[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]
BILLING CODE 6712-01-P