Commission tentatively concludes that the public interest 
would be served by converting to geographic licensing for all paging 
channels that are licensed on an exclusive, non-nationwide basis. 
Licensing such systems by geographic areas for ten-year license terms, 
rather than by individual sites, would simplify paging system expansion 
and substantially reduce the administrative burden on both paging 
licensees and the Commission.
    10. The Commission proposes that all incumbent systems be entitled 
to continue operating under existing authorizations with full 
protection from interference. Geographic licensees and incumbents could 
enter into voluntary negotiations with respect to the purchase or 
relocation of the incumbents' facilities. Any request for transfer or 
assignment of an incumbent authorization to the geographic licensee is 
presumed to be in the public interest, although each request will be 
reviewed as required by Section 310(d) of the Act. In addition, if an 
incumbent fails to construct, discontinues operations, or otherwise has 
its license terminated, the Commission proposes that the geographic 
area covered by the incumbent's authorization revert automatically to 
the geographic licensee. To the extent geographic licensing is adopted, 
the Commission proposes to eliminate the finder's preference under Part 
90 of the Commission's rules. The Commission seeks comment on the 
geographic licensing proposal.
    11. 931 MHz and 929 MHz Channels. Under the geographic licensing 
proposal in this Notice, 931 and 929 MHz licensees would be extended 
the same flexibility, to the extent feasible, as cellular and PCS 
licensees in terms of the location, design, construction, and 
modification of their facilities throughout their geographic areas. The 
Commission tentatively concludes that geographic licensing would 
decrease the filing burden on 931 and 929 MHz licensees and provide 
additional operational flexibility. Such licensing also would expedite 
the processing of applications by reducing the number of licenses to be 
issued and simplifying the determinations of which license applications 
are mutually exclusive. The Commission seeks comment on this tentative 
conclusion.
    12. Nationwide Channels. The Commission proposes to exclude from 
geographic licensing the following channels that have been assigned to 
single licensees on a nationwide basis under the existing rules: the 
three CCP channels (931.8875, 931.9125, and 931.9375 MHz) dedicated for 
nationwide use and all PCP channels for which licensees have met the 
construction requirements for nationwide exclusivity as of the adoption 
date of this Notice. The Commission will announce, by Public Notice, 
the specific PCP channels excluded for nationwide use at a later time. 
The Commission tentatively concludes that a licensee who has obtained 
nationwide exclusivity on a paging channel should be given a single 
nationwide license for use of the channel instead of continuing to 
operate under site-specific authorizations. The Commission tentatively 
concludes that if a licensee fails to comply with the construction and 
service requirements for nationwide exclusivity, the channel should be 
made available for geographic licensing, and such licensee would 
receive protection as an incumbent only 

[[Page 6201]]
for those areas where it has completed construction and commenced 
service. The Commission seeks comment on whether MTel's second channel 
(931.4375 MHz) used virtually on a nationwide basis, should be 
designated a nationwide channel, and whether it should be excluded from 
our geographic licensing proposal.
    13. Lower Band CCP Channels. The Commission also tentatively 
concludes that geographic licensing should be extended to CCP channels 
in the 35, 43, 152, and 454 MHz bands. The Commission asks commenters 
to address the relative costs and benefits of converting lower band 
channels to geographic licensing. The Commission also seeks comment on 
whether competitive bidding should be used to select among mutually 
exclusive paging and BETRS applications, and whether to allow 
geographic partitioning of licensing areas to make spectrum available 
to BETRS operators in sparsely populated regions.
    14. Shared PCP Channels. The Commission seeks comment on whether 
and when to use geographic licensing for lower band PCP channels (i.e., 
those PCP frequencies in the 152/158 MHz, 462 MHz, 465 MHz bands), 
which currently are licensed on a shared basis. The Commission also 
seeks comment on whether to (1) convert lower band shared PCP channels 
to exclusive use and implement geographic licensing; (2) issue only a 
certain number of licenses per shared channel and use competitive 
bidding to choose among mutually exclusive applications once the limit 
is reached; or (3) retain the status quo. The Commission tentatively 
concludes that if the shared paging channels were to convert to 
exclusive licensing, a geographic licensing approach would be 
appropriate.
    15. The Commission requests comment on the costs and benefits of 
continuing to license some channels on a shared basis versus licensing 
all channels on an exclusive basis, how such licensing plans would 
affect the rights of incumbent licensees, and whether a geographic plan 
is the most practical way in which to begin licensing these channels on 
an exclusive basis.
b. Defining the Service Areas
    16. The Commission seeks comment on the use of Metropolitan 
Statistical Areas (MTAs) and on other options for defining service 
areas for all of the various paging services. The Commission 
tentatively concludes that MTAs form the most appropriate geographic 
area boundaries for paging systems, because they are economically-
defined regions that appear to best mirror the size and development of 
existing paging systems. MTAs also offer advantages from an 
administrative perspective, because they are more efficient for the 
Commission to license than smaller areas that require issuance of more 
licenses. Commenters should provide empirical data on the area covered 
by existing paging systems and how such coverage areas compare to MTAs.
    17. The Commission tentatively concludes that, if MTA service areas 
are adopted, three licensing regions in addition to the 47 Rand McNally 
MTAs would be used to cover United States territories: Guam and the 
Northern Mariana Islands would be licensed as a single area, Puerto 
Rico and the U.S. Virgin Islands as a single area, and American Samoa 
as a single area. Alaska would be licensed as a single area separate 
from the Seattle MTA.
    18. Rand McNally is the copyright owner of the MTA/BTA Listings, 
which list the counties contained in each BTA/MTA, as embodied in Rand 
McNally's Trading Area System BTA/MTA Diskette and geographically 
represented in the map contained in Rand McNally's Commercial Atlas & 
Marketing Guide. Rand McNally has licensed the use of its copyrighted 
MTA/BTA Listings and maps for certain services such as PCS, 800 MHz and 
900 MHz SMR, and Local Multipoint Distribution Services. These blanket 
licensing agreements authorize the conditional use of Rand McNally's 
copyrighted material in connection with these particular services, 
require interested persons using the material to include a legend on 
reproductions (as specified in the license agreement) indicating Rand 
McNally's ownership, and provide for a payment of a license fee to Rand 
McNally. Currently, paging services are not covered by a blanket 
copyright license agreement. A paging authorization grantee who does 
not obtain a copyright license (either through a blanket license 
agreement or some other arrangement) from Rand McNally for use of the 
copyrighted material may not rely on grant of a Commission 
authorization as a defense to any claim of copyright infringement 
brought by Rand McNally against such grantee.
c. Treatment of Incumbents
    19. The Commission tentatively concludes that there is no feasible 
means to relocate incumbents to alternative channels. Therefore, 
incumbent licensees would be allowed to continue to operate under their 
existing site-specific authorizations or a single system-wide license, 
and geographic licensees would be required to provide protection to all 
co-channel systems that are constructed and operating within their 
service areas. No incumbent licensee would be allowed to expand beyond 
its existing interfering contour and into the geographic licensee's 
territory without the consent of the geographic licensee unless the 
incumbent in question is itself the geographic licensee for the 
relevant channel.
    20. The Commission proposes that incumbent licensees should be 
permitted to modify or add transmitters in their existing service area 
without prior notification to the Commission, as long as the 
interfering contour of the pre-existing system is not expanded. 
Incumbents would be free to negotiate voluntary arrangements with 
geographic licensees to allow expansion within a geographic area. The 
Commission seeks comment on whether this proposal strikes a proper 
balance between the competing interests of geographic and incumbent 
licensees and whether there are any circumstances under which 
incumbents should be permitted to expand into unserved areas without 
the geographic licensee's consent.
d. Coverage Requirements
    21. The Commission seeks comment on whether geographic paging 
licensees should be subject to minimum coverage requirements as a 
condition of licensing. The Commission tentatively concludes that 
geographic licensees should be required to provide coverage to one-
third of the population within their geographic areas within three 
years of initial license grant and to two-thirds of the population by 
the end of five years, or in the alternative, provide substantial 
service to the geographic license area at five years. A geographic 
licensee must, three years from license grant, either submit a showing 
that the one-third population coverage standard has been met, or 
provide written notification that it has elected to show substantial 
service to the geographic license area five years from license grant. 
Each geographic licensee must, three years from license grant, indicate 
how it expects to demonstrate substantial service at five years. The 
Commission tentatively concludes that population-based coverage 
requirements are more appropriate than geographic-based coverage 
requirements, because strictly geographic-based requirements may lead 
to coverage in sparsely populated areas where service is not needed or 
is economically unjustified. The Commission requests comment on the 
costs and benefits of imposing coverage requirements on geographic 
licensees, 

[[Page 6202]]
the specific coverage criteria proposed, and any alternative criteria.
    22. The Commission tentatively concludes that under this geographic 
licensing scheme, ``slow growth'' extensions for paging systems in the 
929-930 MHz spectrum are unnecessary and that such extensions could 
hinder geographic licensing because an incumbent licensee obtaining a 
construction extension could effectively occupy an entire market area. 
Therefore, the Commission proposes to dismiss all ``slow growth'' 
applications pending at the time an order pursuant to this Notice is 
adopted, without prejudice to refile under the new geographic licensing 
scheme. The Commission seeks comment on its tentative conclusion and 
proposal to dismiss pending ``slow-growth'' extensions.
    23. The Commission also tentatively concludes that, regardless of 
the extent to which their respective service areas are occupied by co-
channel incumbents, geographic licensees should be responsible for 
meeting their coverage requirements. This rule will deter applicants 
who have a limited ability to provide coverage in a geographic area 
from seeking the geographic license for anti-competitive reasons, e.g., 
to block expansion by an incumbent who already provides substantial 
coverage. The ``substantial service'' option will provide an incentive 
for incumbents already providing substantial coverage to seek 
geographic licenses in the areas they serve. The Commission proposes to 
require the geographic licensee to meet its coverage requirement 
directly (e.g., by utilizing vacant spectrum or acquiring such spectrum 
through buy-outs of incumbent licensees). The Commission asks 
commenters to address the advantages and disadvantages of these 
proposals and any alternatives.
    24. The Commission tentatively concludes that a geographic 
licensee's failure to meet the coverage requirements should result in 
automatic cancellation of the geographic license. The Commission also 
tentatively concludes that if a licensee loses its geographic license 
for failure to comply with coverage requirements authorizations that 
the licensee held prior to the auction for sites constructed and 
operating would be reinstated. The Commission requests comment on this 
proposal and any alternatives.
e. Co-Channel Interference Protection
    25. The Commission seeks comment on the appropriate interference 
protection criteria for incumbent co-channel facilities and to co-
channel licensees in neighboring service areas.
a. Protection of Incumbent Systems
    26. Paging systems are currently protected from co-channel 
interference by a variety of rules that govern transmitter height and 
power, distance between stations, the licensee's protected service 
area, and/or the field strength of the licensee's service and 
interfering signals. The Commission proposes to retain these criteria 
to define the interference protection rights of incumbent licensees 
under any geographic licensing scheme that may be adopted. There are 
some variations in the specific methodologies used to measure 
interference in the different paging services. Therefore, the 
Commission seeks comment on whether to adopt a standard methodology for 
measuring interference in all paging bands or to retain existing 
criteria in our rules.
    27. Lower Band CCP Channels. In the Part 22 Rewrite Order, the 
Commission adopted a series of mathematical formulas to determine 
service and interfering contours in each CCP frequency range, other 
than 931 MHz. If lower band CCP channels are converted to geographic 
licensing, the Commission proposes to retain the mathematical formulas 
and contour overlap provisions adopted in the Part 22 Rewrite Order to 
define the interference protection rights of incumbents. The Commission 
seeks comment on this proposal, and asks commentators to provide 
empirical evidence showing whether the current Part 22 formulas would 
provide satisfactory co-channel protection to incumbents.
    28. 931 MHz Channels. The Commission seeks comment on whether 
incumbents licensed in the 931 MHz band should continue to be protected 
based on our existing tables of standard radii if geographic licensing 
is adopted for 931 MHz channels. The Commission tentatively concludes 
that the eight-radial contour method and mathematical formulas used for 
the lower band CCP channels may be preferable to a fixed table of 
standard radii, because it will more reasonably predict potential 
interference to incumbents and provide geographic licensees with 
greater flexibility in placing their facilities. The Commission invites 
comment on this tentative conclusion.
    29. The Commission seeks comment on the appropriate mathematical 
formula for determining service and interference contours if the eight-
radial contour method for 931 MHz channels is adopted. The Commission 
proposes to use the following mathematical formula, which is similar to 
the formulas used in the lower band CCP services:

d = k  x  hx  x  py

The proposed formula is derived from the form of equations commonly 
used for propagation path loss. In this formula, ``d'' is the radial 
distance to the contour, ``h'' is the antenna center of radiation 
height above average terrain along the cardinal radial, ``p'' is the 
radial effective radiated power. The remaining factor ``k'' and 
exponents ``x'' and ``y'' are numerical figures that can be determined 
experimentally by matching the resulting curve to that of an 
established propagation model for a given signal field strength. The 
Commission proposes to assume a median field strength of 47 
dBV/m as the basis for the service contour to determine the 
appropriate formula for the 931 MHz service and interference contour 
calculations. Statistically, this equates to a reasonably strong field 
strength (in the 32 to 40 dBV/m range) at more than 90% of 
locations in a suburban environment. The Commission proposes to assume 
a median field strength of 21 dBV/m as the basis for the 
interfering contour. The Commission proposes to derive corresponding 
distances from these field strengths by using the Okumura 900 MHz 
propagation curves as the propagation model. The specific formulas 
would be:

Service: dkm = 0.108  x  hm0.61  x  pw0.32
Interfering: dkm = 3.033  x  hm0.38  x  pw0.16

In these formulas, ``km'' represents kilometers, ``m'' represents 
meters, and ``w'' represents watts. The Commission seeks comment on 
these formulas and their suitability for calculating service and 
interfering contours for 931 MHz paging systems. Applying the formula, 
a paging station operating at 1000 watts effective radiated power with 
an antenna height of 305 meters (1000 feet) above average terrain would 
have a service contour of approximately 32.2 kilometers (20 miles), 
which is consistent with the service radius afforded under the current 
rules. The Commission seeks comment on whether any variations in the 
formula are needed, and on the field strength proposed for service and 
interfering contours.
    30. 929 MHz Exclusive Channels. Interference protection for 
exclusive 929 MHz licensees currently is provided by rules requiring 
standard minimum geographic separations between stations, which are 
based on station height and power. These separations are based on the 
same height-power table that is used for 931 MHz paging. The PCP rules, 
unlike the CCP rules, do not 

[[Page 6203]]
formally define a protected service contour or interference contour for 
each station. The Commission proposes to adopt service and interference 
contour criteria for 929 MHz paging using the same methodology proposed 
for 931 MHz paging.
    31. Non-Exclusive PCP Channels. Rules for paging systems on non-
exclusive PCP channels prescribe operating requirements such as 
monitoring prior to transmitting to determine if the channel already is 
in use, minimizing the length of messages, and yielding to others 
transmitting communications related to the immediate safety of life. 
The Commission requests comment on whether incumbent licensees should 
receive interference protection.
b. Maximum Power and Height-Power Limits
    32. Maximum Power Limits. In the Part 22 Rewrite proceeding, the 
Commission concluded that a maximum power limit of 3500 Watts ERP is 
appropriate for paging facilities in the 931 MHz band, because it 
allows for the use of high power facilities where needed, yet provides 
sufficient protection from intermodulation interference and receiver 
desensitization. The Commission tentatively concludes that the maximum 
ERP limit for these facilities should be raised to a maximum of 3500 
Watts in order to bring the rules governing non-nationwide 929 MHz 
facilities into conformity with those already in effect for 931 MHz, 
nationwide 929 MHz, and Narrowband PCS facilities. This would provide 
929 MHz licensees with the benefits of higher power operation without 
unduly increasing the risk of interference. The Commission proposes to 
retain the current maximum ERP limits for the various lower band paging 
channels and seeks comment on this proposal and any alternatives.
    33. Maximum Height-Power Limits. Height-power limits serve to limit 
the service and interfering range of a facility to a constant distance. 
The Commission proposes to eliminate the height-power limit for 929 MHz 
licensees. With respect to the lower band channels, most of which 
continue to be occupied by smaller systems, the Commission proposes to 
maintain the current height-power limits, to continue to limit the 
range of each facility and promote spectrum efficiency.
c. Adjacent Geographic Licensees
    34. The Commission tentatively concludes that geographic licensees 
should provide interference protection either by (1) reducing the 
signal level at their service area boundary (e.g., by positioning 
directional antennas in such a way that the contour does not encroach 
on a geographic licensee's adjacent territory), or (2) negotiating some 
other mutually acceptable agreement with all potentially affected 
geographic licensees in adjacent areas. The Commission seeks comment on 
this proposal and any alternatives.
f. Licensing in Mexican and Canadian Border Areas
    35. In the Mexican and Canadian border areas, paging channel 
availability may be restricted by treaty and limitations on ERP and 
antenna height may be placed on additional channels. The Commission 
tentatively concludes that all geographic areas should be licensed on a 
uniform basis without distinguishing border from non-border areas, even 
if some spectrum is unusable, if paging services are converted to 
geographic licensing. The Commission proposes that geographic licensees 
be entitled to use any available border-area channels, subject to the 
relevant rules regarding international assignment and coordination of 
such channels.
g. Eligibility
    36. The Commission tentatively concludes that both incumbents and 
new entrants should be allowed to apply for geographic licenses without 
restrictions on eligibility. In cases where there are multiple co-
channel incumbents in a geographic area, the Commission tentatively 
concludes that incumbents can form consortia or joint ventures and 
apply collectively for the geographic license, or enter into 
partitioning agreements. The Commission seeks comment on these 
proposals. In particular, commenters are requested to discuss the 
relationship between the coverage already provided by an incumbent in a 
geographic area and the perceived value of the geographic license to 
that incumbent and other potential applicants.
h. Channel Aggregation Limit
    37. The Commission proposes to assign geographic licenses on a 
channel-by-channel basis. The Commission seeks comment on whether an 
aggregation limit is appropriate for paging frequencies, and if so, 
what that limit should be. The Commission seeks comment on whether it 
would be more appropriate to cap the combined aggregation of paging and 
narrowband PCS spectrum rather than imposing a limit on paging only.

B. Competitive Bidding Issues

a. Auctionability of Paging Services
    38. The Commission proposes to adopt comparable competitive bidding 
procedures for both exclusive PCP channels and CCP channels, and seeks 
comment on this proposal. The Commission seeks comment on what 
competitive bidding methods should be used to award licenses in 
conjunction with the proposal to adopt geographic licensing for CCP 
services. The Commission also seeks comment on whether to adopt 
equivalent competitive bidding procedures for competing applications 
for exclusive PCP channels.
b. Competitive Bidding Design
a. Bidding Methodology
    39. In the Competitive Bidding Second Report and Order, 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding, Second Report and Order, PP Docket No. 93-253, 59 Fed. Reg. 
(May 4, 1994) (Competitive Bidding Second Report and Order), the 
Commission established criteria to select which auction design method 
to use for particular auctionable services. The two most important 
design elements are the number of auction rounds (single or multiple), 
and the order in which licenses are auctioned (sequentially or 
simultaneously). These two elements can be combined to create four 
basic auction designs: sequential single round, simultaneous single 
round, sequential multiple round, and simultaneous multiple round. The 
Commission seeks comment on which of the above auction methodologies 
should be used for the auction of paging licenses.
    40. In the Competitive Bidding Second Report and Order, the 
Commission stated that simultaneous multiple round auctions would be 
the preferred method where licenses have strong value 
interdependencies. The Commission seeks comment on whether simultaneous 
multiple round auctions would be too burdensome to implement from an 
administrative perspective, given the large number of paging licenses, 
and whether simultaneous multiple round auctions or another competitive 
bidding methodology such as oral outcry is most appropriate for the 
paging services.
b. License Grouping
    41. Depending upon the auction methodology chosen, there are 
several alternatives for grouping of paging licenses. The Commission 
seeks comment on how paging licenses should be grouped for competitive 

[[Page 6204]]
bidding purposes and on possible license groupings.
c. Bidding Procedures
    42. In the Competitive Bidding Second Report and Order, the 
Commission established general procedures for simultaneous multiple 
round auctions, including bid increments, duration of bidding rounds, 
stopping rules, and activity rules. The Commission seeks comment on the 
bidding procedures that should be used for licensing of paging 
services.
    43. Bid Increments. If a multiple round auction is used, the 
Commission proposes to establish minimum bid increments for bidding in 
each round of the auction, based on the same considerations in prior 
orders. The Commission proposes to adopt a minimum bid increment of 
five percent of the high bid in the previous round or $0.01 per 
activity unit, whichever is greater. The Commission proposes to retain 
the discretion to vary the minimum bid increments for individual 
licenses or groups of licenses at any time before or during the course 
of the auction, based on the number of bidders, bidding activity, and 
the aggregate high bid amounts. The Commission also proposes to retain 
the discretion to keep an auction open if there is a round in which no 
bids or proactive waivers are submitted.
    44. Stopping Rules for Multiple Round Auctions. In a multiple round 
auction, a stopping rule must be established for determining when the 
auction is over. Markets may close individually, simultaneously, or a 
hybrid approach may be used. The Commission seeks comment on whether a 
stopping rule is needed and if so, which one should be used. A market-
by-market stopping rule would be the least complex approach from an 
administrative perspective, if a multiple round auction is used. Under 
a market-by-market approach, bidding closes on each license after one 
round passes in which no new acceptable bids are submitted for that 
particular license. With a simultaneous stopping rule, bidding remains 
open on all licenses until there is no bidding on any license. Under a 
hybrid approach, a simultaneous stopping rule, coupled with an activity 
rule designed to bring the markets to close within a reasonable period 
of time, could be used to close auctions with high value licenses. For 
lower value licenses, the simpler market-by-market closing could be 
employed.
    45. Activity Rules. The Commission tentatively concludes that it is 
unnecessary to implement an activity rule if a market-by-market 
stopping rule is employed. An activity rule is less important when 
markets close one by one, because failure to participate in any given 
round may result in a lost opportunity to bid at all, if that round 
turns out to be the last. The Commission seeks comment on this 
tentative conclusion.
    46. The Commission tentatively concludes that if an activity rule 
is used, the Milgrom-Wilson approach should be used. The Commission 
seeks comment on this tentative conclusion. Under the Milgrom-Wilson 
approach, the minimum activity level, measured as a fraction of the 
self-declared maximum eligibility, will increase during the course of 
the auction. During the first stage of the auction, a bidder is 
required to be active on licenses encompassing at least 60 percent of 
the activity units for which it is eligible. The penalty for falling 
below that activity level is a reduction in eligibility. During the 
first stage, if activity is below the required minimum level, 
eligibility in the next round will be calculated by multiplying the 
current round activity by five-thirds (5/3). In the second stage, a 
bidder who wishes to maintain its current eligibility is required to be 
active on 80 percent of the activity units for which it is eligible in 
the current round. During the second stage, if activity is below the 
required minimum level, eligibility in the next round will be 
calculated by multiplying the current round activity by five-fourths 
(5/4). In the third stage, a bidder who wishes to maintain its current 
eligibility is required to be active on licenses encompassing 95 
percent of the activity units for which it is eligible in the current 
round. In the final stage, if activity in the current round is below 
the required activity level, eligibility in the next round will be 
calculated by multiplying the current round activity by twenty-
nineteenths (20/19).
    47. Duration of Bidding Rounds. The Commission proposes to retain 
the discretion to vary the duration of bidding rounds or the interval 
at which bids are accepted (e.g., run two or more rounds per day rather 
than one), in order to move the auction toward closure more quickly. If 
this mechanism is used, the Commission would most likely shorten the 
duration and/or intervals between bidding rounds where there are 
relatively few licenses to be auctioned, where the value of the 
licenses is relatively low, or in early rounds to speed the auction 
process. Where license values are expected to be high or where large 
numbers of licenses are being auctioned, the Commission proposes to 
increase the duration and/or intervals between bidding rounds. The 
Commission proposes to announce by Public Notice the duration and 
intervals between bidding rounds. The Commission also proposes to 
announce by Public Notice, before each auction, the stopping rule to be 
used. The Commission seeks comment on these proposals.
    48. Anti-Collusion Rules. In the Competitive Bidding Second Report 
and Order, the Commission adopted a special rule designed to prevent 
collusive conduct in the context of competitive bidding. The Commission 
tentatively concludes that the anti-collusion rules should be applied 
to the auctions for paging services. The Commission proposes to apply 
Section 1.2105(c) of the rules, which prohibits bidders that have 
applied for any of the same geographic license areas from communicating 
with one another regarding the substance of their bids or bidding 
strategies after short-form applications (FCC Form 175) have been 
filed. Additionally, applicants may not discuss the substance of their 
bids or bidding strategies with bidders, other than those identified on 
the short-form application, that are bidding in the same geographic 
license areas. The post-filing deadline prohibition on discussions 
extends to providing indirect information that affects bids or bidding 
strategy. Communications among bidders concerning matters unrelated to 
the license auction would be permitted. Even when an applicant has 
withdrawn its application after the short-form filing deadline, the 
applicant may not enter into a bidding agreement with another applicant 
bidding on the geographic license areas from which the first applicant 
withdrew. In addition, once the short-form application has been filed, 
a party with an attributable interest in one bidder may not acquire a 
controlling interest in another bidder bidding for licenses in any of 
the same geographic license areas. Additionally, the Commission 
proposes to amend Section 22.129 of the rules to prohibit settlements 
between applicants after the short-form deadline has passed. The 
Commission also proposes to require winning bidders to submit with 
their long-form application a detailed explanation of the terms, 
conditions, and parties involved in any auction-related consortium, 
joint venture, partnership, or other agreement entered into prior to 
the close of bidding.
    49. There are three exceptions to the rule prohibiting discussions 
with other applicants after the filing of the short-form application. 
First, an applicant may modify its short-form application to reflect 
formation of bidding agreements or changes in ownership at any time 
before or during the auction, as long as 

[[Page 6205]]
the changes do not result in change of control of the applicant, and 
the parties forming the bidding agreement have not applied for licenses 
in any of the same geographic license areas. Applicants may also make 
agreements to bid jointly for licenses, so long as the applicants have 
not applied for licenses in any of the same geographic license areas. 
Finally, a holder of a non-controlling attributable interest in an 
applicant may acquire an ownership interest in, or enter into a bidding 
agreement with other applicants in the same geographic license area, if 
the owner of the attributable interest certifies that it has not 
communicated and will not communicate bids or bidding strategies of 
more than one of the applicants in which it holds an attributable 
interest or with which it has a bidding agreement, and the arrangements 
do not result in any change of control of an applicant.
    50. Bidders who are found to have violated the Commission's anti-
collusion rules or who are in violation of U.S. antitrust laws in 
connection with participation in the auction process may, among other 
sanctions, be subject to the loss of their down payment or their full 
bid amount, cancellation of their licenses, and may be prohibited from 
participating in future auctions. The Commission seeks comment on these 
proposals.
c. Procedural and Payment Issues
a. Pre-Auction Application Procedures
    51. As geographic licensees gain use of a large geographic area and 
the freedom to locate base stations anywhere within that larger 
geographic region, they differ from the existing paging service 
licenses that are essentially confined to a smaller region. 
Accordingly, the Commission proposes to treat all geographic applicants 
as initial applicants for Public Notice, application processing, and 
auction purposes, regardless of whether they are already incumbent 
operators.
    52. In the Competitive Bidding Second Report and Order, the 
Commission determined that only a short-form application prior to 
competitive bidding should be required, and that only winning bidders 
should be required to submit a long-form license application after the 
auction. The Commission proposes to extend the application of these 
rules to the competitive bidding process for paging services.
    53. Under this proposal, before a paging services auction, the 
Wireless Telecommunications Bureau would release an initial Public 
Notice announcing the auction. The initial Public Notice would specify 
the licenses to be auctioned and the time and place of the auction in 
the event that mutually exclusive applications are filed. The Public 
Notice would specify the method of competitive bidding to be used, 
applicable bid submission procedures, stopping rules, activity rules, 
and the deadline by which short-form applications must be filed and the 
amounts and deadlines for submitting the upfront payment. Applications 
submitted before the release of the Public Notice would be returned as 
premature. Likewise, applications submitted after the deadline 
specified by Public Notice would be dismissed, with prejudice, as 
untimely.
    54. All bidders would be required to submit short-form applications 
on FCC Form 175 (and FCC Form 175-S, if applicable), by the date 
specified in the initial Public Notice. Applicants would be encouraged 
to file FCC Form 175 electronically. Detailed instructions regarding 
electronic filing would be contained in a bidder information package. 
Those applicants filing manually would be required to submit one paper 
original and one diskette original of their application, as well as two 
diskette copies. The short-form applications would require applicants 
to provide the information required by Section 1.2105(a)(2) of the 
Commission's rules. Specifically, each applicant would be required to 
specify on its FCC Form 175 application certain identifying 
information, including its status as a designated entity (if 
applicable), its classification (i.e., individual, corporation, 
partnership, trust, or other), the geographic areas and channel(s) or 
channel blocks(s) for which it is applying, and assuming that the 
licenses will be auctioned, the names of persons authorized to place or 
withdraw a bid on its behalf. The Commission seeks comment on this 
proposal and specifically on whether further ownership disclosure 
should be required.
    55. The Commission proposes that if only one application that is 
acceptable for filing for a particular license is received, and thus 
there is no mutual exclusivity, a Public Notice would be issued 
cancelling the auction for that license and establishing a date for the 
filing of a long-form application (FCC Form 600), the acceptance of 
which would trigger the procedures permitting petitions to deny. If no 
petitions to deny are filed, the application would be grantable after 
30 days. The Commission would require that bidders' applications 
contain all information and documentation sufficient to demonstrate 
that the application is not in violation of Commission rules, and may 
dismiss applications not meeting those requirements prior to the 
competitive bidding.
b. Amendments and Modifications
    56. To encourage maximum bidder participation, the Commission 
proposes to provide applicants with an opportunity to correct minor 
defects in their short-form applications prior to the auction. On the 
date set for submission of corrected applications, applicants that on 
their own discover minor errors in their applications (e.g., 
typographical errors, incorrect license designations, etc.) would be 
permitted to file corrected applications. Applicants would not be 
permitted to make any major modifications to their applications until 
after the auction. Applicants could modify their short-form 
applications to reflect formation of consortia or changes in ownership 
at any time before or during an auction, provided such changes would 
not result in a change in control of the applicant, and provided that 
the parties forming consortia or entering into ownership agreements 
have not applied for licenses in any of the same geographic license 
areas. In addition, applications that are not signed would be dismissed 
as unacceptable.
    57. Upon reviewing the short-form applications, the Commission 
would release a Public Notice listing all accepted, rejected, and 
incomplete applications. Applicants would be given an opportunity to 
cure incomplete applications. An applicant who fails to submit a 
sufficient upfront payment to qualify it to bid on any license being 
auctioned would not be identified on this Public Notice as a qualified 
bidder. Each applicant listed on the Public Notice would be issued a 
bidder identification number and further information and instructions 
regarding auction procedures.
c. Upfront Payments
    58. The Commission proposes to require paging auction participants 
to tender a substantial upfront payment as a condition of bidding, in 
order to ensure that only serious, qualified bidders participate in 
auctions and to ensure payment of the penalty in the event of bid 
withdrawal or default. For services that are licensed by simultaneous 
multiple round auction, the Commission proposes a standard upfront 
payment formula of $0.02 per activity unit for the largest combination 
of MHz-pops a bidder anticipates bidding on in any single round of 
bidding. The Commission proposes a minimum upfront payment of $0.02 per 


[[Page 6206]]
activity unit or $2,500, whichever is greater. The Commission 
tentatively concludes that a minimum $2,500 upfront payment should be 
required regardless of the bidding methodology.
    59. Upfront payments would be due approximately fourteen days 
before a scheduled auction. This period should be sufficient to allow 
the Commission time to process upfront payment data and release a 
Public Notice listing all qualified bidders. The specific procedures to 
be followed in the tendering and processing of upfront payments are set 
forth in Section 1.2106 of the Commission's rules.
d. Down Payment and Full Payment
    60. The Commission proposes to apply the 20 percent down payment 
requirement set forth in the Competitive Bidding Second Report and 
Order to winning bidders for paging licenses. Such a down payment would 
be due within five business days following the Public Notice announcing 
the winning bidders. The Commission proposes to require paging auction 
winners to pay the full balance of their winning bids within five 
business days following Public Notice that the Commission is about to 
award the license.
e. Bid Withdrawal, Default, and Disqualification
    61. The Commission proposes to adopt bid withdrawal, default, and 
disqualification rules for the paging services based on the procedures 
in the general competitive bidding rules. Under these procedures, any 
bidder who withdraws a high bid during an auction before the Commission 
declares bidding closed, or defaults by failing to remit the required 
down payment within the prescribed time, would be required to reimburse 
the Commission. The bidder would be required to pay the difference 
between its high bid and the amount of the winning bid the next time 
the license is offered by the Commission, if the subsequent winning bid 
is lower. A defaulting auction winner would be assessed an additional 
payment of three percent of the subsequent winning bid or three percent 
of the amount of the defaulting bid, whichever is less. The additional 
payment would be satisfied first from the upfront payment, and 
additional funds would be required if necessary. In the event that an 
auction winner defaults or is otherwise disqualified, the Commission 
proposes to re-auction the license either to existing or new 
applicants. The Commission would retain discretion, however, to offer 
the license to the next highest bidder at its final bid level if the 
default occurs within five business days of the close of bidding.
f. Long-Form Applications
    62. If the winning bidder makes the down payment in a timely 
manner, the Commission proposes the following procedures: A long-form 
application would be filed by a date specified by Public Notice, 
generally within ten business days after the close of bidding. After 
the winning bidder's down payment and long-form application is 
received, the Commission will review the application to determine if it 
is acceptable for filing. In addition to the information required in 
the FCC Form 600, designated entities will be required to submit 
evidence to support their claim to any special provision available for 
designated entities ultimately adopted by an Order as a result of this 
Notice. This information may be included in an exhibit to FCC Form 600. 
This information will enable the Commission, and other interested 
parties, to ensure the validity of the applicant's certification of 
eligibility for bidding credits, installment payment options, and any 
other special provisions. Upon acceptance for filing of the long-form 
application, the Commission will issue a Public Notice announcing this 
fact, triggering the filing window for petitions to deny. If the 
Commission denies all petitions to deny, and is otherwise satisfied 
that the applicant is qualified, the license(s) will be granted to the 
auction winner.
g. Petitions to Deny and Limitations on Settlements
    63. The petition to deny procedures in Sections 22.130 and 90.163 
of the Commission's rules will apply to the processing of applications 
for the paging services. Thus, a party filing a petition to deny 
against a paging application will be required to demonstrate standing 
and meet all other applicable filing requirements. The Commission will 
limit the consideration that an applicant or petitioner is permitted to 
receive for agreeing to withdraw an application or a petition to deny 
to the legitimate and prudent expenses of the withdrawing applicant or 
petitioner.
h. Transfer Disclosure Requirements
    64. The Commission tentatively concludes that the transfer 
disclosure requirements of Section 1.2111(a) of the Commission's rules 
should apply to all paging services licenses obtained through the 
competitive bidding process. Generally, licensees transferring their 
licenses within three years after the initial license grant would be 
required to file, together with their transfer applications, the 
associated contracts for sale, option agreements, management 
agreements, and all other documents disclosing the total consideration 
received in return for the transfer of its license.
i. Performance Requirements
    65. Section 309(j)(4)(B) of the Act requires the Commission to 
establish rules for auctionable services that ``include performance 
requirements, such as appropriate deadlines and penalties for 
performance failures, to ensure prompt delivery of service to rural 
areas, to prevent stockpiling or warehousing of spectrum by licensees 
or permittee, and to promote investment in and rapid deployment of new 
technologies and services.'' The Commission decided, in the Competitive 
Bidding Second Report and Order, that in most auctionable services, 
existing construction and coverage requirements provided in the service 
rules would be sufficient to meet this standard, and that it was 
unnecessary to impose additional performance requirements. In this 
Notice the Commission proposed service rules for paging that would 
require geographic licensees either to meet minimum population coverage 
requirements or demonstrate substantial service in their licensing 
areas. The Commission tentatively concludes that these proposed 
coverage requirements are sufficient to meet the requirements of 
Section 309(j)(4)(B) of the Act. The Commission proposes that failure 
to meet these requirements would result in automatic license 
cancellation, and does not propose to adopt additional performance 
requirements for paging services.
d. Treatment of Designated Entities
a. Overview and Objectives
    66. Section 309(j)(3)(B) of the Act provides that in establishing 
auction eligibility criteria and bidding methodologies, the Commission 
shall ``promot[e] economic opportunity and competition and ensur[e] 
that new and innovative technologies are readily accessible to the 
American people by avoiding excessive concentration of licenses and by 
disseminating licenses among a wide variety of applicants, including 
small businesses, rural telephone companies, and businesses owned by 
members of minority groups and women.'' The Commission seeks comment on 
various proposals and tentative decisions regarding designated entity 
provisions that should be incorporated into the competitive bidding 
procedures for paging services. 

[[Page 6207]]

b. Eligibility for Designated Entity Provisions
    67. Small Businesses. The Commission tentatively concludes that it 
is appropriate to establish special provisions in the paging rules for 
competitive bidding by small businesses. The Commission believes that 
small businesses applying for paging licenses should be entitled to 
some form of bidding credit and should be allowed to pay their bids in 
installments, and seeks comment on this tentative conclusion.
    68. Minority and Women-Owned Businesses. Prior to the Supreme 
Court's decision in Adarand Contractors, Inc. v. Pena, 115 S.Ct. 2097 
(1995) (Adarand), the Commission concluded that in licensing of 
broadband and narrowband PCS, minority and women-owned businesses might 
have difficulty accessing sufficient capital to be viable auction 
participants or service providers in the absence of special provisions 
in our auction rules. In Adarand, however, the Supreme Court ruled that 
racial classifications imposed by the federal government are subject to 
strict scrutiny. At this time, the Commission does not have a 
sufficient factual record with respect to spectrum-based services 
generally or paging services specifically to sustain such measures 
under strict scrutiny.
    69. The Commission proposes to limit special provisions in the 
paging auction rules to small businesses. The Commission seeks comment 
on this proposal. The Commission seeks comment on the possibility that 
in addition to small business provisions, separate provisions for women 
and minority-owned entities should be adopted for paging services. To 
comply with the Supreme Court's ruling in Adarand, any race-based 
classification must be a narrowly tailored measure that furthers a 
compelling governmental interest. The Commission seeks comment on 
whether the capital requirements of paging pose a barrier to entry by 
minorities and women, and whether assisting women and minorities to 
overcome such a barrier, if it exists, would constitute a compelling 
governmental interest. The Commission seeks comment on whether separate 
provisions for women and minorities are necessary to further such an 
interest and whether such provisions can be narrowly tailored to 
satisfy the strict scrutiny standard.
c. Set-Aside Spectrum
    70. The Commission tentatively concluded that it is not necessary 
to adopt an entrepreneurs' block for paging. The Commission tentatively 
concludes that the capital requirements of the paging service are not 
so substantial that certain blocks of spectrum should be insulated from 
very large bidders in order to provide meaningful opportunities for 
designated entities.
d. Bidding Credits
    71. Bidding credits allow eligible designated entities to receive a 
payment discount (or credit) on their winning bid in an auction. In the 
Competitive Bidding Second Report and Order, the Commission determined 
that competitive bidding rules applicable to individual services would 
specify the entities eligible for bidding credits and the bidding 
credit amounts for each particular service. As a result, the Commission 
has adopted a variety of bidding credit provisions for small businesses 
and other designated entities in auctionable services. The Commission 
seeks comment on the appropriate level of bidding credit for paging in 
comparison to other auctionable services.
    72. The Commission also seeks comment on the possibility of 
offering tiered bidding credits for different sizes of small 
businesses. The Commission proposes to establish two levels of bidding 
credits: a 10 percent bidding credit for all small businesses and a 15 
percent credit for small businesses that meet a more restrictive gross 
revenue threshold. These two levels of bidding credits would not be 
cumulative.
    73. The Commission also seeks comment on the appropriate definition 
of small business to be applied for purposes of the bidding credits 
proposed above. In conjunction with the proposal to provide two levels 
of bidding credits, the Commission proposes to establish two small 
business definitions: to obtain the 10 percent bidding credit, an 
applicant would be limited to $15 million in average gross revenues for 
the previous three years; to obtain a 15 percent credit, the applicant 
would be limited to $3 million in gross revenues for the previous three 
years. In both cases, the applicant would be required to aggregate the 
gross revenues of its affiliates and attributable investors for 
purposes of determining eligibility. If a control group is formed, the 
applicant must aggregate the gross revenues of its affiliates and 
attributable investors for purposes of determining eligibility. The 
Commission seeks comment on whether these thresholds, and the proposed 
bidding credit amounts associated with them, are sufficient for paging 
in light of the build-out costs associated with constructing a paging 
system throughout a market area, or whether alternative definitions 
would be more suitable. Comment is also sought on whether the proposed 
small business definitions are sufficiently restrictive to protect 
against businesses receiving bidding credits when in fact they do not 
need them.
    74. The Commission seeks comment on the degree to which the 
revenues of affiliates and major investors should be considered in 
determining small business eligibility. The Commission also seeks 
comment on which attribution threshold should be applied to paging 
applicants seeking to qualify as small businesses.
    75. The Commission proposes to make the small business bidding 
credit available on all paging channels that are licensed on a 
geographic basis, rather than limiting its availability to certain 
channels. The Commission seeks comment on this proposal, and on whether 
there is a reasonable basis for providing credits on some channels and 
not others.
e. Installment Payments
    76. The Commission proposes to adopt an installment payment option 
for small businesses that successfully bid for paging licenses. Under 
this proposal, licensees who qualify for installment payments would be 
entitled to pay their winning bid amount in quarterly installments over 
the ten-year license term, with interest charges to be fixed at the 
time of licensing at a rate equal to the rate for ten-year U.S. 
Treasury obligations plus 2.5 percent. In addition, the Commission 
proposes to tailor installment payments to the needs of different size 
entities. Small businesses with $3 million or less in gross revenues 
for the preceding three years would make interest-only payments for the 
first five years of the license term, while small businesses with $15 
million or less in gross revenues for the preceding three years would 
make interest-only payments during the first two years.
    77. The Commission tentatively concludes that small businesses 
eligible for installment payments may pay a reduced down payment. Five 
percent of the winning bid would be due five days after the auction 
closes, with the remaining five percent down payment due five days 
after Public Notice that the license is ready for grant. Under this 
proposal, the license would be granted within ten business days after 
receiving such down payment. The Commission seeks comment on this 
proposal, and the need, if any, for a reduced upfront payment for 
entities qualifying as a small business. 

[[Page 6208]]

f. Unjust Enrichment Provisions
    78. The Commission seeks comment on whether, in services such as 
paging, where there is no entrepreneurs' block to further restrict the 
class of entities eligible for substantial governmental benefits, the 
public interest would be served by adopting an approach similar to that 
used in the narrowband PCS context, in which bidding credits and 
installment payments immediately become due upon transfer to an 
ineligible entity. The Commission also seeks comment on whether an 
approach to unjust enrichment similar to that adopted for the 900 MHz 
SMR service, in which a holding period was imposed, would be optimal 
for the paging services.
g. Rural Telephone Company Partitioning
    79. The Act directs the Commission to ensure that rural telephone 
companies have the opportunity to participate in the provision of 
spectrum-based services. Rural areas, because of their more dispersed 
populations, tend to be less profitable to serve than more densely 
populated urban areas. Rural telephone companies, however, are well 
positioned because of their existing infrastructure to serve these 
areas. The Commission seeks comment on whether similar provisions 
should be incorporated into the paging rules. Commenters are 
specifically encouraged to provide information on the extent to which 
paging service is available in rural areas.
    80. The Commission believes that geographic partitioning should be 
made available to rural telephone companies on the same basis as in 
PCS. Such a partitioning scheme would provide rural telephone companies 
with the flexibility to serve areas in which they already provide 
service, while the remainder of the service area could be served by 
other providers. Under this proposal, rural telephone companies would 
be permitted to acquire partitioned paging licenses in one of two ways: 
(1) by forming bidding consortia consisting entirely of rural telephone 
companies to participate in auctions, and then partitioning the 
licenses won among consortia participants, or (2) by acquiring 
partitioned paging licenses from other licensees through private 
negotiation and agreement either before or after the auction. 
Partitioned areas would be required to conform to established 
geopolitical boundaries (such as county lines) and that each area 
include all portions of the wireline service area of the rural 
telephone company applicant that lies within each PCS area. In 
addition, if a rural telephone company receives a partitioned license 
post-auction from another PCS licensee, the partitioned area must be 
reasonably related to the rural telephone company's wireline service 
area. The Commission also proposes to use the definition for rural 
telephone companies implemented in the Competitive Bidding Fifth Report 
and Order for broadband PCS. Rural telephone companies would be defined 
as local exchange carriers having 100,000 or fewer access lines, 
including all affiliates. The Commission seeks comment on whether CCP 
and PCP paging applicants would benefit from expanding this concept to 
other designated entities or to all paging licensees in general, and 
whether partitioning should be extended to small businesses that may be 
able to provide niche services in a specific geographic area.

C. Interim Licensing

a. Freeze on New Applications
    81. Because of the fundamental changes proposed in the paging 
licensing rules, the Commission is suspending the acceptance of new 
applications for paging channels as of the adoption date of this 
Notice, except as provided below. This interim policy will not apply to 
assignment or transfer of control applications, which will continue to 
be processed under existing procedures.
    82. Incumbent licensees will be allowed to add sites to existing 
systems or modify existing sites, provided that such additions or 
modifications do not expand the interference contour of the incumbent's 
existing system. Under the current Part 22 rules, such additions or 
modifications are allowed by CCP licensees without prior Commission 
approval if the added site is within both existing service and 
interference contours. The Commission finds that the public interest is 
served by continuing to allow such modifications because they will give 
incumbents the flexibility to make internal site modifications without 
affecting spectrum availability to others. The Commission also believes 
that it serves the public interest to exempt incumbents from the 
requirement that the service area not be modified so long as the 
licensee's interference contour is maintained. Using the interference 
contour as the sole basis for modification provides the same protection 
to other licensees as the current rules but provides a simpler analysis 
of determining permissible modifications.
    83. The Commission also finds that it is in the public interest to 
allow 929 MHz licensees on exclusive channels the same flexibility as 
Part 22 licensees to make similar changes within their interference 
contours. Such modifications afford incumbents flexibility and will not 
prejudice other licensees, as no expansion is allowed beyond the 
incumbent's interference contour. The Commission believes that such 
modifications will not affect any auction for geographic area licenses, 
as the size of an incumbent's protected interference contour will not 
change.
    84. CCP and PCP licensees with nationwide exclusivity on a paging 
channel will be allowed to apply for additional sites without 
restrictions. The addition of such sites by the nationwide licensee 
will not affect the spectrum availability to others.
    85. The Commission seeks comment on an expedited basis on whether 
during the pendency of this proceeding, incumbents should be allowed to 
file new applications that would expand or modify their existing 
systems beyond their existing interference contours with such 
modifications receiving only secondary site authorization. Secondary 
operations may not cause interference to operations authorized on a 
primary basis, and they are not protected from interference from 
primary operations. Thus, under this alternative, applications to 
expand an incumbent's existing interference contour would receive no 
interference protection in the event that the Commission ultimately 
adopts the geographic licensing proposals in this Notice. Such an 
approach would be similar to the interim licensing policy in the 900 
MHz SMR service. The Commission seeks comment on this alternative and 
on whether any limitations on secondary licensing are needed.
b. Processing of Pending Applications
    86. With respect to paging applications that were filed prior to 
the adoption of this Notice and that remain pending, the Commission 
will process such applications provided that (1) they are not mutually 
exclusive with other applications as of the adoption date of this 
Notice, and (2) the relevant period for filing competing applications 
has expired as of the adoption date of this Notice. The Commission 
believes that this approach gives the appropriate consideration to 
those applicants who filed applications prior to our proposed changes 
and whose applications are not subject to competing applications. 
Processing of mutually exclusive pending applications and applications 
for which the relevant period for filing 

[[Page 6209]]
competing applications has not expired will be held in abeyance until 
the conclusion of this proceeding. Upon the adoption of an order in 
this proceeding, the Commission will process or dismiss all remaining 
pending applications in accordance with such new rules as are adopted.
a. Licensing of 931 MHz CCP Frequencies
    87. The Commission adopted new processing rules for 931 MHz CCP 
licenses in the Part 22 Rewrite Order based on channel-specific 
applications and use of competitive bidding to select licensees in the 
event of mutually exclusive applications. The Commission issued a 
temporary stay of the new Part 22 licensing rules for 931 MHz until it 
resolved certain pending applications. The Commission retains the 
existing stay of the new Part 22 licensing rules until competitive 
bidding procedures are established in this proceeding. The Commission 
will therefore continue processing 931 MHz CCP applications which were 
pending prior to the adoption date of this Notice, and for which the 60 
day window for filing competing applications has expired, under the 
application procedures in effect prior to January 1, 1995. 
Consequently, pending 931 MHz CCP applications that are not mutually 
exclusive with other applications will be processed, while mutually 
exclusive 931 MHz applications will be held pending the outcome of this 
proceeding. Upon the adoption of an order in this proceeding, the 
Commission will process or dismiss all remaining pending applications 
in accordance with such new rules as are adopted.
b. Licensing of Lower Band CCP Channels
    88. The Commission will process non-mutually exclusive lower band 
CCP applications under the existing rules, provided that the window for 
filing competing applications has closed as of the adoption date of 
this Notice. The Commission will continue to hold all mutually 
exclusive lower band CCP applications until competitive bidding rules 
are established.
c. Licensing of 929 MHz PCP Exclusive Channels
    89. The Commission will continue to process non-mutually exclusive 
PCP applications that were filed before the adoption date of this 
Notice, pending the outcome of this proceeding. Because these 
applications are subject to coordination, they are generally not 
subject to mutually exclusive applications. Nonetheless, to the extent 
that pending mutually exclusive applications may exist, processing of 
such applications will be held in abeyance until the conclusion of the 
rulemaking.
    90. Under the current PCP exclusivity rules, applicants are granted 
conditional exclusivity when they are licensed, and permanent 
exclusivity is awarded when the licensee demonstrates that it has 
constructed and is operating a qualified system. As a result, numerous 
requests for conditional and permanent exclusivity are pending before 
the Commission. Because of the proposed changes to the PCP rules in 
this proceeding, the Commission believes that consideration of such 
requests should be postponed while this proceeding is pending. In the 
event that the geographic area licensing proposals are adopted, all 
existing PCP facilities would receive full protection as incumbents, 
and such pending exclusivity requests would be moot. The Commission 
will therefore suspend action on all pending exclusivity requests until 
the conclusion of this rulemaking.
d. Licensing of Non-Exclusive PCP Channels
    91. The Commission will continue to process pending applications 
for non-exclusive PCP channels pending the outcome of this proceeding. 
Applications will be processed through the frequency coordinator under 
existing procedures.

IV. Procedural Matters and Ordering Clauses

Final Regulatory Flexibility Analysis

    Summary: This Notice contains proposed or modified information 
collections subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law No. 104-13. It has been submitted to the Office of 
Management and Budget (OMB) for review under Section 3507(d) of the 
PRA. OMB, the general public, and other Federal agencies are invited to 
comment on the proposed or modified information collections contained 
in this proceeding.
    Dates: Written comments by the public on the proposed and/or 
modified information collections are due March 18, 1996. Written 
comments must be submitted by the Office of Management and Budget (OMB) 
on the proposed and/or modified information collections on or before 60 
days after date of publication in the Federal Register.
    Address: In addition to filing comments with the Secretary, a copy 
of any comments on the information collections contained herein should 
be submitted to Dorothy Conway, Federal Communications Commission, Room 
234, 1919 M Street, N.W., Washington D.C., 20554, or via the Internet 
to [email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 
725 17th Street, N.W., Washington D.C. 20503, or via the Internet to 
[email protected].
    Further Information: For additional information concerning the 
information collections contained in this Notice, contact Dorothy 
Conway at (202) 418-0217 or via the Internet at [email protected].

Supplementary Information:

    Paperwork Reduction Act: This Notice contains either a proposed or 
modified information collection. 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 collections contained in this Notice, as required by the 
Paperwork Reduction Act of 1995, Pub. L. No. 104-13. Public and agency 
comments are due on March 18, 1996, at the same time as the other 
comments in the Notice. OMB comments are due 60 days from the date of 
publication of this Notice in the Federal Register. 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.
    Title Revision of Part 22 and Part 90 of the Commission's Rules to 
Facilitate Future Development of Paging Systems and Implementation of 
Section 309(j) of the Communications Act--Competitive Bidding.
    Form No.: N/A.
    Type of Review: New Collection.
    Respondendents: Existing and prospective private paging and common 
carrier paging licensees.
    Number of Respondents: Approximately 750 existing licensees; 
approximately 525 auction winners.
    Estimated Time Per Response: Approximately 845 hours for list of 
existing transmitter sites; 1,221 hours for request for single 
authorization for multiple site licenses; 262.5 hours for demonstration 
of compliance with relocation notification requirements; 721 hours for 
ownership and gross 

[[Page 6210]]
revenue information for small businesses; 262.5 hours for disclosure of 
terms of joint bidding agreements; 787.5 hours for transfer disclosure 
information.
    Total Annual Burden: A one-time burden of approximately 4,099.5 
hours.
    Total Respondents Costs: $1,008,036.
    Needs and Uses: On February 8, 1996, the Commission adopted a 
Notice of Proposed Rule Making that examines ways to establish a 
comprehensive and consistent regulatory scheme that will simplify and 
streamline licensing procedures and provide a flexible operating 
environment for both common carrier and private paging services. To 
this end, the Notice proposes to establish a geographic, rather than a 
site-based, licensing approach. The Notice also proposes to adopt 
auction rules for mutually exclusive paging applications so that 
available channels may be assigned rapidly to applicants, who will, in 
turn, expedite service to the public.
    To ensure that the process of streamlining our paging regulations 
correctly gauges current usage of the applicable spectrum, it may be 
necessary for us to request that existing paging licensees notify the 
Commission of the location of their various transmitter sites. The 
Notice also proposes to require that licensees submit information that 
they meet applicable coverage requirements. Further, the Notice 
proposes that incumbent licensees operating at multiple sites may 
exchange their multiple site license for a single license after the 
completion of the auction for the spectrum blocks within which their 
frequencies are included provided they submit a showing that their 
authorized facilities have been constructed and placed in operation and 
the contours associated with these facilities are contiguous and 
overlapping. The Notice also proposes that auction winners submit proof 
of their notification to incumbents operating on frequencies included 
within the auction winners' spectrum blocks of their intention to 
relocate such incumbent.
    In addition, the proposed auction procedures include (1) a 
requirement that auction winners claiming status as a small business 
submit detailed ownership and gross revenue information necessary to 
determine whether they qualify as a small business pursuant to 
Commission rules; (2) a requirement that auction winners disclose the 
terms of joint bidding agreements, if any, with other auction 
participants in order to ensure the integrity of the market structure; 
and (3) a requirement that licensees who transfer licenses within three 
years maintain a file of all documents and contracts pertaining to the 
transfer.

Ex Parte Rules--Non-Restricted Proceeding

    This is a non-restricted notice and comment rulemaking proceeding. 
Ex parte presentations are permitted except during the Sunshine Agenda 
period, provided they are disclosed as provided in the Commission's 
rules, 47 CFR Secs. 1.1202, 1.1203, 1.1206(a).

Ordering Clauses

    It is ordered that the pending applications for paging licenses 
that are not mutually exclusive with other paging applications will be 
processed to the extent possible under our existing licensing rules.
    It is further ordered that applications for PCP exclusivity and 
waiver requests received after the adoption date of this Notice of 
Proposed Rulemaking will be held in abeyance and not processed until 
further notice, except as otherwise indicated above with respect to 
Interim Licensing.

List of Subjects

47 CFR Part 22

    Communications common carriers, Recordkeeping requirements.

47 CFR Part 90

    Common carriers, Recordkeeping requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-3657 Filed 2-15-96; 8:45 am]
BILLING CODE 6712-01-P