[Federal Register Volume 62, Number 3 (Monday, January 6, 1997)]
[Rules and Regulations]
[Pages 653-662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-98]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 24
[WT Docket No. 96-148; GN Docket No. 96-113; FCC 96-474]
Geographic Partitioning and Spectrum Disaggregation by Commercial
Mobile Radio Services Licensees; and Implementation of Section 257 of
the Communications Act; Elimination of Market Entry Barriers
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this Report and Order in WT Docket No. 96-148, the
Commission adopts rules concerning geographic partitioning and spectrum
disaggregation by broadband personal communications service (PCS)
licensees. The rules adopted for broadband PCS will permit partitioning
and disaggregation by all broadband PCS licensees. This will provide
broadband PCS licensees with desirable flexibility to determine the
amount of spectrum they will occupy and the geographic area they will
serve. Such flexibility will: facilitate the efficient use of spectrum
by providing licensees with the flexibility to make offerings directly
responsive to market demands for particular types of service; increase
competition by allowing market entry by new entrants; and expedite the
provision of service to areas that otherwise may not receive broadband
PCS service in the near term.
EFFECTIVE DATE: March 7, 1997.
FOR FURTHER INFORMATION CONTACT: Shaun A. Maher, Commercial Wireless
Division, Wireless Telecommunications Bureau at (202) 418-0620.
SUPPLEMENTARY INFORMATION: This Report and Order in WT Docket No. 96-
148 and GN Docket No. 96-113, adopted on December 13, 1996, and
released December 20, 1996, is available for inspection and copying
during normal business hours in the FCC Reference Center, Room 234,
1919 M Street, N.W., Washington, D.C. The complete text may also be
purchased from the Commission's copy contractor, International
Transcription Service, Inc., 2100 M Street, N.W., Suite 140,
Washington, D.C. 20037, (202) 857-3800. Synopsis of Report and Order.
I. Background
1. The Commission's initial regulations and policies for broadband
PCS were adopted in the Broadband PCS Second Report and Order,
Amendment of the Commission's Rules to Establish New Personal
Communications Services, GEN Docket No. 90-314, Second Report and
Order, 58 FR 59174 (November 8, 1993) (Broadband PCS Second Report and
Order), and amended in the Broadband PCS Memorandum Opinion and Order,
Amendment of the Commission's Rules to Establish New Personal
Communications Services, GEN Docket No. 90-314, Memorandum Opinion and
Order, 59 FR 32830 (June 24, 1994) (Broadband PCS Memorandum Opinion
and Order). In the Broadband PCS Memorandum Opinion and Order, the
Commission declined to adopt unrestricted geographic partitioning for
broadband PCS based on its concern that licensees might use
partitioning as a means of circumventing construction requirements.
However, the Commission stated that it would consider the issue of
geographic partitioning for rural telephone companies (rural telcos)
and other designated entities in a future proceeding to establish
competitive bidding rules for broadband PCS. The Commission then
permitted broadband PCS geographic partitioning for rural telcos in the
Competitive Bidding Fifth Report and Order, Implementation of Section
309(j) of the Communications Act--Competitive Bidding, PP Docket No.
93-253, Fifth Report and Order, 59 FR 37566 (July 22, 1995)
(Competitive Bidding Fifth Report and Order). The Commission observed
that partitioning was one method to satisfy Congress' mandate to
provide an opportunity for rural telcos to participate in the provision
of broadband PCS. The Commission also found that rural telcos could
take advantage of their existing infrastructure to provide broadband
PCS services, thereby speeding service to rural areas. In the
Competitive Bidding Further Notice of Proposed Rule Making,
Implementation of Section
[[Page 654]]
309(j) of the Communications Act--Competitive Bidding, PP Docket No.
93-253, Further Notice of Proposed Rule Making, 59 FR 41426 (August 12,
1994) (Competitive Bidding Further Notice of Proposed Rule Making), the
Commission sought comment on whether to extend post-auction geographic
partitioning of broadband PCS licenses to women- and minority-owned
businesses.
2. Section 24.229(c) of the Commission's rules permits a broadband
PCS licensee that has met its five-year construction requirement to
disaggregate its licensed PCS spectrum after January 1, 2000. In the
Broadband PCS Memorandum Opinion and Order, the Commission reasoned
that this limit on spectrum disaggregation for broadband PCS would
allow the PCS market to develop and prevent anti-competitive practices
with regard to disaggregation.
3. The Commission believes that it is appropriate at this time to
liberalize its rules to allow partitioning and disaggregation for
broadband PCS. The rules adopted in the Report and Order will provide
licensees with the flexibility to use their spectrum more efficiently,
will increase opportunities for small businesses and other entities to
enter into the broadband PCS market, and will speed service to
underserved or unserved areas.
II. Discussion
A. Partitioning
1. License Eligibility
4. The Commission concludes that relaxing its PCS geographic
partitioning rules, as discussed herein, will help to (1) remove
potential barriers to entry thereby increasing competition in the PCS
marketplace; (2) encourage parties to use PCS spectrum more
efficiently; and (3) speed service to unserved and underserved areas.
Parties that were unsuccessful bidders or that did not participate in
the PCS auctions will be able to use partitioning as a method to
acquire PCS licenses after the auctions. Smaller or newly-formed
entities, for example, may enter the PCS market for the first time
through partitioning. Under the prior rules, such entities would have
been unable to qualify for partitioning because of the Commission's
rural telco restriction. By eliminating that restriction, these
entities will be able to negotiate for licenses for portions of the
original service area at a cost that is proportionately less than that
of the full geographic market.
5. The Commission also finds that increasing the number of parties
that may obtain partitioned PCS licenses will lead to more efficient
use of PCS spectrum and will speed service to underserved or rural
areas. PCS licensees will be able to partition portions of their
markets to entities more willing to serve niche markets instead of
postponing service to those areas. The Commission believes that
retaining the existing partitioning restrictions, as recommended by the
rural telco commenters, would prevent additional small businesses and
other entities from using partitioning to enter the broadband PCS
market. In addition, restricting the number of parties that are
eligible for partitioned PCS licenses only serves to unreasonably
reduce the number of potential entrants into the PCS marketplace
without any corresponding public interest benefit.
6. The rural telco commenters claim that changing the current
partitioning rules would be inconsistent with the mandate set forth in
Section 309(j)(3)(B) of the Communications Act of 1934, as amended
(Communications Act), 47 U.S.C. 309(j)(3)(B), to ensure that licenses
are disseminated among a wide variety of applicants including rural
telcos. They contend that partitioning was the sole means by which the
Commission sought to fulfill the mandate of Section 309(j)(3)(B) of the
Communications Act, 47 U.S.C. 309(j)(3)(B) for rural telcos. The
Commission disagrees. Rural telcos are able to take advantage of the
special provision for small businesses the Commission designed in its
auction rules to obtain licenses in the entrepreneur block auctions.
Furthermore, Sections 309(j)(3)(A), (B), and (D) of the Communications
Act, 47 U.S.C. 309(j)(A), (B) & (D), direct the Commission to further
the rapid deployment of new technologies for the benefit of the public
including those residing in rural areas, to promote economic
opportunity and competition, and to ensure the efficient use of
spectrum. While encouraging rural telco participation in PCS service
offerings is an important element in meeting these goals, Congress did
not dictate that this should be the sole method of ensuring the rapid
deployment of service in rural areas. The Commission concludes that
allowing open partitioning will further the goals of Section 309(j)(3)
of the Communications Act, 47 U.S.C. 309(j)(3), by allowing PCS
licensees to partition to multiple entities within their markets rather
than limiting partitioning to a small number of rural telcos.
7. The rural telcos argue further that they will not be able to
compete for partitioned PCS licenses unless the Commission retains its
current restriction because PCS licensees will be unwilling to
partition their licenses to rural telcos and will choose to partition
to Commercial Mobile Radio Service (CMRS) providers with greater
financial resources. The rural telco commenters also argue that they
relied to their detriment upon the current partitioning restrictions
when devising their business plans and that many of them chose not to
participate in the broadband PCS auctions because they believed that
they would be the only parties that could obtain partitioned PCS
licenses. The Commission is unpersuaded that its action herein will
harm the rural telcos' business plans. Under the new rules adopted
herein, rural telcos will be fully able to obtain partitioned PCS
licenses, as they were previously. Moreover, in many instances, rural
telcos are likely to be in a superior position to obtain partitioned
licenses.
8. The Commission declines to adopt the rural telcos' proposal to
require a right of first refusal. Granting the rural telcos a right of
first refusal would limit the number of parties that could obtain
partitioned PCS licenses which would be at odds with the Commission's
goals of encouraging participation in the PCS marketplace by as many
parties as possible and reducing barriers to entry for small
businesses. The Commission finds that increasing the number of
potential entities that can acquire partitioned PCS licenses will
result in better service and increased competition which may result in
lower prices for PCS service.
9. The Commission also finds that the right of first refusal would
be difficult to administer and could discourage partitioning. The area
proposed in a partitioning agreement may not coincide exactly with the
area for which a rural telco would have a right of first refusal or a
single partitioning transaction may encompass more than one rural
telcos' service area. In those cases, the consent of multiple rural
telcos would be required before a partitioning transaction could be
consummated. Additionally, a partitioning agreement may be part of a
larger assignment transaction. If a rural telco were to exercise its
right of first refusal to acquire the partitioned area, it may not be
possible to separate out the partitioning agreement to stand on its own
and the entire assignment transaction could not be consummated.
[[Page 655]]
2. Available License Area, Restrictions on Timing of Partitioning, and
Matters Related to Entrepreneur Block Licensees
a. License Area. 10. The Commission is persuaded by the commenters'
arguments that limiting geographic partitioning of PCS licenses to
those areas defined by county lines may not be reflective of market
realities and may otherwise inhibit partitioning. As the commenters
note, parties seeking a partitioned license may not desire to serve an
entire county but rather a smaller niche market. The Commission
believes that permitting partitioning along any service area defined by
the partitioner and partitionee is the most logical approach, provided
they submit sufficient information to the Commission to maintain its
licensing records. This will be the rule for all parties, including
rural telcos.
11. Partitioning applicants will be required to submit, as separate
attachments to the partial assignment application, a description of the
partitioned service area and a calculation of the population of the
partitioned service area and licensed market. The partitioned service
area must be defined by coordinate points at every 3 seconds along the
partitioned service area agreed to by both parties, unless either (1)
an FCC-recognized service area is utilized (i.e., Major Trading Area,
Basic Trading Area, Metropolitan Service Area, Rural Service or
Economic Area) or (2) county lines are followed. These geographical
coordinates must be specified in degrees, minutes and seconds to the
nearest second of latitude and longitude, and must be based upon the
1927 North American Datum (NAD27). Applicants may also supply
geographical coordinates based on 1983 North American Datum (NAD83) in
addition to those required based on NAD27. This coordinate data should
be supplied as an attachment to the partial assignment application, and
maps need not be supplied. In cases where an FCC recognized service
area or county lines are being utilized, applicants need only list the
specific area(s) (through use of FCC designations) or counties that
make up the newly partitioned area. Allowing partitioning along any
agreed-upon service area will provide an opportunity for PCS licensees
to design flexible and efficient partitioning agreements. By providing
such flexibility to licensees for determining partitioned areas, the
Commission will permit the market to decide the most suitable service
areas.
b. Non-entrepreneur block licenses. 12. The Commission concludes
that the public interest will be served by allowing non-entrepreneur
block licensees to freely partition their licenses to any other
qualifying entity following the issuance of the license. Since non-
entrepreneur block licensees are permitted to assign their entire
license after grant, the Commission finds they should be able to assign
a portion of their license following the issuance of their license. PCS
licensees will be permitted to partition their licensed market areas
without limitation on the overall size of the partitioned areas
consistent with the Commission's rules.
c. Entrepreneur block licenses. 13. The Commission will permit
entrepreneur block PCS licensees to partition at any time to other
parties that would be eligible for licenses in those blocks.
Partitioning of entrepreneur block license areas to non-entrepreneurs
will not be permitted for the first five years of an entrepreneur block
license term. This restriction is necessary in order to ensure that
entrepreneurs do not circumvent the Commission's restrictions on full
license transfers by attempting to immediately partition a portion of
their licenses to non-entrepreneurs.
14. The Commission finds that its unjust enrichment requirements
should be applied if an entrepreneur block licensee partitions a
portion of its license area to a non-entrepreneur, after the initial
five-year license term. The Commission will apply its unjust enrichment
rules to transactions where entrepreneurs obtain partitioned licenses
from other entrepreneurs and subsequently seek to assign their
partitioned license to a non-entrepreneur. The Commission will also
apply the unjust enrichment provisions to an entrepreneur block
licensee that qualifies as a small business who partitions to an entity
that satisfies the entrepreneur block eligibility criteria but is not a
small business that would be eligible for bidding credits or
installment payments.
15. The Commission will use population as the objective measure to
calculate the relative value of the partitioned area for determining
all of its unjust enrichment obligations. Population will be calculated
based upon the latest census data.
16. In partitioning cases involving installment payments, the
Commission finds that separating the payment obligations and default
provisions of the original licensee and partitionee is the best
approach because it reduces each party's risk and creates payment
obligations that can be enforced separately against the defaulting
party without adversely affecting the other licensee. The Commission
adopts the following rules to address the various combinations of
parties and the relative obligations for each in the event an
entrepreneur seeks to partition its license:
(a) No Continued Installment Payments. When an entrepreneur block
licensee with installment payments partitions its license after the
five-year holding period to a party that would not qualify for
installment payments under our rules or to an entity that does not
desire to pay for its share of the license with installment payments,
the Commission will first apportion the percentage of the remaining
government obligation (including accrued and unpaid interest calculated
on the date the partial assignment application is filed) between the
partitionee and original licensee based upon the ratio of the
population of the partitioned area to the population of the entire
original licensed area. Under this procedure, both parties will be
responsible to the U.S. Treasury for their proportionate share of the
balance due including accrued and unpaid interest calculated on the
date the partial assignment application is filed. The Commission will
require, as a condition of grant of the partial assignment application,
that the partitionee pay its entire pro rata amount within 30 days of
Public Notice conditionally granting the partial assignment
application. Failure to meet this condition will result in the
automatic cancellation of the grant of the partial assignment
application. The partitioner will receive new financing documents
(promissory note and security agreement) with a revised payment
obligation, based on the remaining amount of time on the original
installment payment schedule. These financing documents will replace
the partitioner's existing financing documents which will be marked
``superseded'' and returned to the licensee upon receipt of the new
financing documents. The original interest rate, established at the
time of the issuance of the initial license in the market, will
continue to be applied to the partitioner's portion of the remaining
government obligation. The Commission will require, as a further
condition to approval of the partial assignment application, that the
partitioner execute and return to the U.S. Treasury the new financing
documents within 30 days of the Public Notice conditionally granting
the partial assignment application. Failure to meet this condition will
result in the automatic cancellation of the grant of the partial
assignment application. A
[[Page 656]]
default on an obligation will only affect that portion of the market
area held by the defaulting party. The payments to the U.S. Treasury
are required notwithstanding any additional terms and conditions agreed
to between or among the parties.
(b) Partitioning With Continued Installment Payments. Where both
parties to the partitioning arrangement qualify for installment
payments under Sec. 24.720(b)(1), 47 CFR 24.720(b)(1), the Commission
will permit the partitionee to make installment payments on its portion
of the remaining government obligation. Partitionees are free, however,
to make a lump sum payment of their pro rata portion of the remaining
government obligation within 30 days of the Public Notice conditionally
granting the partial assignment application. Should a partitionee
choose to make installment payments, the Commission will require, as a
condition to approval of the partial assignment application, that both
parties execute financing documents (promissory note and security
agreement) agreeing to pay the U.S. Treasury their pro rata portion of
the balance due (including accrued and unpaid interest on the date the
partial assignment application is filed) based upon the installment
payment terms for which they would qualify. These documents must be
executed and returned to the U.S. Treasury within 30 days of the Public
Notice conditionally granting the partial assignment application.
Either party's failure to meet this condition will result in the
automatic cancellation of the grant of the partial assignment
application. The original interest rate, established at the time of the
issuance of the initial license in the market, will apply to both
parties' portion of the remaining government obligation. Each party
will receive a license for its portion of the market area and each
party's financing documents will provide that a default on its
obligation would only affect their portion of the market area. These
payments to the U.S. Treasury are required notwithstanding any
additional terms and conditions agreed to between or among the parties.
3. Construction Requirements
17. The Commission will adopt two alternative construction options
for broadband PCS partitioning. Under the first option, the partitionee
certifies that it will satisfy the same construction requirements as
the original licensee. The partitionee then must meet the same five-
and ten-year service requirements as the original 10 MHz or 30 MHz
licensee in its partitioned area, while the partitioner remains
responsible for meeting those requirements in the area it has retained.
Under the second option, the partitioner certifies that it has already
met or will meet its five-year construction requirement and that it
will meet the ten-year construction requirement for the entire market.
Because the partitioner retains the responsibility for meeting the
construction requirements for the entire market, the partitionee will
only be required to meet the substantial service requirement for its
partitioned area at the end of the ten-year license term. The
definition of substantial service will be that definition found at
Sec. 24.16(a) of the rules, 47 CFR 24.16(a). If a partitionee fails to
meet its construction requirements, the license for the partitioned
area will automatically cancel without further Commission action.
18. At the five- and ten-year benchmarks, partitionees are required
to file supporting documentation showing compliance with the
construction requirements. Licensees failing to meet the coverage
requirements will be subject to forfeiture, license cancellation, or
other penalties.
B. Disaggregation
1. Timing of Disaggregation
19. The Commission concludes that disaggregation of broadband PCS
spectrum should be allowed prior to January 1, 2000, and that the
condition that the licensee must first satisfy the five-year build out
requirement before disaggregating should be eliminated. To the extent
that disaggregation would enable other entities to provide broadband
PCS within geographic market areas, the Commission finds that allowing
immediate disaggregation would encourage rather than impede competition
by enabling the entry of new competitors. Moreover, the current
prohibition on disaggregation may constitute a barrier to entry for
small businesses that lacked the resources to participate successfully
at auction for 30 MHz and 10 MHz spectrum blocks. In furtherance of the
mandate prescribed by Section 257 of the Communications Act, the
Commission is eliminating such market entry barriers by permitting non-
entrepreneur block (A, B, D, and E block) PCS licensees to disaggregate
spectrum at any time to other entities with minimum eligibility
qualifications. Entrepreneur block (C and F block) licensees may
disaggregate at any time to other entrepreneurs, or to non-
entrepreneurs after a five-year holding period. While the Commission
concludes that disaggregation should generally be allowed, it
emphasizes that all proposed disaggregation agreements, like
partitioning agreements, will be subject to Commission review and
approval under the public interest standard of Section 310 of the Act.
In addition, as discussed below, disaggregatees will be subject to the
CMRS spectrum cap to ensure that disaggregation is not used to
accumulate large amounts of spectrum in order to preclude entry by
other competitors.
2. Amount of Spectrum to Disaggregate
20. The Commission concludes that there should be no restriction on
the amount of broadband PCS spectrum that can be disaggregated.
Providing the flexibility to allow parties to decide the exact amount
of spectrum to be disaggregated is preferable because it will encourage
more efficient use of spectrum and will permit the deployment of a
broader mix of service offerings, leading to a more competitive
wireless marketplace. The Commission finds that requiring parties to
obtain disaggregated spectrum in a predetermined amount, such as a
block of 1 MHz, may result in parties obtaining more spectrum they
need, leaving some spectrum unused, and may foreclose some parties from
using disaggregation as a means of obtaining the spectrum they need to
provide their service offerings. Therefore, the Commission will not
restrict the amount of broadband PCS spectrum that can be
disaggregated. Similarly, it will not require the disaggregator to
retain a minimum amount of spectrum.
21. The Commission is not adopting a limit on the maximum amount of
spectrum that licensees may disaggregate, provided that the
disaggregatee complies with the CMRS spectrum cap. The Commission finds
no evidence at this time that a maximum limitation for disaggregation
is necessary. PCS licensees shall be permitted to disaggregate spectrum
without limitation on the overall size of the disaggregation as long as
such disaggregation is otherwise consistent with the rules.
3. Matters Relating to Entrepreneur Block Licensees
22. In keeping with the proposals the Commission is adopting for
partitioning, it will permit entrepreneur block licensees to
disaggregate at any time to other parties that qualify as
entrepreneurs. Disaggregation to entities that do not qualify as
entrepreneurs is not permitted for the first five years of a license
term. Allowing unrestricted entrepreneur block disaggregation
[[Page 657]]
would be inconsistent with the five-year restriction on full license
transfers to non-entrepreneurs which was designed to ensure that
entrepreneurs do not take advantage of special entrepreneur block
provisions by immediately seeking to transfer their licenses to non-
entrepreneurs. The Commission believes the same rationale would apply
to entrepreneur block disaggregation, as licensees who have benefited
from such provisions could immediately disaggregate spectrum to parties
that would not qualify for such benefits.
23. The Commission declines to permit entrepreneur block licensees
to swap equivalent blocks of entrepreneur spectrum with non-
entrepreneurs within the same market area. The administrative burden of
keeping track of such arrangements would far outweigh any benefit to
the public.
24. The Commission will follow the approach outlined for
partitioning and apply unjust enrichment payments to entrepreneur block
licensees that disaggregate to non-entrepreneurs after the five-year
holding period and to entrepreneur block licensees that qualified for
bidding credits and installment payments and that disaggregate to other
entrepreneurs that would not have qualified for such benefits. All such
unjust enrichment payments will be calculated based upon the ratio of
the amount of spectrum disaggregated to the amount of spectrum retained
by the original licensee. With respect to disaggregation from an
entrepreneur block licensee to another entrepreneur that would also
qualify for installment payments, the Commission adopts an approach
similar to the one it adopted for partitioning. The Commission will
apportion the payment obligations between the disaggregator and
disaggregatee based upon the amount of spectrum disaggregated and
require separate payment obligations, promissory notes and default
liabilities for each party.
4. Construction Requirements
25. The Commission concludes that the proposed construction
requirements for disaggregation set forth in the NRPM would be
inconsistent with the approach adopted in its partitioning rules, and
that a more flexible approach is appropriate. Because the rules do not
dictate a minimum level of spectrum usage by the original PCS licensee,
the Commission believes it would be inconsistent to impose separate
construction requirements on both disaggregator and disaggregatee for
their respective spectrum portions. At the same time, the Commission
wishes to ensure that the parties do not use disaggregation to
circumvent its underlying construction requirements. Therefore, the
Commission adopts a flexible approach analogous to its approach in the
partitioning context: to retain the underlying five- and ten-year
construction requirements for the spectrum block as a whole, but allow
either party to meet the requirements on its disaggregated portion.
Thus, a PCS licensee who disaggregates a portion of its spectrum may
elect to retain responsibility for meeting the five- and ten-year
coverage requirements, or it may negotiate a transfer of this
obligation to the disaggregatee. In either case, the rules ensure that
the spectrum will be developed to at least the same degree that was
required prior to disaggregation.
26. To ensure compliance with the rules, the Commission will
require that parties seeking Commission approval of a disaggregation
agreement include a certification as to which party will be responsible
for meeting the applicable five- and ten-year construction
requirements. Parties may also propose to share the responsibility for
meeting the construction requirements. The specific requirements to be
met will depend on whether the spectrum being disaggregated was
originally licensed as a 30 MHz block or a 10 MHz block. In the event
that only one party agrees to take responsibility for meeting the
construction requirement and later fails to do so, that party's license
will be subject to forfeiture, but the other party's license will not
be affected. Should both parties agree to share the responsibility for
meeting the construction requirements and either party later fails to
do so, both parties' licenses will be subject to forfeiture. So that
the CMRS rules remain consistent and competitively neutral,
disaggregatees that already hold a broadband PCS license or other CMRS
license in the same geographic market will be subject to the same
coverage requirements as disaggregatees who do not hold other licenses
for disaggregated spectrum.
C. Related Matters
1. Combination of Partitioning and Disaggregation
27. To allow parties flexibility to design the types of agreements
they desire, the Commission will permit combined partitioning and
disaggregation. For example, this will allow a party to obtain a
license for a single county of an A block market with only 15 MHz of
spectrum. In the event that there is a conflict in the application of
the partitioning and disaggregation rules, the partitioning rules
should prevail. For the purpose of applying the unjust enrichment
requirements and/or for calculating obligations under installment
payment plans, when a combined partitioning and disaggregation is
proposed, the Commission will use a combination of both population of
the partitioned area and amount of spectrum disaggregated to make these
pro rata calculations.
2. Licensing
28. The Commission will follow existing partial assignment
procedures for broadband PCS licenses in reviewing requests for
geographic partitioning, disaggregation, or a combination of both. Such
applications will be placed on Public Notice and will be subject to
petitions to deny. A licensee will be required to file an FCC Form 490
that is signed by both the licensee and the qualifying entity. With
respect to partitioning, the FCC Form 490 must include the attachment
defining the partitioned license area and an attachment demonstrating
the population of the partitioned license area. Partial assignment
applications that are filed seeking partitioning or disaggregation in
the entrepreneur blocks must include an attachment demonstrating
compliance with the five year entrepreneur block holding period. The
qualifying entity will also be required to file an FCC Form 430 unless
a current FCC Form 430 is already on file with the Commission. An FCC
Form 600 must be filed by the qualifying entity to receive
authorization to operate in the market area being partitioned or to
operate the disaggregated spectrum or to modify an existing license of
the qualifying entity to include the new/additional market area being
partitioned or the spectrum that is disaggregated. Any requests for a
partitioned license or disaggregated spectrum must contain the FCC
Forms 490, 430, and 600 and be filed as one package under cover of the
FCC Form 490.
29. The 45 MHz CMRS spectrum cap contained in Section 20.6 of the
rules applies to partitioned license areas and disaggregated spectrum.
3. License Term
30. The Commission will allow partitionees and disaggregatees to
hold their licenses for the remainder of the original licensee's ten-
year license term. Partitionees and disaggregatees may also earn a
renewal expectancy on the same basis as other PCS licensees.
31. The Commission will not permit an existing broadband PCS
licensee acquiring a partitioned license or disaggregated spectrum in a
market in
[[Page 658]]
which it is already a licensee to apply its original license term to
the partitioned license or spectrum. Such a proposal would be
burdensome to administer because the processing staff would be required
to determine the licensee's other licenses in the market and calculate
the correct expiration date for the partitioned or disaggregated
license. The Commission finds that such an administrative burden would
outweigh the benefit that may result from such a proposal.
4. Technical Rules
32. The Commission finds that its existing technical rules are
sufficient for application in the partitioning and disaggregation
contexts and that no additional technical rules are required at this
time. Should technical difficulties arise, however, the Commission will
take whatever action is necessary to alleviate any technical or
interference problems that result from partitioning or disaggregation,
including appropriate modifications to its technical rules.
5. Microwave Relocation
33. The Commission concludes that partitionees and disaggregatees
should be treated the same as all other PCS licensees with respect to
microwave relocation issues. In particular, partitionees will have the
same rights and obligations as other broadband PCS licensees under the
cost-sharing plan adopted in Amendment of the Commission's Rules
Regarding a Plan for Sharing the Costs of Microwave Relocation, WT
Docket No. 95-157, Report and Order and Further Notice of Proposed
Rulemaking, 61 FR 24470 (May 15, 1996). Thus, partitionees and
disaggregatees may seek reimbursement under the plan if they relocate
incumbents and they will be required to pay their share of microwave
relocation costs if they benefit from the spectrum-clearing efforts of
another party, according to the cost-sharing formula adopted by the
Commission.
34. The Commission declines to require that the original PCS
licensee guarantee payments under the cost-sharing plan by the
partitionee or disaggregatee. To require licensees to guarantee such
payments would be unfair because the original licensees would have no
control over the actions of the partitionees and disaggregatees.
6. Clearinghouse for Spectrum
35. The Commission declines to create a Commission-based resource
of information, but will continue to make available, in a user-friendly
manner, information contained in its existing databases, concerning
geographic areas open to partitioning and spectrum that would be
available through disaggregation. Although a few entities offered to
serve as commercial clearinghouses of PCS spectrum information, the
Commission declines to establish an official Commission clearinghouse.
VI. Conclusion
36. The partitioning and disaggregation proposals the Commission
has adopted are consistent with a pro-competitive policy framework.
These rules will eliminate barriers to entry for small businesses
seeking to enter the PCS marketplace and will promote the rapid
creation of a competitive market for the provision of PCS services.
These rules also meet the Congressional objectives to further the rapid
development of new technologies for the benefit of the public including
those residing in rural areas, without administrative delay, to promote
economic opportunity and competition, and to ensure that new
technologies are available by avoiding excessive concentration of
licenses.
VII. Procedural Matters and Ordering Clauses
A. Regulatory Flexibility Act
Summary
As required by Section 603 of the Regulatory Flexibility Act (RFA),
5 U.S.C. 603 (RFA), an Initial Regulatory Flexibility Analysis (IRFA)
was incorporated in the Notice of Proposed Rulemaking (NRPM) in WT
Docket No. 96-148. The Commission sought written public comment on the
proposals in the NPRM, including the IRFA. The Commission's Final
Regulatory Flexibility Analysis in this Report and Order conforms to
the RFA, as amended by the Contract With America Advancement Act of
1996.
Need for and Purpose of this Action
In this Report and Order the Commission modifies the broadband PCS
rules to permit partitioning and disaggregation for all Part 24
licenses. The proposals adopted herein also implement Congress' goal of
giving small businesses the opportunity to participate in the provision
of spectrum-based services in accordance with 47 U.S.C. 309(j)(4)(D)
and to reduce entry barriers for small businesses in accordance with 47
U.S.C. 257. With more open partitioning and disaggregation, additional
entities, including small businesses, may participate in the provision
of broadband PCS service without needing to acquire wholesale an
existing license (with all of the bundle of rights currently associated
with the existing license). Acquiring less than the current license
will presumably be a more flexible and less expensive alternative for
entities desiring to enter these services.
Summary of Issues Raised in Response to the Initial Regulatory
Flexibility Analysis
Only one commenter, National Telephone Cooperative Association
(NTCA), submitted comments that were specifically in response to the
IRFA. NTCA argues that the Commission is required under the RFA to
identify significant alternatives to the proposed rules in order to
accomplish the stated objectives of Sections 309(j) and 257 of the
Communications Act of 1934, as amended (Communications Act).
Specifically, NTCA argues that the Commission must consider the right
of first refusal approach suggested by some commenters as an
alternative to allowing open partitioning of PCS licenses and how it
might minimize significant economic impacts on rural telcos. NTCA
contends that, for the purposes of determining which businesses are to
be included in an RFA analysis, the Commission should adopt the U.S.
Small Business Administration's (SBA) definition of small business,
which is any company with fewer than 1,500 employees.
In the Report and Order, significant alternatives were identified
and considered in order to further the mandates of Sections 309(j) and
257 of the Communications Act. In addition, significant consideration
was given to the rural telcos' right of first refusal approach for
partitioning; however, the Commission concluded that such an approach
was unworkable and would actually discourage partitioning. Finally, the
Commission declined to adopt NTCA's suggestion to utilize the SBA
definition of small business (businesses with fewer than 1,500
employees). As noted below, the existing definition of small business
(firms with revenues of less than $40 million in each of the last three
years) was used in the PCS C-Block auction and was approved by the SBA.
The Commission also notes that it has found incumbent LECs to be
``dominant in their field of operation'' since the early 1980's, and it
has consistently certified under the RFA that incumbent LECs are not
subject to regulatory flexibility analyses because they are not small
businesses. The Commission has made similar determinations in other
areas.
[[Page 659]]
Description and Number of Small Entities Involved
The rules adopted in the Report and Order will affect all small
businesses which avail themselves of these rule changes, including
small businesses currently holding broadband PCS licenses who choose to
partition and/or disaggregate, and small businesses who may acquire
licenses through partitioning and/or disaggregation. The rules will
also affect rural telephone companies which, under the current rules,
have the exclusive right to obtain partitioned broadband PCS licenses.
Small businesses will be defined for these purposes as firms that have
revenues of less than $40 million in each of the last three calendar
years. This definition was used in the PCS C-Block auction and approved
by the SBA. The definition of rural telephone company shall be that
definition found at Sec. 24.720(e) of the rules, 47 CFR 24.720(e).
The broadband PCS spectrum is divided into six frequency blocks
designated A through F. The Commission has auctioned broadband PCS
licenses in blocks A, B, and C. The Commission does not have sufficient
information to determine whether any small businesses within the SBA-
approved definition bid successfully for licenses in the A or B block
PCS auctions. There were 89 winning bidders that qualified as small
businesses in the C block PCS auctions. Based upon this information,
the Commission concludes that the number of broadband PCS licensees
affected by the rules adopted herein includes the 89 winning bidders
that qualified as small entities in the block C broadband PCS auctions.
The Commission anticipates that a total of 10,370 PCS licensees or
potential licensees could take the opportunity to partition or
disaggregate a license or obtain a license through partitioning and/or
disaggregation. This estimate is based on the total number of broadband
PCS licenses auctions and subject to auction, 2,074, and the
Commission's estimate that each license would probably not be
partitioned and/or disaggregated to more than five parties. Currently,
the C and F block licensees and potential licensees (holding a total of
986 licenses) must be small businesses or entrepreneurs with average
gross revenues over the past three years of less than $125 million.
Under the rules adopted in the Report and Order, they will be permitted
to partition and/or disaggregate to other qualified entrepreneurs at
any time and to non-entrepreneurs after the first five years of their
license term. The A, B, D, and E block licensees and potential
licensees (holding a total of 1,088 licenses) will also be permitted
under the proposed rules to partition and/or disaggregate to small
businesses.
The Commission is presently conducting auctions for the D, E, and F
blocks of broadband PCS spectrum. The Commission anticipates that a
total of 1,479 licenses will be awarded in the D, E, and F block PCS
auctions. Eligibility for the F block licenses is limited to
entrepreneurs with average revenues of less than $125 million. It is
not possible to estimate the number of licenses that will be awarded to
small businesses in the F block nor is it possible to estimate how many
small businesses will win the D or E block licenses. The Commission
believes that it is possible that small businesses will constitute a
significant number of the up to 10,370 PCS licensees or potential
licensees who could take the opportunity to partition and/or
disaggregate or who could obtain a license through partitioning and/or
disaggregation.
Summary of Projected Reporting, Recordkeeping and Other Compliance
Requirements
The rules adopted in the Report and Order will impose reporting and
recordkeeping requirements on small businesses seeking licenses through
partitioning and disaggregation. The information requirements will be
used to determine whether the licensee is a qualifying entity to obtain
a partitioned license or disaggregated spectrum. This information will
be given in a one-time filing by any applicant requesting such a
license. The information will be submitted on the FCC Form 490 (or 430
and/or 600 filed as one package under cover of the Form 490) which are
currently in use and have already received OMB clearance. The
Commission estimates that the average burden on the applicant is three
hours for the information necessary to complete these forms. The
Commission estimates that 75 percent of the respondents (which may
include small businesses) will contract out the burden of responding.
The Commission estimates that it will take approximately 30 minutes to
coordinate information with those contractors. The remaining 25 percent
of respondents (which may include small businesses) are estimated to
employ in-house staff to provide the information.
Steps Taken To Minimize Burdens on Small Entities
The rules adopted in the Report and Order are designed to implement
Congress' goal of giving small businesses, as well as other entities,
the opportunity to participate in the provision of spectrum-based
services and are consistent with the Communications Act's mandate to
identify and eliminate market entry barriers for entrepreneurs and
small businesses in the provision and ownership of telecommunications
services.
Allowing non-restricted partitioning of PCS licenses will
facilitate market entry by parties who may lack the financial resources
for participation in PCS auctions, including small businesses. Some
small businesses may have been unable to be winning bidders at the PCS
auctions due to high bidding and would have been unable to qualify for
partitioning because of our current restriction which permits
partitioning of PCS licenses to only rural telephone companies (rural
telcos). By eliminating this restriction, small businesses will be able
to obtain partitioned PCS licenses for smaller service areas at
presumably reduced costs, thereby providing a method for small
businesses to enter the PCS marketplace.
Similarly, allowing immediate disaggregation of PCS licenses will
facilitate the entry of new competitors to the provision of PCS
services, many of whom will be small businesses seeking to acquire a
smaller amount of PCS spectrum at a reduced cost.
Allowing geographic partitioning of PCS licenses by services areas
defined by the parties rather than only by county lines will provide an
opportunity for small businesses to obtain partitioned PCS license
areas designed to serve smaller, niche markets. This will permit small
businesses to enter the PCS marketplace by reducing the overall cost of
acquiring a partitioned PCS license.
Allowing disaggregation of spectrum in any amount will also promote
participation by small businesses who may seek to acquire a smaller
amount of PCS spectrum tailored to meet the needs of their proposed
service.
The Commission's proposals to allow non-entrepreneur block
licensees to partition or disaggregate to any party and to allow
entrepreneurs to partition or disaggregate to other entrepreneurs at
any time and to non-entrepreneurs after a five year holding period will
significantly increase the opportunities for small businesses to enter
the PCS marketplace. Allowing entrepreneur partitionees and
disaggregatees to pay their proportionate share of the remaining
government obligation through installment payments will provide a
further opportunity for small
[[Page 660]]
businesses to participate in the provision of PCS services.
The Commission's decision to allow partitioning parties to choose
between two construction requirements will provide small businesses
with more flexibility to construct their systems at a rate that is
determined by market forces, thus allowing them to conserve their
resources.
Significant Alternatives Considered and Rejected
The Commission considered and rejected a number of alternative
proposals concerning partitioning and disaggregation.
The rural telephone companies (rural telcos) argued that the
Commission should either retain the current partitioning restriction or
adopt a right of first refusal approach that would require partitioning
parties to notify the rural telco and offer it the partitioned license
area under similar terms and conditions. The Commission found that
retaining the current partitioning restriction would prevent small
businesses from using partitioning to enter the broadband PCS market.
Since retaining the partitioning restriction would constitute a
significant barrier to entry for small businesses, the Commission
declined to continue to limit partitioning to rural telcos.
The Commission found that the right of first refusal would be
difficult to implement and could discourage partitioning. Areas
proposed in partitioning agreements may not coincide exactly with areas
for which a rural telco may have a right of first refusal. A single
partitioning transaction may encompass more than one rural telco's
service area, or a partitioning agreement may be part of a larger
assignment transaction. Parties would be unwilling to enter into
partitioning agreements not knowing how much of an area would
ultimately be partitioned or whether they could consummate the
transaction. This determination will make it easier for non-rural-
telcos, including some small business entities, to enter partitioning
agreements.
The Commission declined to adopt the proposal set forth in the NPRM
to limit partitioning to areas defined by county lines. The Commission
was convinced by the majority of commenters that geographic
partitioning along county lines is too restrictive. The Commission
found that parties seeking a partitioned license may not desire to
serve an entire county but rather a smaller niche market. Therefore,
the Commission found that allowing partitioning along service areas
defined by the parties would allow the parties to design flexible
partitioning agreements.
The Commission rejected proposals to permit partitioning and
disaggregation during the first five years of an entrepreneur's license
term. While allowing entrepreneurs to immediately partition or
disaggregate to non-entrepreneurs may have resulted in additional
entities participating in the provision of PCS services, the Commission
concluded that the five year holding period restriction is necessary in
order to ensure that entrepreneurs do not take advantage of the special
entrepreneur block benefits by immediately partitioning a portion of
their licenses or disaggregating a portion of their spectrum to parties
that would not have qualified at auction, on their own merits, for such
benefits. Furthermore, limiting partitioning and disaggregation during
the first five years of an entrepreneur's license term will increase
the possibility that small businesses will be able to acquire PCS
licenses.
The Commission declined to adopt proposals to apply a new license
term to partitioned license areas and disaggregated spectrum. Under
this approach, entities obtaining partitioned licenses or disaggregated
spectrum would receive a new ten-year license term beginning from the
date the Commission approved the partitioning or disaggregation. The
Commission found that permitting parties to ``re-start'' their license
term would effectively allow a licensee to extend its license term and
could lead to circumvention of our license term rules.
The Commission rejected the proposal to require disaggregation of
broadband PCS spectrum in blocks of 1 MHz of paired frequencies (500
kHz plus 500 kHz). The Commission found that requiring parties to
obtain that large a block of spectrum could act as a barrier to entry
for entities that do not require that much spectrum to provide service.
Finally, the Commission declined the proposal put forth by some
commenters that PCS licensees be required to assume the obligations and
responsibilities for microwave relocation costs for their entire
license area and spectrum block even if they partition a portion of
their license area or disaggregate a portion of their spectrum to
another party. The Commission found that requiring licensees to
guarantee the payments of partitionees and disaggregatees would be
unfair because licensees would not have control over the actions of
partitionees and disaggregatees and because there was no reason to
treat those parties differently than other late-entrant PCS licensees
with respect to microwave relocation costs.
Report to Congress:
The Commission shall include a copy of this Final Regulatory
Flexibility Analysis, along with this Report and Order, in a report to
be sent to Congress pursuant to the Small Business Regulatory
Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). A copy of this
Final Regulatory Flexibility Analysis will also be published in the
Federal Register.
B. Ordering Clauses
Accordingly, it is ordered That, pursuant to the authority of
Sections 4(i), 257, 303(g), 303(r) and 332(a) of the Communications Act
of 1934, as amended, 47 U.S.C. 154(i), 257, 303(g), 303(r), and 332(a),
Part 24 of the Commission's Rules, 47 CFR 24, is amended as set forth
below.
It is further ordered That the rules adopted herein will become
effective March 7, 1997. This action is taken pursuant to 4(i), 303(r)
and 332(a) of the Communications Act of 1934, as amended, 47 U.S.C.
154(i), 303(r), and 332(a).
List of Subjects in 47 CFR Part 24
Communications common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 24 of Chapter I of Title 47 of the Code of Federal Regulations
is amended as follows:
PART 24--PERSONAL COMMUNICATIONS SERVICES
1. The authority citation for Part 24 continues to read as follows:
Authority: 47 U.S.C. 154, 301, 302, 303, 309, and 332, unless
otherwise noted.
Sec. 24.229 [Amended]
2. Section 24.229 is amended by removing paragraph (c).
Sec. 24.707 [Amended]
3. Section 24.707 is amended by removing the phrase from the third
sentence: ``(and applicants seeking partitioned licenses pursuant to
agreements with auction winners under Sec. 24.714).''
4. Section 24.714 is revised to read as follows:
[[Page 661]]
Sec. 24.714 Partitioned licenses and disaggregated spectrum.
(a) Eligibility. (1) Parties seeking approval for partitioning and
disaggregation shall request an authorization for partial assignment of
a license pursuant to Sec. 24.839.
(2) Broadband PCS licensees in spectrum blocks A, B, D, and E may
apply to partition their licensed geographic service area or
disaggregate their licensed spectrum at any time following the grant of
their licenses.
(3) Broadband PCS licensees in spectrum blocks C and F may not
partition their licensed geographic service area or disaggregate their
licensed spectrum for the first five years of the license term unless
it is to an entity that meets the eligibility criteria set forth in
Sec. 24.709 at the time the request for partial assignment of license
is filed or to an entity that holds license(s) for frequency blocks C
and F that met the eligibility criteria set forth in Sec. 24.709 at the
time of receipt of such license(s). Partial assignment applications
seeking partitioning or disaggregation of broadband PCS licenses in
spectrum blocks C and F must include an attachment demonstrating
compliance with this section.
(b) Technical standards--(1) Partitioning. In the case of
partitioning, requests for authorization for partial assignment of a
license must include, as attachments, a description of the partitioned
service area and a calculation of the population of the partitioned
service area and the licensed geographic service area. The partitioned
service area shall be defined by coordinate points at every 3 seconds
along the partitioned service area unless an FCC recognized service
area is utilized (i.e., Major Trading Area, Basic Trading Area,
Metropolitan Service Area, Rural Service Area or Economic Area) or
county lines are followed. The geographic coordinates must be specified
in degrees, minutes, and seconds to the nearest second of latitude and
longitude and must be based upon the 1927 North American Datum (NAD27).
Applicants may supply geographical coordinates based on 1983 North
American Datum (NAD83) in addition to those required (NAD27). In the
case where an FCC recognized service area or county lines are utilized,
applicants need only list the specific area(s) (through use of FCC
designations or county names) that constitute the partitioned area.
(2) Disaggregation. Spectrum may be disaggregated in any amount.
(3) Combined partitioning and disaggregation. The Commission will
consider requests for partial assignment of licenses that propose
combinations of partitioning and disaggregation.
(c) Unjust enrichment--(1) Installment payments. Licensees in
frequency Blocks C and F making installment payments that partition
their licenses or disaggregate their spectrum to entities not meeting
the eligibility standards for installment payments, will be subject to
the provisions concerning unjust enrichment as set forth in
Secs. 1.2111 of this chapter and 24.716(d).
(2) Bidding credits. Licensees in frequency Blocks C and F that
received a bidding credit and partition their licenses or disaggregate
their spectrum to entities not meeting the eligibility standards for
such a bidding credit, will be subject to the provisions concerning
unjust enrichment as set forth in Secs. 1.2110(f) of this chapter and
24.717(c).
(3) Apportioning unjust enrichment payments. Unjust enrichment
payments for partitioned license areas shall be calculated based upon
the ratio of the population of the partitioned license area to the
overall population of the license area and by utilizing the most recent
census data. Unjust enrichment payments for disaggregated spectrum
shall be calculated based upon the ratio of the amount of spectrum
disaggregated to the amount of spectrum held by the licensee.
(d) Installment payments--(1) Apportioning the balance on
installment payment plans. When a winning bidder elects to pay for its
license through an installment payment plan pursuant to Secs. 1.2110(e)
of this chapter or 24.716, and partitions its licensed area or
disaggregates spectrum to another party, the outstanding balance owed
by the licensee on its installment payment plan (including accrued and
unpaid interest) shall be apportioned between the licensee and
partitionee or disaggregatee. Both parties will be responsible for
paying their proportionate share of the outstanding balance to the U.S.
Treasury. In the case of partitioning, the balance shall be apportioned
based upon the ratio of the population of the partitioned area to the
population of the entire original license area calculated based upon
the most recent census data. In the case of disaggregation, the balance
shall be apportioned based upon the ratio of the amount of spectrum
disaggregated to the amount of spectrum allocated to the licensed area.
(2) Parties not qualified for installment payment plans. (i) When a
winning bidder elects to pay for its license through an installment
payment plan, and partitions its license or disaggregates spectrum to
another party that would not qualify for an installment payment plan or
elects not to pay for its share of the license through installment
payments, the outstanding balance owed by the licensee (including
accrued and unpaid interest) shall be apportioned according to
Sec. 24.714(d)(1).
(ii) The partitionee or disaggregatee shall, as a condition of the
approval of the partial assignment application, pay its entire pro rata
amount within 30 days of Public Notice conditionally granting the
partial assignment application. Failure to meet this condition will
result in a rescission of the grant of the partial assignment
application.
(iii) The licensee shall be permitted to continue to pay its pro
rata share of the outstanding balance and shall receive new financing
documents (promissory note, security agreement) with a revised payment
obligation, based on the remaining amount of time on the original
installment payment schedule. These financing documents will replace
the licensee's existing financing documents which shall be marked
``superseded'' and returned to the licensee upon receipt of the new
financing documents. The original interest rate, established pursuant
to Sec. 1.2110(e)(3)(i) of this chapter at the time of the grant of the
initial license in the market, shall continue to be applied to the
licensee's portion of the remaining government obligation. We will
require, as a further condition to approval of the partial assignment
application, that the licensee execute and return to the U.S. Treasury
the new financing documents within 30 days of the Public Notice
conditionally granting the partial assignment application. Failure to
meet this condition will result in the automatic cancellation of the
grant of the partial assignment application.
(iv) A default on the licensee's payment obligation will only
affect the licensee's portion of the market.
(3) Parties qualified for installment payment plans. (i) Where both
parties to a partitioning or disaggregation agreement qualify for
installment payments, the partitionee or disaggregatee will be
permitted to make installment payments on its portion of the remaining
government obligation, as calculated according to Sec. 24.714(d)(1).
(ii) Each party will be required, as a condition to approval of the
partial assignment application, to execute separate financing documents
(promissory note, security agreement) agreeing to pay their pro rata
portion of
[[Page 662]]
the balance due (including accrued and unpaid interest) based upon the
installment payment terms for which they qualify under the rules. The
financing documents must be returned to the U.S. Treasury within thirty
(30) days of the Public Notice conditionally granting the partial
assignment application. Failure by either party to meet this condition
will result in the automatic cancellation of the grant of the partial
assignment application. The interest rate, established pursuant to
Sec. 1.2110(e)(3)(i) of this chapter at the time of the grant of the
initial license in the market, shall continue to be applied to both
parties' portion of the balance due. Each party will receive a license
for their portion of the partitioned market or disaggregated spectrum.
(iii) A default on an obligation will only affect that portion of
the market area held by the defaulting party.
(iv) Partitionees and disaggregatees that qualify for installment
payment plans may elect to pay some of their pro rata portion of the
balance due in a lump sum payment to the U.S. Treasury and to pay the
remaining portion of the balance due pursuant to an installment payment
plan.
(e) License term. The license term for a partitioned license area
and for disaggregated spectrum shall be the remainder of the original
licensee's license term as provided for in Sec. 24.15.
(f) Construction requirements--(1) Requirements for partitioning.
Parties seeking authority to partition must meet one of the following
construction requirements:
(i) The partitionee may certify that it will satisfy the applicable
construction requirements set forth in Sec. 24.203 for the partitioned
license area; or
(ii) The original licensee may certify that it has or will meet its
five-year construction requirement and will meet the ten-year
construction requirement, as set forth in Sec. 24.203, for the entire
license area. In that case, the partitionee must only satisfy the
requirements for ``substantial service,'' as set forth in
Sec. 24.16(a), for the partitioned license area by the end of the
original ten-year license term of the licensee.
(iii) Applications requesting partial assignments of license for
partitioning must include a certification by each party as to which of
the above construction options they select.
(iv) Partitionees must submit supporting documents showing
compliance with the respective construction requirements within the
appropriate five- and ten-year construction benchmarks set forth in
Sec. 24.203.
(v) Failure by any partitionee to meet its respective construction
requirements will result in the automatic cancellation of the
partitioned or disaggregated license without further Commission action.
(2) Requirements for disaggregation. Parties seeking authority to
disaggregate must submit with their partial assignment application a
certification signed by both parties stating which of the parties will
be responsible for meeting the five- and ten-year construction
requirements for the PCS market as set forth in Sec. 24.203. Parties
may agree to share responsibility for meeting the construction
requirements. Parties that accept responsibility for meeting the
construction requirements and later fail to do so will be subject to
license forfeiture without further Commission action.
[FR Doc. 97-98 Filed 1-3-97; 8:45 am]
BILLING CODE 6712-01-P