[Federal Register Volume 62, Number 3 (Monday, January 6, 1997)]
[Proposed Rules]
[Pages 696-700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-99]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 22 and 26

[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: Proposed rule.

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SUMMARY: In this Further Notice of Proposed Rulemaking in WT Docket No. 
96-148, the Commission proposes modifications to the cellular and 
General Wireless Communications Services (GWCS) rules to expand 
geographic partitioning and spectrum disaggregation provisions. The 
Commission solicits comment on certain issues relating to these rules.

DATES: Comments must be filed on or before February 10, 1997. Reply 
comments must be filed on or before February 25, 1997.

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

FOR FURTHER INFORMATION CONTACT: Shaun A. Maher, Commercial Wireless 
Division, Wireless Telecommunications Bureau at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This Further Notice of Proposed Rulemaking 
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 Further Notice of Proposed Rulemaking

I. Introduction

    1. There are Commercial Mobile Radio Services (CMRS) in which 
partitioning and disaggregation have either not been proposed or have 
been adopted on a more limited basis than the rules adopted for 
broadband PCS. For example, while partitioning is allowed for cellular 
licensees, there are no rules on disaggregation. Similarly, General 
Wireless Communications Service (GWCS) licensees are permitted to 
partition only to rural telcos and currently there is no rule for GWCS 
disaggregation.
    2. The Commission believes that it is appropriate at this time to 
consider whether to permit full partitioning and disaggregation in 
cellular, GWCS and any other services that are licensed on a geographic 
area basis, or in spectrum blocks of sufficient size to make 
disaggregation practical. Therefore, the Commission seeks comment on 
whether these benefits similarly justify extension of partitioning and 
disaggregation to other services.

II. Discussion

A. Partitioning and Disaggregation for Cellular and GWCS Services

    3. Cellular. The Commission seeks comment as to whether to permit 
cellular disaggregation. Commenters should address whether there are 
technical or other constraints, unique to the cellular service, that 
would make disaggregation either impractical or administratively 
burdensome. Commenters should address whether regulatory or 
technological changes expected in the near future may provide the 
opportunity for cellular licensees to disaggregate portions of their 
licensed spectrum to other parties. The Commission seeks comment as to 
whether such regulatory changes may create a demand for cellular 
disaggregation and whether, in anticipation of such changes, the 
Commission should adopt interim disaggregation rules for cellular.
    4. GWCS. The Commission seeks comment as to whether open 
partitioning of GWCS licenses should be permitted similar to the 
proposal for open partitioning the Commission has adopted for broadband 
Personal Communications Service (PCS) licensees. In addition, the 
Commission seeks comment as to whether GWCS licensees should be 
permitted to disaggregate their spectrum. The Commission also seeks 
comment as to whether there are technical or regulatory constraints 
unique to the GWCS service that would render disaggregation impractical 
or administratively burdensome. Further, the Commission recognizes that 
there are special competitive bidding issues, similar to those raised 
in the broadband PCS context, that must be resolved if it permits open 
partitioning and disaggregation for GWCS.

B. Available License Area

    5. Section 22.947(b) of the rules, 47 CFR 22.947(b), provides that 
a cellular licensee may partition portions of its cellular market to 
other eligible parties. The parties are free to define the license area 
or ``CGSA'' of the new partitioned cellular system. Because the 
cellular partitioning rule is sufficiently flexible to permit parties 
to freely define the partitioned license area, the Commission does not 
propose to modify the cellular rules at this time.
    6. GWCS service areas are based on Economic Areas. Similar to the 
former rule for broadband PCS partitioning, GWCS licensees must 
partition along an established geopolitical boundary, such as county 
lines, the partitioned area must include the wireline service area

[[Page 697]]

of a rural telephone company (rural telco) and it must be reasonably 
related to the rural telco's wireline service area. The Commission 
seeks comment on whether and how its existing partitioning rule for 
GWCS, which requires partitioning along established geopolitical 
boundaries and along an area that is reasonably related to a rural 
telco's wireline service area, should be modified, if it chooses to 
open partitioning of GWCS licenses to entities other than rural telcos. 
The Commission tentatively concludes that a more flexible approach, 
similar to the one it adopted for broadband PCS, is appropriate for 
GWCS. Partitioning of GWCS licenses would be permitted based on any 
license area defined by the parties. The Commission seeks comment on 
whether this proposal is consistent with the licensing of GWCS based on 
Economic Areas and whether there are any technical or other issues 
unique to GWCS that might impede the adoption of a flexible approach to 
defining the partitioned license area.

C. Amount of Spectrum To Disaggregate

    7. The Commission seeks comment as to whether minimum 
disaggregation standards are necessary for cellular and GWCS. The 
Commission seeks to determine whether technological and administrative 
considerations warrant the adoption of such standards. Cellular 
licenses are currently issued for a 25 MHz block of spectrum and GWCS 
licenses for 5 MHz blocks. GWCS licensees are also permitted to obtain 
multiple 5 MHz blocks and are subject to a 15 MHz GWCS spectrum 
aggregation limit. The Commission finds that any such standard it 
adopts should be sufficiently flexible so as to encourage 
disaggregation while providing a standard which is consistent with the 
technical rules and by which the Commission will be able to track 
disaggregated spectrum and review disaggregation proposals in an 
expeditious fashion.

D. Combined Partitioning and Disaggregation

    8. The Commission seeks comment as to whether combined partitioning 
and disaggregation should be permitted for cellular and GWCS services. 
The Commission tentatively concludes that it should permit such 
combinations to provide parties the flexibility they need to respond to 
market forces and demands for service relevant to their particular 
locations and service offerings.

E. Construction Requirements

    9. Cellular. While the Commission does not propose to modify the 
existing cellular build-out procedures, it seeks comment as to whether 
the cellular partitioning rule is sufficiently flexible to increase the 
viability and value of partitioned cellular licenses and to facilitate 
cellular partitioning while preventing circumvention of the cellular 
build-out procedures. The Commission invites comment as to whether the 
existing cellular rules might be amended to further facilitate cellular 
partitioning and what types of alternative partitioning mechanisms 
might be adopted.
    10. In addition, the Commission seeks comment as to whether it 
should adopt a disaggregation certification procedure similar to the 
type adopted for broadband PCS. The Commission proposes requiring 
parties seeking Commission approval of a cellular disaggregation 
agreement to include a certification as to which party will be 
responsible for building out the remainder of the market. Should that 
party fail to build out, the Commission proposes that the unserved 
portion of the market would be subject to Phase II or unserved area 
applications. The Commission seeks comment as to whether such an 
approach is feasible for cellular disaggregation given the distinctive 
nature of the cellular build-out rules.
    11. GWCS. The Commission seeks comment as to whether it should 
amend its existing partitioning rule for GWCS to allow dual 
construction options for GWCS partitioning and adopt a certification 
procedure for GWCS disaggregation similar to the procedure it has 
adopted for broadband PCS.
    12. For example, under the first construction option for GWCS 
partitioning, the partitionee would certify that it will satisfy the 
same construction requirement as the original GWCS licensee for its 
partitioned license area. Under the second construction option, the 
original GWCS licensee may certify that it has or will meet its five-
year construction requirement and that it will meet the ten-year 
construction requirement for the entire license area. Since the 
original GWCS licensee retains responsibility for meeting the 
construction requirements, the Commission believes that the partitionee 
should be permitted to meet a less substantial construction 
requirement. The Commission seeks comment as to what lesser 
construction requirement would be appropriate.
    13. As for GWCS disaggregation, the Commission proposes adopting a 
procedure similar to the one adopted for broadband PCS and proposed for 
cellular. Under such an approach, the disaggregating parties would be 
required to submit a certification, signed by both the disaggregator 
and disaggregatee, as to which of the parties will retain 
responsibility for meeting the five and ten-year construction 
requirements for the GWCS market. The parties would be permitted to 
share responsibility for meeting the construction requirements. The 
party or parties taking responsibility for meeting the construction 
requirements would be subject to license forfeiture for failing to meet 
the construction requirements.

F. License Term

    14. The Commission seeks comment as to whether the cellular and 
GWCS rules should be amended to provide that parties obtaining 
partitioned cellular or GWCS licenses or disaggregated spectrum hold 
their license for the remainder of the original licensee's ten-year 
license term. In addition, the Commission seeks comment as to whether 
GWCS partitionees and disaggregatees should be afforded the same 
renewal expectancy as other GWCS licensees. The Commission tentatively 
concludes that limiting the license term of the partitionee or 
disaggregatee is necessary to ensure that there is maximum incentive 
for parties to pursue available spectrum as quickly as practicable.

G. GWCS Competitive Bidding Issues

    15. The Commission tentatively concludes that GWCS partitionees and 
disaggregatees that would qualify as designated entities should be 
permitted to pay their pro rata share of the remaining government 
obligation via installment payments. The Commission seeks comment as to 
the exact mechanisms for apportioning the remaining government 
obligation between the parties and whether there are any unique 
circumstances that would make devising such a scheme for the GWCS 
service more difficult than for broadband PCS. Since GWCS service areas 
are allotted on a geographic basis, similar to broadband PCS, the 
Commission proposes using population as the objective measure to 
calculate the relative value of the partitioned area and amount of 
spectrum disaggregated as the objective measure for disaggregation.
    16. The Commission seeks comment on whether to apply unjust 
enrichment rules to designated entity GWCS licensees that partition or 
disaggregate to non-designated entities. Commenters

[[Page 698]]

should address whether the unjust enrichment payments should be 
calculated on a proportional basis, using population of the partitioned 
area and amount of spectrum disaggregated as the objective measures. 
The Commission further seeks comment as to how to enforce unjust 
enrichment payments for designated entity GWCS licensees paying via 
installment payments and those that were awarded bidding credits that 
partition or disaggregate to non-designated entities. The Commission 
tentatively proposes using methods similar to those adopted for 
broadband PCS for calculating the amount of the unjust enrichment 
payments that must be paid in those circumstances.

H. Licensing Issues

    17. Partial assignment procedures are not used for cellular 
partitioning. Instead, whenever a cellular licensee enters into a 
partitioning agreement, the partitionee must file an application (FCC 
Form 600) for a new cellular system covering the partitioned market. 
Since this procedure provides the appropriate level of review of the 
partitioning transaction, the Commission proposes no modification at 
this time. However, should the Commission permit cellular 
disaggregation, it seeks comment on the method it should devise for 
reviewing cellular disaggregation transactions.
    18. Since there are existing partial assignment rules for both 
cellular and GWCS, the Commission proposes utilizing partial assignment 
procedures, similar to those adopted for broadband PCS, to review 
cellular disaggregation and GWCS partitioning and disaggregation 
transactions. Partial assignment applications would be placed on public 
notice and subject to petitions to deny. The parties would be required 
to submit an FCC Form 490, an FCC Form 600 and, if necessary, an FCC 
Form 430, together as one package under cover of the FCC Form 490. The 
Commission invites comment whether any additional procedures are 
necessary for reviewing these applications.

III. Procedural Matters and Ordering Clauses

A. Regulatory Flexibility Act

Summary
    As required by Section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603, the Commission has prepared an Initial Regulatory 
Flexibility Analysis (IRFA) of the expected impact on small entities of 
the policies and rules proposed in this Further Notice of Proposed 
Rulemaking (FNPRM).
Reason for Action
    This rulemaking proceeding was initiated to secure comment on 
proposals to modify our cellular and General Wireless Communications 
Service (GWCS) rules to permit partitioning and disaggregation for all 
licensees in those services. The proposals advanced in the FNPRM are 
also designed to implement Congress' goal of giving small businesses 
the opportunity to participate in the provision of spectrum-based 
services in accordance with Sections 257 and 309(j) of the 
Communications Act of 1934, as amended, 47 U.S.C. 257, 309(j) (the 
Communications Act).
Objectives
    The Commission proposes to change its rules for cellular and GWCS 
to facilitate the efficient use of cellular and GWCS spectrum, increase 
competition, and expedite the provision of cellular and GWCS services 
in the near term. These proposals seek to increase the level of small 
business participation in the provision of cellular and GWCS services. 
The Commission considers whether to modify the existing cellular rules 
to provide for more flexible partitioning and to allow disaggregation 
of cellular spectrum for the first time. In addition, the Commission 
proposes to allow GWCS licensees to partition and disaggregate to 
entities that are eligible for GWCS licenses. Designated entity GWCS 
licensees will be allowed to partition or disaggregate to non-
designated entities, subject to unjust enrichment payments. Entities 
that qualify for installment payments will be permitted to pay their 
pro rata share of the remaining government obligation via installment 
payments. The Commission proposes to establish license terms that 
permit cellular and GWCS partitionees to hold partitioned licenses and 
disaggregatees to hold disaggregated spectrum for the remaining 
duration of the original ten-year license term. The Commission also 
proposes to establish construction requirements for GWCS partitioning 
to ensure expedient access to GWCS service in partitioned areas, to 
ensure coverage and to increase spectrum efficiency. Finally, the 
Commission proposes to allow combined partitioning and disaggregation 
for cellular and GWCS services and to follow the existing partial 
assignment procedures for cellular and GWCS.
Legal Basis
    The proposed action is authorized under Sections 4(i), 257, 303(r) 
and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 
154(i), 257, 303(r), and 309(j).
Reporting, Recordkeeping, and Other Compliance Requirements
    The proposals under consideration in this FNPRM include the 
possibility of imposing reporting and recordkeeping requirements on 
small businesses seeking licenses through the proposed partitioning and 
disaggregation rules. The information requirements would be used to 
determine whether the licensee was qualified to obtain a partitioned 
license or disaggregated spectrum. This information will be a one-time 
filing by an applicant requesting cellular disaggregation or GWCS 
partitioning or disaggregation. This information will be submitted on 
FCC Forms 490 (and 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. We estimate that the average burden on the applicant is 
three hours for the information necessary to complete these forms. We 
estimate that 75 percent of the respondents (which may include small 
businesses) will contract out the burden of responding. We estimate 
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.
Federal Rules Which Overlap, Duplicate or Conflict With These Rules
    None.
Description, Potential Impact, and Number of Small Entities Involved
    The rule changes proposed in this proceeding will affect all small 
businesses which avail themselves of these rule changes, including 
small businesses currently holding cellular licenses who choose to 
partition and/or disaggregate, and small businesses who may acquire 
licenses through partitioning and/or disaggregation. The Commission is 
required to estimate in its Final Regulatory Flexibility Analysis the 
number of small entities to which a rule will apply, provide a 
description of such entities, and assess the impact of the rule on such 
entities. To assist the Commission in this analysis, commenters are 
requested to provide information regarding how many total cellular and 
GWCS entities, existing and potential, would be affected by the 
proposed rules in the FNPRM. In particular, we seek estimates of how 
many cellular and GWCS entities, existing or potential, will be 
considered small businesses. Small business is

[[Page 699]]

defined here as a firm that has revenues of less than $40 million in 
each of the last three calendar years. This definition was adopted for 
the GWCS service. We seek comment as to whether this definition is 
appropriate in this context. Additionally, we request each commenter to 
identify whether it is a small business under this definition. If the 
commenter is a subsidiary of another entity, this information should be 
provided for both the subsidiary and the parent corporation or entity.
    The Commission anticipates that a total of 8,465 cellular 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 upon the current number of 
existing cellular licensees (1,693) and our estimate that each license 
would probably not be partitioned and/or disaggregated to more than 
five parties. However, we estimate that a significant number of the 
cellular and GWCS licensees and potential licensees who take the 
opportunity to partition and/or disaggregate a license or who could 
obtain a license through partitioning and/or disaggregation will be 
small businesses.
    SBA has not developed a definition of small entities specifically 
applicable to cellular. The closest applicable definition under SBA 
rules is radiotelephone (wireless) companies. According to SBA's 
definition, a small business radiotelephone company is one employing 
fewer than 1,500 persons. According to our most recent data, there are 
1,693 existing cellular licensees. We are unable at this time to 
estimate the number of cellular service carriers that would qualify as 
small business concerns under SBA's definition. We estimate that fewer 
than 1,693 small entity cellular service carriers may be affected by 
the decisions and rules adopted in this FNPRM.
Significant Alternatives Minimizing the Impact on Small Entities 
Consistent With the Stated Objectives
    The proposals advanced in the FNPRM 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. The impact on small entities in the proposals in the FNPRM is 
the opportunity to enter the cellular and GWCS market through 
partitioning and disaggregation. With more open partitioning and 
disaggregation, additional entities, including small businesses, may 
participate in the provision of cellular and GWCS services 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.
    The rule changes proposed in the FNPRM by the Commission are 
consistent with the Communications Act's mandate to identify and 
eliminate market entry barriers for small business in the provision and 
ownership of telecommunications services, and the mandate under Section 
309(j) of the Communications Act, 47 U.S.C. 309(j), to utilize auctions 
to ensure that small, minority and women-owned businesses and rural 
telcos have an opportunity to participate in the provision of spectrum-
based services. The proposals in the FNPRM, if implemented, will 
facilitate market entry by parties, including small businesses, that 
may lack the financial resources for participation in cellular and GWCS 
services. The alternative is to continue to allow GWCS partitioning 
only for rural telcos. Limiting GWCS partitioning to rural telcos would 
not permit other small businesses to obtain partitioned licenses or to 
partition to other parties, and thus would not promote the 
participation of small business in the provision of GWCS service.
    In the FNPRM, the Commission proposes facilitating GWCS 
partitioning by offering a choice between two different build-out 
options, which could be negotiated by the parties. The Commission 
tentatively concludes that these proposed flexible build-out 
requirements, if adopted, will encourage partitioning to entities that 
have a sincere interest in providing GWCS service and will thereby 
expedite the provision of service to geographic areas that otherwise 
may not receive it as quickly.
    This FNPRM solicits comments on a variety of proposals discussed 
herein. Any significant alternatives presented in the comments will be 
considered.

B. Paperwork Reduction Act

    The Further Notice of Proposed Rulemaking (FNPRM) contains either a 
proposed or modified information collection. As part of its continuing 
effort to reduce paperwork burdens, we invite the general public and 
the Office of Management and Budget to take this opportunity to comment 
on the information collections contained in this FNPRM, as required by 
the Paperwork Reduction Act of 1995, Public Law No. 104-13. Public and 
agency comments are due at the same time as other comments on this 
FNPRM; OMB comments are due March 7, 1997. 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.
    19. In addition to filing comments with the Secretary, a copy of 
any comments on the information collections contained herein should be 
submitted to both of the following: Dorothy Conway, Federal 
Communications Commission, Room 234, 1919 M Street, N.W., Washington, 
DC 20554, or via the Internet to [email protected] and to Timothy Fain, 
OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 
20503 or via the Internet at [email protected]. For additional 
information regarding the information collections contained herein, 
contact Dorothy Conway above.

C. Ex Parte Rules--Non-Restricted Proceedings

    This is a non-restricted notice and comment rule making 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 1.1201, 1203, and 1.1206(a).

D. Comment Period

    Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments to the Further Notice of Proposed Rulemaking 
on or before February 10, 1997, and reply comments on or before 
February 25, 1997. To file formally in this proceeding, you must file 
an original and four copies of all comments, reply comments, and 
supporting comments. If you want each Commissioner to receive a 
personal copy of your comments, you must file an original plus nine 
copies. You should send comments and reply comments to Office of the 
Secretary, Federal Communications Commission, Washington, D.C. 20554. 
Comments and reply comments will be available for public inspection 
during regular business hours in the FCC Reference Center of the 
Federal Communications

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Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554.

E. Authority

    Authority for issuance of this Further Notice of Proposed 
Rulemaking is contained in Sections 4(i), 257, 303(r), and 309(j) of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 257, 
303(r), and 309(j).

F. 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. Secs. 154(i), 257, 303(g), 303(r), 
and 332(a), a further notice of proposed rulemaking is hereby adopted.
    It is further ordered, that comments in WT Docket No. 96-148 will 
be due February 10, 1997, and reply comments will be due February 25, 
1997.

List of Subjects

47 CFR Part 22

    Communications common carriers, Reporting and recordkeeping 
requirements.

47 CFR Part 26

    Communications common carriers; Reporting and recordkeeping 
requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-99 Filed 1-3-97; 8:45 am]
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