[Federal Register Volume 62, Number 100 (Friday, May 23, 1997)]
[Rules and Regulations]
[Pages 28373-28375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13545]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 101
[CC Docket No. 92-297; FCC 97-166]
Local Multipoint Distribution Service (``LMDS'')
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: On May 8, 1997, the Federal Communications Commission adopted
an Order reconsidering on its own motion its decision in the Rulemaking
to Amend Parts 1, 2, 21, and 25 of the Commission's Rules To
Redesignate the 27.5-29.5 GHz Frequency Band, To Reallocate the 29.5-
30.0 GHz Frequency Band, To Establish Rules and Policies for Local
Multipoint Distribution Service and for Fixed Satellite Services;
Petitions for Reconsideration of the Denial of Applications for Waiver
of the Commission's Common Carrier Point-to-Point Microwave Radio
Service Rules; and Suite 12 Group Petition for Pioneer Preference, CC
Docket No. 92-297, PP-22, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rulemaking, FCC 97-82,
released March 13, 1997 (``LMDS Second Report and Order''). The
Commission affirmed its decision to refer CellularVision's Pioneer's
Preference request to peer review, in order to clarify the Commission's
basis for that decision. The Order also amends the LMDS competitive
bidding affiliation rule in order to include an exemption for entities
owned or controlled by Indian Tribes or Alaska Regional or Village
Corporations. This affirmation and the rule change set forth in the
Order are intended to clarify the Commission's decision and insure
Indian tribes and Alaska Native Corporations a meaningful opportunity
to participate in spectrum-based services.
EFFECTIVE DATE: June 23, 1997.
FOR FURTHER INFORMATION CONTACT: Mark Bollinger, Wireless
Telecommunications Bureau, Federal Communications Commission, (202)
418-0660.
SUPPLEMENTARY INFORMATION: This summarizes the Commission's Order in
FCC 97-166, CC Docket No. 92-297 and PP-22, adopted on May 8, 1997, and
released on May 16, 1997. The complete text of this Order is available
for inspection and copying during normal business hours in the FCC
Reference Center (Room 239), 1919 M Street N.W., Washington, D.C., and
also may be purchased from the Commission's copy contractor,
International Transcription Service, (202) 857-3800, 2100 M Street,
N.W., Suite 140, Washington, D.C. 20037. The complete Order is also
available on the Commission's Internet home page (http://www.fcc.gov/).
Synopsis of the Order
1. In this Order, the Commission affirms its decision to refer
CellularVision's Pioneer's Preference request to peer review, but
clarifies its basis for doing so. Additionally, the Commission amends a
rule it adopted in the LMDS Second Report and Order (62 FR 23148, April
29, 1997). Specifically, the Commission amends Section 101.1112 to
include subsection 101.1112(d)(11) as set forth in Appendix A of the
Order. Consistent with the Commission's rules governing the Wireless
Communications Service (``WCS'') and broadband Personal Communications
Services (``PCS''), this new subsection exempts from the affiliation
rules entities owned and controlled by Indian tribes or Alaska Regional
or Village Corporations for purposes of determining whether an entity
meets the definition of a small business or a business with average
annual gross revenues of not more than $75 million.
Pioneer's Preference
2. In the LMDS Second Report and Order, the Commission ordered the
initiation of a peer review process to examine the pending Pioneer's
Preference request filed by CellularVision. The Commission stated that
it was undertaking this action pursuant to Section 1.402(h) of the
Commission's Rules, 47 CFR 1.402(h). On reconsideration, the Commission
recognizes that Section 1.402(h) does not apply directly to the request
filed by CellularVision. The rule applies only to a Pioneer's
Preference request accepted for filing after September 1, 1994, and
CellularVision's predecessor in interest, Suite 12 Group, filed its
request on September 24, 1991.
3. Nothing in Section 1.402(h) or in the Commission Orders amending
the Pioneer's Preference rules pursuant to the legislation conferring
competitive bidding authority upon the Commission, and the legislation
implementing the General Agreement on Tariffs and Trade (``GATT''),
however, precludes the Commission from ordering peer review in cases
where applications were filed before that date. While the rule is clear
that applications filed after September 1, 1994, must be subject to
peer review, the rule is silent with respect to
[[Page 28374]]
applications filed before that date. The Commission's Pioneer's
Preference policy prior to the enactment of the GATT legislation
explicitly contemplated referral of preference requests to peer review
at the Commission's discretion.
4. In amending Section 1.402(h), the Commission did not intend to
constrain its exercise of discretion with respect to invocation of the
peer review process in the case of applications filed prior to
September 1, 1994. Nor does the Commission believe that its action in
amending the rule can be reasonably construed as resulting in any
limitation on the exercise of the Commission's discretion. The rule, on
its face, cannot be read to limit or terminate the Commission's ability
to refer to peer review an application filed prior to September 1,
1994.
5. Likewise, in the Commission Reports and Orders discussing the
applicability of the new rules, the Commission did not indicate any
intention to limit its discretion to refer pre-September 1, 1994,
applications to peer review. Although the Commission indicated that the
new regulations would not apply to the Pioneer's Preference applicants
that had been granted tentative preferences, including CellularVision,
this means only that the revised rule requiring peer review would not
apply; it did not nullify the Commission's ability to seek peer review
on a discretionary basis, as provided under the preexisting policy.
6. Thus, in the case of CellularVision, the Commission clarifies
that, consistent with the preexisting Pioneer's Preference rules, the
Commission has concluded that it would benefit from a more thorough
review and analysis by persons with highly specialized expertise before
making a final determination on the CellularVision request. As a policy
matter, the Commission appropriately exercised its discretion in this
case to obtain the opinion of experts to assist it in determining
whether CellularVision should be awarded a Pioneer's Preference.
Although the Commission has tentatively decided to grant the request
filed by CellularVision, there are several reasons why it would be
advantageous to subject the application to peer review at this time.
First, referring CellularVision's proposal to a panel of experts would
supplement the record with the evaluations of disinterested experts who
are familiar with the technology. Although the Commission ordinarily
relies upon the standard notice and comment process to guide its
decision making, the highly technical nature of the issues presented by
the CellularVision proposal leads the Commission to believe that it
would benefit from the additional advice of technical experts who do
not have a stake in the outcome of this proceeding. It is the
Commission's responsibility to verify that the proposal constitutes a
technological advancement. The peer review process will help ensure the
reasonableness of the Commission's final decision on these highly
technical matters.
7. Second, CellularVision for several years has been using
millimeter wave technology to provide video service. As a result, there
may now be available more demonstrable evidence that would be relevant
to an inquiry into whether the service being provided by CellularVision
is either a new service or a substantial enhancement to an existing
service, as required by the Pioneer's Preference rules. Of particular
relevance is whether the work done by CellularVision merely constitutes
an adaptation of existing technology. Finally, in light of the
modifications to the Pioneer's Preference policy resulting from the
GATT legislation and the decision to use competitive bidding to choose
between mutually exclusive LMDS applications, CellularVision is now
potentially eligible to receive a substantial discount on its license.
Under these circumstances, which have changed during the pendency of
the CellularVision request, it is particularly appropriate that the
Commission utilize the peer review process to enable it to make a
fully-informed, well-reasoned decision on the Pioneer's Preference
request. For these reasons, the Commission affirms its decision to
refer CellularVision's Pioneer's Preference request to peer review, and
clarifies that the Commission does so pursuant to its pre-1994 policy.
Competitive Bidding Rules
8. In the LMDS Second Report and Order, the Commission adopted
rules providing that, for purposes of determining eligibility for
installment payments and bidding credits, an entity's average gross
revenues for the preceding three years would be aggregated with the
average gross revenues of its affiliates and controlling principals.
Affiliation generally exists when the applicant controls or has the
power to control another entity, another entity controls or has the
power to control the applicant, the applicant and another entity are
controlled by the same third party, or another entity has an identity
of interest with the applicant. In its broadband PCS and WCS
affiliation rules, the Commission specifically exempted entities owned
and controlled by Indian tribes or Alaska Regional or Village
Corporations from being considered affiliates of applicants or
licensees that are owned and controlled by such entities. In the LMDS
Second Report and Order, however, the Commission did not adopt this
exemption.
9. The exemption the Commission provides in the broadband PCS and
WCS rules mirrors Small Business Administration (``SBA'') rules that
exclude from affiliation coverage entities owned and controlled by
Indian tribes or Alaska Regional or Village Corporations. The SBA is
required by statute to determine the size of a small business concern
owned by an Indian tribe (or a wholly owned business entity of such
tribe) ``without regard to its affiliation with the tribe, any entity
of tribal government, or any other business enterprise owned by the
tribe, unless the Administrator determines that one or more such
tribally owned business concerns have obtained, or are likely to
obtain, a substantial unfair competitive advantage within an industry
category.'' Additionally, Section 29(e) of the Alaska Native Claims
Settlement Act (43 U.S.C. Sec. 1626(e)) provides that:
(1) For all purposes of Federal law, a Native Corporation shall be
considered to be a corporation owned and controlled by Natives and a
minority and economically disadvantaged business enterprise if the
Settlement Common Stock of the corporation and other stock of the
corporation held by holders of Settlement Common Stock and by Natives
and descendants of Natives, represents a majority of both the total
equity of the corporation and the total voting power of the corporation
for the purposes of electing directors.
(2) For all purposes of Federal law, direct and indirect subsidiary
corporations, joint ventures, and partnerships of a Native Corporation
qualifying pursuant to paragraph (1) shall be considered to be entities
owned and controlled by Natives and a minority and economically
disadvantaged business enterprise if the shares of stock or other units
of ownership interest in any such entity held by such Native
Corporation and by the holders of its Settlement Common Stock represent
a majority of both--
(A) the total equity of the subsidiary corporation, joint venture,
or partnership; and
(B) the total voting power of the subsidiary corporation, joint
venture, or partnership for the purpose of electing directors, the
general partner, or principal officers.
These statutory provisions have been incorporated into the SBA's
regulations.
[[Page 28375]]
10. The Commission believes that entities owned and controlled by
Indian tribes and Alaska Regional or Village Corporations should be
eligible to bid in LMDS auctions as small businesses or as businesses
with average annual gross revenues not exceeding $75 million,
notwithstanding their affiliation with other entities owned by tribes
or Alaska Native Corporations whose gross revenues cause the combined
average gross revenues of the entity and its affiliates to exceed the
general limits for eligibility for bidding as such a business. An
exemption from the affiliation rules will ensure that these entities
will have a meaningful opportunity to participate in spectrum-based
services from which they would otherwise be precluded. As is true of
other services where the Commission has adopted this exception, LMDS is
expected to be a highly capital intensive wireless service.
Furthermore, the Commission does not believe that this exemption for
the specified entities will entitle them to an unfair advantage over
entities that are otherwise eligible for small business status. The
Commission will therefore amend the LMDS affiliation rules so as not to
preclude the eligibility of entities owned and controlled by Indian
tribes and Alaska Native Corporations for classification as small
businesses, or as businesses with average annual gross revenues not
exceeding $75 million.
Procedural Matters and Ordering Clauses
11. Accordingly, It Is ordered that the Chief, Federal
Communications Commission Office of Engineering and Technology, Shall
Select a panel of experts to review the specific technologies set forth
in the Pioneer's Preference request that was filed by the Suite 12
Group on September 23, 1991, as amended on November 19, 1991, and that
was accepted and placed on Public Notice on December 16, 1991.
12. It is further ordered that part 101 of the Commission's Rules
is amended as set forth in Appendix A, attached to the Order.
13. It is further ordered that the rule changes made by the Order
are adopted and effective June 23, 1997. This action is taken pursuant
to Section 4(i), 303(r) and 309(j) of the Communications Act of 1934,
as amended by the Telecommunications Act of 1996, 47 U.S.C.
Secs. 154(i), 303(r) and 309(j).
List of Subjects in 47 CFR Part 101
Communications common carriers, Radio, Reporting and recordkeeping
requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 101 of Chapter 1 of title 47 of the Code of Federal
Regulations is amended as follows:
1. The authority citation continues to read as follows:
Authority: 47 U.S.C. 154, 303, 309(j), unless otherwise noted.
2. Section 101.1112 is amended by adding subsection (d)(11):
Sec. 101.1112 Definitions.
* * * * *
(d) * * *
(11) Exclusion from affiliation coverage. For purposes of
paragraphs (b) and (d) of this section, Indian tribes or Alaska
Regional or Village Corporations organized pursuant to the Alaska
Native Claims Settlement Act (43 U.S.C. 1601 et seq.), or entities
owned and controlled by such tribes or corporations, are not considered
affiliates of an applicant (or licensee) that is owned and controlled
by such tribes, corporations or entities, and that otherwise complies
with the requirements of paragraphs (b), except that gross revenues
derived from gaming activities conducted by affiliated entities
pursuant to the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.)
will be counted in determining such applicant's (or licensee's)
compliance with the financial requirements of paragraph (b) of this
section, unless such applicant establishes that it will not receive a
substantial unfair competitive advantage because significant legal
constraints restrict the applicant's ability to access such gross
revenues.
[FR Doc. 97-13545 Filed 5-22-97; 8:45 am]
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