[Federal Register Volume 63, Number 113 (Friday, June 12, 1998)]
[Rules and Regulations]
[Pages 32580-32592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15710]



[[Page 32579]]

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Part VI





Federal Communications Commission





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47 CFR Part 90



Reconsideration of the Rules and Policies for the 220-222 MHz Radio 
Service; Final Rule

  Federal Register / Vol. 63, No. 113/ Friday, June 12, 1998 / Rules 
and Regulations  

[[Page 32580]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 90

[PR Docket No. 89-552, GN Docket No. 93-252, and PP Docket No. 92-253; 
FCC 98-93]


Reconsideration of the Rules and Policies for the 220-222 MHz 
Radio Service

AGENCY: Federal Communications Commission.

ACTION: Final rule; petitions for reconsideration.

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SUMMARY: The Federal Communications Commission has adopted a Memorandum 
Opinion and Order on Reconsideration (MO&O) concerning rules and 
policies for the 220-222 MHz radio service (220 service). The MO&O 
responds to petitions for reconsideration or clarification of the 220 
MHz Second Report and Order (Second R&O) and the 220 MHz Third Report 
and Order (Third R&O) in this proceeding. This MO&O reaffirms the 
decision in the Second R&O with one clarification. The MO&O also 
generally reaffirms the rules adopted in the Third R&O, but adopts some 
changes and clarifications. The intended effect of this action is to 
clarify and resolve issues pertaining to the 220 service prior to the 
Commission's auction of remaining spectrum within that service.

EFFECTIVE DATE: August 11, 1998.
    Written comments by the public on the new information collections 
are due on or before July 13, 1998.

ADDRESSES: A copy of any comments on the information collections 
contained in the MO&O should be submitted Judy Boley, Federal 
Communications Commission, Room 234, 1919 M Street, N.W., Washington, 
D.C. 20503, or via the internet to [email protected], and to Timothy Fain, 
OMB Desk Officer, 10236 NEOB, 725-17th Street, N.W., Washington, D.C. 
20503, or via the internet to [email protected].

FOR FURTHER INFORMATION CONTACT: For Non-Auction Information: Marty 
Liebman, Mary Woytek, or Jon Reel, 202-418-1310. For Auction 
Information: Frank Stilwell, 202-418-0660.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Memorandum Opinion 
and Order on Reconsideration in PR Docket No. 89-552, GN Docket 93-252, 
and PP Docket 93-253, FCC 98-93, adopted on May 14, 1998, and released 
on May 21, 1998. The complete text of this decision 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 
may be purchased from the Commission's copy contractor, International 
Transcription Service, (202) 857-3800, 1231 20th Street, N.W., 
Washington, DC 20036. The complete text is also available under the 
file name fcc98093.wp on the Commission's internet site at http://
www.fcc.gov/Bureaus/Wireless/Orders/1998/index.html. Written comments 
must be submitted by OMB on the new information collections on or 
before July 27, 1998.

Paperwork Reduction Act

    This MO&O contains new information collections that have been 
submitted to the Office of Management and Budget (OMB) for Emergency 
Clearance under the Paperwork Reduction Act, Public Law No. 104-13. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the OMB to comment on these 
information collections. Comments should address: (a) whether the new 
collections of information are 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.
    OMB Approval Number: 3060-XXXX.
    Title: Private Land Mobile Radio Services Part 90.
    Form No.: N/A.
    Type of Review: New collection.
    Respondents: Licensees in the 220-222 MHz band.
    Number of Responses: 18,400.
    Estimated Time Per Response: 30 minutes to 12 hours. These 
estimates are for various burdens including coordinating actions with 
other licensees, submitting certifications with applications for 
modifications of authorizations, and seeking a waiver of section 
90.729(b).
    Frequency of Response: On occasion.
    Total Annual Burden: Approximately 44,850 hours.
    Needs and Uses: The information collected will be used by the 
Commission to verify licensee compliance with Commission rules and 
regulations, to ensure the integrity of the 220 MHz service, and to 
ensure that licensees continue to fulfill their statutory 
responsibilities in accordance with the Communications Act of 1934.

Synopsis of Memorandum Opinion and Order on Reconsideration

    1. The Commission adopts a Memorandum Opinion and Order on 
Reconsideration (MO&O) which responds to petitions for reconsideration 
or clarification of two Orders previously adopted in this proceeding 
concerning the 220-222 MHz radio service (220 MHz service). The 220 MHz 
Second Report and Order (Second R&O) (61 FR 03841, February 2, 1996) 
enabled existing 220 MHz licensees to modify their licenses to relocate 
their authorized base stations within Commission specified parameters. 
The 220 MHz Third Report and Order (Third R&O) (62 FR 16004, April 3, 
1997) established rules to govern the future operation and licensing of 
the 220 MHz service. In response to petitions for reconsideration or 
clarification of the Second R&O, the MO&O reaffirms the earlier 
decision with one clarification, stating the Commission's continuing 
belief that the modification procedures the Commission has adopted 
provide existing 220 MHz licensees flexibility to complete construction 
of their systems and provide service without unreasonably impairing the 
opportunity of potential competitors to obtain licenses in the 220 MHz 
service. In general, the MO&O affirms the rules for the 220 MHz service 
adopted in the Third R&O, but adopts some changes and clarifications.
    2. The MO&O first considers issues raised on reconsideration of the 
Third R&O. The Commission denies the petitions which seek to modify the 
Commission's rule that specifies the co-channel protection that must be 
provided to Phase I licensees by Phase II licensees.\1\ In the Third 
R&O, the Commission decided that Phase II Economic Area (EA) and 
Regional licensees would be required to locate their base stations at 
least 120 km from the base stations of co-channel Phase I licensees, 
except that Phase II licensees would be permitted to locate their base 
stations less than 120 km from the base stations of co-channel Phase I 
licensees if they provide 10 dB protection to the predicted 38 dBuV/m 
(dBu) service contour of the base stations of the Phase I licensees.
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    \1\ Licensees granted authorizations from among applications 
filed on or before May 24, 1991, are hereinafter referred to as 
Phase I licensees. On August 28, 1995, the Commission released the 
220 MHz Third Notice of New Rulemaking (Third Notice) (60 FR 46564, 
September 7, 1995), which proposed market area licensing and more 
flexible technical rules for the next phase (Phase II) of licensing 
of the 220 MHz band.
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    3. Petitioners seek reconsideration of this decision, arguing that 
Phase II

[[Page 32581]]

licensees should be required, in locating their base stations, to 
afford greater protection to co-channel Phase I licensees by providing 
10 dB protection to the predicted 28 dBu service contour of all co-
channel Phase I base stations. Other petitioners do not oppose 
continued protection of the 38 dBu service contour, but assert that the 
Commission should afford greater than 10 dB protection to that contour.
    4. Petitioners argue that the decision made by the Commission in 
the Third R&O to provide 10 dB protection to the 38 dBu contour of 
Phase I stations does not provide adequate protection between Phase I 
and Phase II licensees. Petitioners contend that 220 MHz systems 
significantly outperform the Commission's original coverage estimation, 
and that 220 MHz customers operate throughout the 28 dBu areas. 
Petitioners add that failure to adopt protection criteria based on a 28 
dBu contour denies Phase I 220 MHz licensees a quality of service 
comparable to that of competitive wireless systems.
    5. Based on its detailed analysis of the technical information and 
arguments provided by petitioners (see paragraphs 28-67 of the full 
text of the MO&O), the Commission concludes that petitioners failed to 
adequately support their claims, and that retention of the rule that 
provides for 10 dB protection to the 38 dBu contour of Phase I stations 
will not adversely affect operations in the 220 MHz service. The 
Commission indicates, too, that it is confident that the existing 220 
MHz protection criteria will enable Phase I licensees and future Phase 
II licensees to operate in harmony.
    6. The Commission denies petitions requesting a change to the way a 
Phase I license service contour is calculated. In the Third R&O, the 
Commission decided that Phase II EA and Regional licensees could locate 
their base stations less than 120 km from the base stations of co-
channel Phase I licensees if they provide 10 dB protection to the 
predicted 38 dBu service contour of the base stations of such 
licensees. The Commission also decided in the Third R&O that the 
predicted 38 dBu contour of Phase I licensees would be calculated based 
on the licensee's authorized effective radiated power (ERP) and height 
above average terrain (HAAT)--not on the maximum allowable ERP and HAAT 
provided in the Commission's rules for the 220-222 MHz band. The 
Commission further determined that licensees operating at power levels 
lower than their initially authorized ERP would be required to seek 
modification of their authorization to reflect the lower ERP.
    7. Petitioners disagree with the Commission's decision to require 
Phase I licensees to modify their authorizations to reflect the 
system's actual ERP, and to define the service area based upon actual 
ERP. Petitioners contend that this is a departure from previous 
Commission policy for Part 90, and argue that these requirements will 
result in a significant reduction in the protection afforded to Phase I 
licensees. Several parties contend that a Phase I licensee's service 
area should be defined based on maximum authorized power and height 
levels.
    8. The Commission disagrees with petitioners. It indicates that in 
developing rules for authorizing Phase II licensees to serve a 
particular geographic area, it sought to allow them to serve any 
portion of that area, except for portions of the area already being 
served by co-channel Phase I licensees. The Commission states that the 
area ``already being served'' by co-channel Phase I licensees is the 
area the licensee was serving at the time the decisions adopted in the 
Third R&O became effective, and must therefore be calculated based on 
the licensee's ERP and HAAT at that time. The Commission also indicates 
that, as discussed in paragraphs 175-184 of the full text of the MO&O, 
the area being served by a Phase I licensee that relocated its base 
station in accordance with the provisions of the Second R&O is 
calculated based on the HAAT and the ERP of the relocated base station.
    9. The Commission states that if it were to assume that all 220 MHz 
Phase I licensees are operating at the maximum power and antenna height 
for the 220 MHz service when many are not operating at such parameters 
and may never operate at such parameters, it could force Phase II 
licensees to provide considerably greater protection to co-channel 
Phase I licensees than necessary, and thereby potentially deny service 
to the public in areas beyond the Phase I licensee's actual 38 dBu 
service contour. The Commission also indicates that to protect a Phase 
I licensee's base station in accordance with a power level that the 
licensee might employ at some time in the future could also deny 
service to the public.
    10. The Commission therefore denies requests for the adoption of 
alternative methods for calculating a Phase I licensees service contour 
made by petitioners. As indicated in the MO&O, the Wireless 
Telecommunications Bureau will issue a Public Notice following the 
adoption of the MO&O announcing when applications must be filed by 
Phase I, non-nationwide licensees in order to enable such licensees to 
comply with the requirement that they modify their authorization to 
reflect the ERP at which they were operating at the time the decisions 
adopted in the Third R&O became effective.
    11. The Commission grants in part the petitions that request that 
Phase I licensees be permitted to modify their authorizations to the 
extent that Phase I licensees will be permitted to make modifications 
to their authorizations which do not expand their 38 dBu service 
contour, and also will be permitted to convert their site-by-site 
licenses to a single license. Otherwise such petitions are denied.
    12. The Commission recognizes that licensed sites may become 
unusable for a variety of reasons and agrees with petitioners arguments 
that, in order to maintain the economic and technical viability of a 
licensee's 220 MHz service, Phase I incumbent licensees should be 
permitted to modify their authorizations (e.g., to relocate their base 
station, to change the ERP or HAAT of their base station) as long as 
doing so does not expand their service contour, as that contour has 
been defined in this proceeding. Such licensees will therefore be 
permitted to make those modifications to their authorizations that do 
not expand their 38 dBu service contour. Phase I licensees will also be 
able to add additional transmitters within their 38 dBu service contour 
without prior authorization from the Commission, e.g., to fill in 
``dead spots'' in coverage or to reconfigure their systems to increase 
capacity within their service area, so long as signals from such 
transmitters do not expand their 38 dBu service contour.
    13. The MO&O notes that a Phase I licensee who relocates under the 
criteria set forth in the Second R&O (and as further considered in this 
MO&O) must first establish its 38 dBu service contour at its new base 
station site in accordance with the Commission's rules for relocation 
before it can take advantage of the flexibility provided in this 
section. In addition, Phase I licensees will be required to notify the 
Commission of any changes in technical parameters or additional 
stations constructed through a minor modification of their license. 
These modification applications will not be subject to public notice 
and petition to deny provisions in the Commission's rules, or mutually 
exclusive applications.
    14. The Commission's rules require geographic separation between 
Phase I

[[Page 32582]]

base stations transmitting on the upper 40 channels in the 220-221 MHz 
band (i.e., channels 161-200, referred to in the Commission's rules as 
``Sub-band B'') and Phase I base stations receiving on the lower 40 
channels in the 221-222 MHz band (i.e., channels 1-40, referred to in 
the Commission's rules as ``Sub-band A''). Also, as indicated in the 
Third R&O, the Commission's rules require Phase II licensees 
transmitting on Sub-band B channels to provide geographic protection to 
Phase I licensees operating on Sub-band A channels; and require Phase 
II licensees operating on Sub-band B and Sub-band A channels to 
coordinate the location of their base stations with one another to 
avoid interference. The Commission's decision in this MO&O to permit 
Phase I, non-nationwide licensees to modify their authorizations to add 
additional transmitter sites or change the operating parameters or 
location of their base station, however, raises interference concerns 
if such stations are authorized to licensees operating in Sub-bands A 
and B.
    15. First, with respect to potential interference among Phase I 
licensees, the Commission believes that Phase I licensees authorized on 
Sub-band A or Sub-band B channels that may seek to add additional 
transmitter sites or change the operating parameters or location of 
their base stations should be required to coordinate such actions in a 
manner similar to the way that Phase II licensees authorized on Sub-
band A and Sub-band B channels must coordinate the location of their 
base stations under Sec. 90.723(f) of the Commission's rules. Thus, to 
ensure that appropriate geographic separations are maintained if 
licensees authorized on Sub-band A or Sub-band B channels seek 
modifications to add additional transmitter sites or change the 
operating parameters or location of their base station, the Commission 
will require licensees authorized on Sub-band A or Sub-band B channels 
to coordinate such actions with one another to avoid interference. 
These licensees must include with their application for a minor 
modification of their authorization, a certification that the station 
has been appropriately coordinated.
    16. Second, Sec. 90.723(e) currently requires Phase II licensees 
authorized on Sub-band B channels, in locating their base stations, to 
provide geographic protection to the base stations of Phase I licensees 
authorized on Sub-band A channels. However, the Commission does not 
believe that it would be appropriate to require a Phase II licensee 
authorized on Sub-band B, as it constructs its EA or Regional system, 
to have to protect receivers associated with additional transmitter 
sites that a Phase I licensee authorized on Sub-band A might add within 
its service contour at any time in the future. The Commission thus 
concludes, that a Phase II licensee authorized on Sub-band B channels 
should continue to provide geographic protection to Phase I licensees 
authorized on Sub-band A, but only to the base station of such 
licensees, as authorized at the time the Phase II, Sub-band B licensee 
seeks to construct its station.
    17. Third, under the Commission's existing rules, there are no 
protection or coordination requirements among Phase I licensees 
authorized on Sub-band B and Phase II licensees authorized on Sub-band 
A. However, if Phase I, Sub-band B licensees are permitted to add 
additional transmitter sites or modify the operating parameters or 
location of their base station at any time in the future, such actions 
could cause unforeseen interference to the base stations of Phase II, 
Sub-band A licensees. The Commission will therefore require Phase I, 
Sub-band B licensees, in adding additional transmitter sites or 
modifying the operating parameters or location of their base station, 
to coordinate such actions with Phase II licensees authorized on Sub-
band A. Phase I, Sub-band B licensees must include with their 
application for a minor modification of their authorization, a 
certification that the station has been appropriately coordinated.
    18. In addition, the Commission will allow Phase I 220 MHz 
licensees to convert their site-by-site licenses to a single license 
authorizing operations throughout the incumbents' contiguous and 
overlapping 38 dBu service contours of their constructed multiple 
sites. Phase I licensees seeking such reissued licenses must make a 
one-time filing of specific information for each of their external base 
station sites to assist the Commission staff in updating the 
Commission's database. The Commission also will require evidence that 
such facilities are constructed and placed in operation and that, by 
operation of the Commission's rules, no other licensee would be able to 
use these channels within this geographic area. The Commission notes 
that facilities added or modified that do not extend the 38 dBu service 
contour will not require prior approval under this procedure.
    19. The Commission believes this decision strikes a fair balance 
between the interests of incumbents and Phase II licensees. A Phase I 
licensee will be free to maintain full operational flexibility in 
providing service within its own service contour, while ensuring that 
the licensee's use of the spectrum does not negatively impact other 220 
MHz operations.
    20. In response to a petition seeking clarification of the decision 
in the Third R&O that the emission limits provided in Sec. 90.212(f) of 
the Commission's rules must be met only at the outermost edges of 
contiguous channels, the Commission indicates that such emission limits 
must be met only at the outermost edges of contiguous channels, 
including those cases in which licensees combine multiple 
authorizations that result in contiguous channels. The Commission also 
clarifies that, so long as licensees combining multiple authorizations 
to create a contiguous channel block maintain the required co-channel 
protection on all of the channels that comprise the channel block, such 
licensees will be permitted to eliminate the emission mask on all 
``inside channels.''
    21. The Commission grants a petition to modify Sec. 90.729(b) of 
its rules to provide that the antenna height limitation for stations 
operating on 221-222 MHz frequencies be associated with HAAT of the 
station's transmitting antenna, rather than the antenna's height above 
ground. The Commission indicates that by requiring licensees operating 
on these frequencies to limit the height of their transmitting antenna 
to 7 meters HAAT, it will eliminate instances of licensees 
inadvertently causing interference to adjacent channel operations by 
transmitting at an antenna height of 7 meters above ground at a 
particularly high elevation. The Commission also modifies 
Sec. 90.729(c) to indicate that the height restriction of base stations 
operating on channels 196-200 must be associated with such station's 
transmitting antenna HAAT, rather than the antenna's height above 
ground.
    22. The Commission denies petitions requesting that the power limit 
for fixed stations operating on mobile channels (i.e., channels in the 
221-222 MHz band) be raised from 50 watts ERP to 500 watts ERP. The 
Commission indicates that if 220 MHz licensees were to be permitted, as 
petitioners propose, to operate fixed stations in the 221-222 MHz band 
at a power level of 500 watts ERP--ten times higher than the current 
limit--it would be concerned about the possibility of interference to 
adjacent channel 220 MHz land mobile operations. The Commission 
therefore rejects the adoption of a rule that would allow for such 
transmissions.
    23. The Commission concludes that the only manner in which a 
licensee

[[Page 32583]]

could operate a fixed station in the 221-222 MHz band at a power level 
of 500 watts ERP without disrupting the operations of other 220 MHz 
licensees would be for that licensee to gain the consent of all 
affected 220 MHz licensees to operate such a station. It will therefore 
permit a licensee seeking to operate fixed stations in the 221-222 MHz 
band at a power level of 500 watts ERP to seek a waiver of 
Sec. 90.729(b) of the Commission's rules if the licensee obtains the 
consent for such operation from the following licensees authorized on 
channels up to 200 kHz removed from the channels of the licensee: (1) 
All nationwide licensees; (2) all Phase II non-nationwide licensees 
that are authorized in an EA or Region that is located within 6 km of 
the licensee's proposed fixed station; (3) all Government nationwide 
users; and (4) all Phase I non-nationwide licensees with a base station 
that is located within 6 km of the licensee's proposed fixed station. 
As discussed in paragraphs 95-106 of the full text of the MO&O, Phase I 
non-nationwide licensees may modify their authorizations to add 
additional transmitters within their existing service area, or change 
the operating parameters or location of their base station. The 
Commission concludes that such a licensee seeking the consent of a 
Phase I non-nationwide licensee to operate at 500 watts ERP will not be 
required to obtain the consent of that licensee with regard to any 
additional transmitters for which the licensee obtains authorization. 
The licensee will only be required to obtain the consent with regard to 
the licensee's base station, as authorized at the time the licensee 
seeks the consent.
    24. The Commission dismisses on procedural grounds petitions 
requesting that the Commission raise the allowable power limit for the 
base stations of nationwide licensees from 500 watts ERP to 1400 watts 
ERP. The Commission finds that, because in the Third Notice, the 
Commission did not seek comment with regard to the appropriateness its 
rule that provides the height-power restrictions for stations operating 
in the 220 MHz band, and because commenters, in response to the Third 
Notice, did not seek modification of the rule with regard to height-
power limitations for stations operating in the 220-221 MHz band, and 
because the Commission did not address or modify the 220-221 MHz band 
height-power limitations in the Third R&O, this matter is beyond the 
scope of this reconsideration proceeding. The Commission does, however, 
believe that an increase in the allowable power for nationwide 
licensees would be acceptable provided that appropriate technical 
criteria are established to ensure that interference does not occur to 
adjacent channel systems. The Commission therefore invites those 
parties seeking modification of the Commission's rules regarding this 
matter to submit a petition for rulemaking in order to change the 
allowable power limit and to develop such criteria.
    25. The MO&O declines requests to specify the criteria used to 
determine whether licensees have provided substantial service as 
alternative means of meeting their construction requirements. The MO&O 
instead refers parties seeking clarification of the standard beyond the 
definition in the Commission's rules to the Commission's stated purpose 
in applying the standard to 220 MHz, and to previous examples the 
Commission has given of substantial service. The MO&O maintains that 
any further elaboration of the standard at this time would only limit 
its flexibility and usefulness to licensees and their customers.
    26. The MO&O removes the 220 MHz service spectrum efficiency 
standard and thus grants petitions seeking elimination of the 
efficiency standard as applied to paging operations. In the Third R&O, 
the Commission concluded that Phase I and Phase II licensees combining 
contiguous 5 kHz channels in order to operate on channels wider than 5 
kHz would be required to meet the following spectrum efficiency 
standard: for voice communications, a licensee was required to employ 
equipment that provides at least one voice channel per 5 kHz of channel 
bandwidth; for data communications, a licensee was required to employ 
equipment that operates at a data rate of at least 4,800 bits per 
second per 5 kHz of channel bandwidth. The standard was implemented 
through the Commission's equipment type acceptance process.
    27. The Commission agrees with petitioners who argue that the goal 
of making the 220 MHz service rules more flexible by permitting paging 
on a primary basis, and by permitting the aggregation of contiguous 
channels, is threatened because paging equipment is not presently 
capable of meeting the efficiency standard for the band. The Commission 
also believes that, since adoption of the Third R&O, circumstances have 
developed in a manner that suggests that 220 MHz spectrum will be used 
efficiently by service providers regardless of whether any spectrum 
efficiency standard is imposed.
    28. Although the Commission is convinced by the showings in the 
record that carriers seeking to offer one-way paging services would be 
impaired in their ability to take advantage of the licensing 
flexibility introduced in the Third R&O because of the requirements of 
the spectrum efficiency standard, the Commission is not persuaded by 
the claim of some petitioners that the best solution to this problem is 
to exempt paging carriers from the standard. The Commission explains 
that singling out paging services for special treatment while leaving 
the standard in place would have the potential effect of impeding the 
introduction and deployment of other services demanded by consumers 
that use available equipment that does not comply with the strictures 
of the efficiency standard.
    29. The Commission further notes that elimination of the efficiency 
standard, while avoiding the policy deficiencies that are inherent in 
an exemption limited to one class of carriers, grants the relief sought 
by the petitioners. The Commission concludes that there is not a 
rational basis for avoiding this problem for carriers choosing to offer 
one type of service while permitting the problem to stand as a barrier 
to carriers offering other services. Although the Commission notes that 
no party has petitioned directly for this result, the Commission does 
not believe that any 220 MHz licensee or applicant will be harmed by 
this grant of additional flexibility.
    30. Elimination of the standard preserves the Commission policy of 
maximizing flexible use of spectrum. This policy is particularly 
important for 220 MHz spectrum because small businesses may be 
prominent players in developing this spectrum, and these businesses 
would directly benefit from a flexible spectrum use policy that enables 
them to respond efficiently to marketplace demand. The Commission 
further observes that, in services where the Commission has used 
competitive bidding to award licenses, there is evidence that licensees 
are using spectrally efficient technologies, despite the decision of 
the Commission not to impose spectrum efficiency standards.
    31. The Commission states that eliminating the spectrum efficiency 
standard for combined contiguous channels should not be construed as a 
lessening of its commitment to using this band to stimulate innovative 
narrowband technology. Because the efficiency standard applies only to 
those licensees who may combine contiguous 5 kHz channels to form 
larger channels, it has only limited effect on the majority of 220 MHz 
service licensees whose

[[Page 32584]]

channels are not contiguous. The Commission therefore believes the 
market for efficient narrowband 5 kHz equipment will remain strong. The 
Commission also notes that, subsequent to its adoption of the Third 
R&O, its decision in the 220 MHz Fourth Report and Order in this 
proceeding (62 FR 46211, September 2, 1997) (Fourth R&O) has stimulated 
deployment of spectrally efficient 5 kHz equipment.
    32. Although most of the debate in the record focused on the 
standard for data, the Commission also removes the spectrum efficiency 
standard for voice communications. The Commission discerns no 
reasonable legal or policy basis to make a distinction with respect to 
the application of a spectrum efficiency standard. Elimination of the 
standard will grant licensees seeking to provide voice services 
comparable flexibility to employ the type of technology that best meets 
their needs. As with 220 MHz licensees that provide data services, the 
Commission is confident that licensees providing voice services will 
seek to ensure the success of their business plans by using the most 
spectrally efficient technologies to serve the maximum number of 
customers.
    33. The Commission rejects one petitioner's suggestion that it 
adopt a lenient efficiency standard that would become stricter over 
time. The Commission explains that if a stricter standard were phased 
in, and operators were permitted to continue using equipment they had 
acquired under the early, more lenient standard, the later standard 
would probably have little effect. The Commission also rejects 
petitioners' proposal that the efficiency standard of the Refarming 
proceeding be applied to the 220 MHz band. The Commission notes that 
the 220 MHz band--a small sector of the radio spectrum, clear of 
incumbents using older, inefficient technology, in which the Commission 
has attempted to foster technological innovation--presents quite 
different circumstances and concerns. The Commission is not persuaded 
that conformance of the two standards would significantly promote the 
goals of either docket, and notes that nothing in the Refarming 
proceeding would preclude the use of 5 kHz equipment in refarmed bands.
    34. The Commission notes that its decision renders moot the 
question of whether waiver requests regarding the spectrum efficiency 
standard should be subject to public comment, as a petitioner 
requested. In the MO&O, the removal of the spectrum efficiency standard 
is discussed in paragraphs 111-149.
    35. The MO&O next clarifies construction requirements contained in 
Sec. 90.769 of the Commission's rules by stipulating that Sec. 90.769 
applies only to Phase II nationwide licensees and not to Phase I 
nationwide licensees. The title of Sec. 90.769 is amended accordingly 
to avoid confusion.
    36. The MO&O grants a petition requesting that the Commission 
reconsider or clarify language regarding the return of pending 
nationwide 220 MHz applications, by clarifying that the language 
ordering the return of pending nationwide applications does not apply 
to pending, commercial, nationwide 220 MHz applications. The Commission 
notes, however, that the applications for nationwide, commercial 220 
MHz licenses have since been dismissed.
    37. Regarding acquisition of multiple nationwide licenses, the MO&O 
dismisses as moot a petition asking that the Commission amend its rules 
to permit entities to obtain more than one Phase I authorization in a 
geographic area. The Fourth R&O in this proceeding, which was adopted 
after the petition for reconsideration was filed, repealed 
Sec. 90.739(a) of the Commission's rules which restricted the 
circumstances under which a Phase I licensee could obtain an additional 
license. Section 90.739 was revised to provide that there would be no 
limit on the number of licenses that may be authorized to a single 220 
MHz service licensee. Thus, no additional action is required by the 
Commission at this time.
    38. Consistent with the conclusions reached in the Part I Third 
R&O, (63 FR 2315, January 15, 1998) the Commission eliminates 
installment payment plans for small and very small businesses 
participating in the 220 MHz service auction, and increases the level 
of bidding credits for such entities. Small businesses with gross 
revenues not to exceed $15 million will receive a 25 percent bidding 
credit and very small businesses with gross revenues not to exceed $3 
million will receive a 35 percent bidding credit. The MO&O also amends 
Sec. 90.1015 of the Commission's rules to permit auction winners to 
make their final payments within ten (10) business days after the 
applicable deadline, provided that they also pay a late fee of five (5) 
percent of the amount due. This change will conform the 220 MHz rules 
with the generally-applicable part 1 rules. Applicants that do not 
submit the required final payment and 5 percent late fee within the 10-
day late payment period will be declared in default and will be subject 
to the default payment specified in Sec. 1.2104(g) of the Commission's 
rules. The Commission emphasizes that the decision to permit late 
payments is limited to payments owed by winning bidders that have 
submitted timely initial down payments. Finally, regarding installment 
payments, the Commission reiterates that the procedures set forth in 
part 1, Subpart Q of the Commission's rules apply to the Phase II 220 
MHz service unless otherwise indicated in part 90 of the Commission's 
rules. The Commission thus clarifies that applicants at the short- and 
long-form application stages are subject to the reporting requirements 
contained in the newly adopted part 1 ownership disclosure rule.
    39. Finally, regarding the Third R&O, the MO&O denies on procedural 
grounds petitions to reconsider the construction requirements for Phase 
I licensees, particularly the requirement that nationwide, Phase I 
licensees construct all five channels at a minimum number of base 
stations at certain urban sites. The MO&O also dismisses on procedural 
grounds petitions to cease requiring nationwide, Phase I licensees to 
obtain specific licenses for each base station.
    40. The MO&O also considers petitions for reconsideration and 
clarification filed in response to the Second R&O which adopted a one-
time modification procedure that allows licensees to modify their 
licenses to relocate their authorized base stations to previously 
unauthorized locations. Under this procedure, licensees with base 
stations authorized inside any Designated Filing Area (DFA) were 
permitted to relocate their base stations up to one-half the distance 
over 120 km toward any authorized co-channel base station, to a maximum 
distance of 8 km. Licensees with base stations authorized outside the 
boundaries of any DFA were permitted to relocate their base stations up 
to one-half the distance over 120 km toward any authorized co-channel 
base station, to a maximum distance of 25 km, so long as they did not 
locate their base station more than 8 km inside the boundaries of any 
DFA.
    41. The Commission finds that the Second R&O set out a clear and 
unambiguous framework governing the maximum distance licensees are 
permitted to move under the modification procedure. Under this 
framework, contrary to the assertions of the petitioners, the defining 
element of a proposed modification is not the ultimate location of the 
base station--the defining element is based on the initially authorized 
location.
    42. The Commission denies petitions requesting that licensees be 
permitted moves up to a maximum distance of 25

[[Page 32585]]

km, rather than the 8 km authorized in the Second R&O, if the licensees 
is moving from a location within a DFA to a location outside that DFA. 
In ruling against the petitions, the MO&O states that the purpose of 
the modification procedure was to enable 220 MHz licensees to carry out 
their initial business plans by finding a useable site within their 
planned area of service. It was not the Commission's intention for the 
modification procedure to serve as an opportunity for a licensee to 
abandon its original plan to serve a particular area in favor of a more 
attractive or different service area. The Commission maintains that a 
licensee who is presently authorized within a DFA, would have available 
to it the same multiplicity of base station sites within an 8 km radius 
as a licensee who is moving from a location within a DFA to another 
location within a DFA.
    43. The fact that a licensee initially authorized in a DFA chooses 
to seek a new base station site outside its DFA should not entitle that 
licensee to be treated in the same manner as a licensee that was 
initially authorized outside a DFA, and therefore, presumably requires 
a larger area, i.e., 25 km, within which to find a new base station 
site. Therefore, the Commission reaffirms its determination that a 
licensee with an authorized base station located in a DFA will be 
permitted to relocate its base station up to one-half the distance over 
120 km toward any co-channel licensee's initially authorized base 
station, to a maximum distance of 8 km, regardless of whether the 
relocated base station site is inside or outside the boundaries of the 
DFA. The Commission also denies a petition asking for clarification of 
its position to indicate that a licensee whose initially authorized 
site is located inside a DFA within 8 km of the perimeter and who seeks 
to modify its authorization in order to move to a location outside the 
DFA be permitted to move its site up to one-half the distance over 120 
km toward any co-channel licensee's initially authorized base station, 
to a maximum distance of 25 km.
    44. The MO&O grants, in part, petitions requesting that the 
Commission accept modifications of operating parameters other than 
relocation modifications to the extent that the Commission clarifies 
that licensees who seek to relocate may modify their antenna HAAT. 
Otherwise these petitions are denied with respect to this issue. The 
Commission states that the Second R&O sought to accommodate Phase I 
licensees that for various unforeseen reasons were unable to construct 
at their authorized locations and so provided such licensees with the 
opportunity to seek modification of their licenses to relocate their 
base stations. The Second R&O did not provide for licensees to modify 
their authorizations for any other reason, such as to change their 
power or antenna height.
    45. The Commission continues to believe that the modification 
procedure set out in the Second R&O appropriately accommodates the 
needs of licensees who were unable to construct at their authorized 
locations. The intention of the Commission in the Second R&O was to 
craft carefully and narrowly drawn relocation parameters to provide 
relief to existing licensees but not to allow them to enhance their 
position in the marketplace. The interest of the Commission in 
establishing precise and narrow criteria was heightened by the fact 
that the Commission allowed these licensees to file modification 
applications without providing an opportunity for other potential 
applicants to file competing initial applications. Thus, the MO&O finds 
no basis for any general extension of the modification parameters to 
include changes to antenna height and power at a licensee's originally 
authorized location. The Commission notes that if a licensee who did 
not seek to relocate believed it was impossible to remain at the same 
HAAT at the original location, there is nothing in the Second R&O that 
would prevent such a licensee from applying for a waiver of the 
Commission's rules. The Commission also notes, however, that licensees 
who decided not to relocate under the procedures announced in the 
Second R&O will be permitted to make changes to their technical 
parameters, as provided elsewhere in the MO&O as long as such 
modifications do not expand their 38 dBu service contour.
    46. In addition, because it is highly unlikely that a licensee who 
relocates its base station will be able to install its antenna at the 
identical HAAT specified in its existing authorization, the Commission 
clarifies that licensees seeking to relocate are also permitted to 
modify their HAAT. On the other hand, it would not be necessary for a 
licensee who relocates to operate at the new site at a different power 
level, and thus the Second R&O does not allow a licensees who relocates 
to change its power level.
    47. If, however, as a result of raising the antenna height, the 
height and power combination exceeds the provisions of the ERP vs. 
Antenna Height Table in Sec. 90.729 of the Commission's rules, the 
rules require that the licensee's authorized power shall be reduced 
accordingly so that the operations of the licensee remain in compliance 
with the provisions of that section. Any applicant seeking to relocate 
and to alter operating power levels is permitted to relocate (if the 
application is in conformance with applicable rules), but the Second 
R&O does not establish any authorization pursuant to which the 
applicant may alter operating power levels. The Commission notes that 
after a licensee relocates in accordance with the Commission's 
modification procedures and establishes its 38 dBu service contour, the 
licensee will be able to make changes to its authorization, including 
its power level, provided that doing so does not expand its 38 dBu 
service contour.
    48. As for licensees who were granted Special Temporary Authority 
(STA) at their original locations but at increased height or power, 
those STAs were granted only on a temporary basis, and they conferred 
no guarantee that the licensee would be able to obtain a permanent 
authorization in accordance with those changes. In addition, a licensee 
with an STA to operate at different height or power parameters would 
not be precluded from offering service if the licensee is not granted 
permanent authorization at those parameters. Only the coverage area 
would be altered.
    49. Finally, the Commission notes that petitioners base their 
arguments in part on the assumption that existing stations are likely 
to be protected under new Phase II rules based on a service contour. 
Petitioners further assert that such protection is likely to be based 
on maximum allowable height and power. In fact, the protection afforded 
Phase I licensees by future Phase II licensees has been addressed by 
the Commission in the Third R&O, where the Commission determined that 
Phase I licensees would be protected to their 38 dBu service contour 
based on actual, as opposed to maximum, height and power. This decision 
was affirmed in this MO&O.
    50. In the Second R&O the Commission recognized that a number of 
licensees had obtained STAs to operate base stations at alternative 
locations and that some of these locations would not meet the 
permissible modification requirements established in the Second R&O. 
The Commission believed that it would not be appropriate to require 
licensees to discontinue operations if they had obtained STAs to 
operate at alternate locations and were currently operating or planning 
to operate at such locations. The Second R&O therefore provided that a 
licensee who had been granted an

[[Page 32586]]

STA to operate at an alternative site would be permitted to seek 
permanent authorization at the STA site if the licensee certified that 
it had (1) constructed its base station and placed the base station in 
operation, or commenced service at that site; or (2) taken delivery of 
its base station transceiver on or before the adoption date of the 
Second R&O. The Commission provided that such licensees were permitted 
to seek permanent authorization at the STA site regardless of whether 
locating at the STA site would be in strict conformance with the 
relocation distance limitations prescribed in the modification 
procedure.
    51. The MO&O denies petitions requesting that the Commission 
reconsider or clarify that if a licensee had taken delivery of its base 
station transceiver on or before January 26, 1996, and had filed an 
application for STA on or before January 26, 1996, the licensee need 
not have been granted an STA by January 26, 1996, in order to be 
allowed to seek permanent authorizations at its STA site. The MO&O 
concludes that it was the Commission's intent in the Second R&O that 
the relief provided for licensees operating under STAs be restricted to 
those licensees who had been granted STAs on or before January 26, 
1996.
    52. The Commission finds no basis to conclude that the January 26, 
1996, deadline is arbitrary or capricious. The Commission grants STAs 
to licensees upon a showing of need. Prior to January 26, 1996, the 
Commission granted STAs because 220 MHz licensees would be unable to 
operate at base station sites other than their initially authorized 
locations, because the Commission had not yet announced final 
modification rules for the 220 MHz service. As of January 26, 1996, the 
final modification and relocation procedures had been announced and 
thus there no longer was any need for an STA. After that date it would 
have only been necessary to issue an STA in order to meet a licensee's 
needs in an emergency situation.
    53. As to those licensees who took delivery of their equipment and 
expended time and resources preparing their STA site for construction, 
but who waited to apply for an STA until late January, the Commission 
notes that an STA does not guarantee any right to obtain permanent 
authorization at the STA site. While pre-grant construction may not be 
an uncommon practice, the Commission's rules provide that licensees who 
construct prior to receiving an authorization do so at their own risk. 
Licensees were able to apply for STAs at any time during the planning 
or construction of their base stations and had no reason to delay 
filing their STA applications. At the time the Second R&O was released, 
the construction deadline was February 2, 1996. The Commission's 
regulations caution applicants to file STA applications at least 10 
days prior to the date of proposed operation. Therefore, a licensee who 
filed an STA application after January 23, 1996, could not reasonably 
have expected to receive an STA prior to the construction deadline.
    54. For these reasons, the Commission concludes that a licensee who 
had taken delivery of its base station transceiver on or before January 
26, 1996, must have been granted an STA on or before January 26, 1996, 
in order to be allowed to seek permanent authorization at its STA site. 
The Commission notes that licensees who were not granted STAs on or 
before January 26, 1996, were permitted to modify their base station 
locations in accordance with the relocation rules set forth in 
Secs. 90.753(a) and 90.753(b) of the Commission's rules.
    55. The MO&O denies petitions seeking clarification of the Second 
R&O to allow waiver requests to be accompanied by an alternative site 
proposal. The Second R&O recognized that in certain areas of the Nation 
it is possible that the technical characteristics of base station sites 
available under the relocation procedure may be considerably inferior 
to the technical characteristics of currently licensed sites and sites 
that may exist at nearby, more elevated locations. In these cases, the 
Commission contemplated that licensees would seek a waiver of the 
modification procedures the Commission adopted in the Second R&O. 
Petitioners express concern that the Second R&O did not provide for a 
protection mechanism or for a tolling of the construction period for 
licensees filing such waiver requests. They argue that if a waiver 
request is ultimately denied, a licensee would lose its authorization 
for failure to construct by March 11, 1996.
    56. Under the Commission's general waiver rule for services 
licensed under part 90, a waiver applicant must show that no reasonable 
alternative exists within existing rules. Furthermore, the standard for 
granting waiver requests, as set forth in Wait Radio, is that ``the 
very essence of waiver is the assumed validity of the general rule, and 
also the applicant's violation unless waiver is granted.'' 2 
Thus, a licensee seeking a waiver of the Commission's rules to locate 
its base station at a site not permitted under the modification 
procedure must, in order to apply for a waiver, have no alternative 
available under the rules. If a licensee is able to offer an 
alternative relocation site, then, it could be argued that there is no 
reasonable basis for a waiver.
---------------------------------------------------------------------------

    \2\ Wait Radio v. FCC, 418 F.2d 1153, 1158 (D.C. Cir. 1969).
---------------------------------------------------------------------------

    57. Therefore, a 220 MHz licensee seeking a waiver would need to 
show that site alternatives within the parameters of the Commission's 
relocation rules would be so inferior that they would preclude a viable 
system. To decide otherwise and permit licensees to make alternative 
site showings would not be consistent with this rule and also would 
impair one of the policy objectives set forth in the Second R&O, i.e., 
to provide existing licensees flexibility to complete construction of 
their systems and provide service while not unreasonably impairing the 
opportunity of potential competitors to obtain licenses in the 220 MHz 
service. The Commission believes that it provided sufficient 
flexibility to incumbent licensees by permitting them to relocate their 
base stations while at the same time insulating them from any competing 
filings by new applicants. To go further, as petitioners urge the 
Commission to do, would risk an adverse impact on the competitive 
development of the 220 MHz service.
    58. The Commission concludes that the Second R&O posed a clear and 
reasonable choice for 220 MHz licensee, that if a licensee believed 
that, due to unique terrain features, it wanted to apply for a waiver 
of the modification procedures established in the Second R&O, it could 
chose to do so. The Second R&O did not provide licensees with the 
option of applying for a waiver while at the same time allowing them to 
attempt to retain their option to construct at an alternate, although 
inferior, site which complies with the rules.
    59. The Commission provided licensees with a reasonable framework 
for modifying their base station locations, and petitioners, in the 
Commission's view, have not presented persuasive arguments that the 
Commission should now change that framework to allow for alternative 
site proposals to accompany waiver requests. Furthermore, since the 
Commission is affirming that licensees may not file alternative 
locations proposals with a waiver request, the Commission does not need 
to reach the question of whether to allow licensees whose waiver 
requests are denied a reasonable period of time to construct their 
facilities at an alternative site. The

[[Page 32587]]

Commission notes, however, that the Second R&O stated that the 
Commission will extend the deadline for a licensee to construct its 
station and place it in operation, or commence service beyond August 
15, 1996, by the number of days after June 1, 1996, that pass before a 
licensee's timely filed modification application is actually granted. 
Therefore, a licensee who is granted a waiver after June 1, 1996, will 
have an adequate period of time to construct its station.
    60. Finally, the MO&O denies petitions asking for clarification 
that the Commission will accept waiver requests other than the specific 
type of waiver request discussed in the Second R&O because such 
clarification is unnecessary under the Commission's rules. The 
Commission notes that there is nothing in the Second R&O that would 
prevent a licensee from seeking an appropriate and timely waiver of the 
Commission's rules if the licensee believes it has met the Commission's 
standard for waiver.

Supplemental Final Regulatory Flexibility Analysis

    61. As required by the Regulatory Flexibility Act (RFA),\3\ a Final 
Regulatory Flexibility Analysis (FRFA) was incorporated in Appendix B 
of the 220 MHz Second Report and Order (Second R&O) and in Appendix A 
of the 220 MHz Third Report and Order (Third R&O) in this proceeding. 
The Commission's Supplemental Final Regulatory Flexibility Analysis 
(Supplemental FRFA) in this Memorandum Opinion and Order on 
Reconsideration (MO&O) reflects revised or additional information to 
that contained in those FRFAs. This Supplemental FRFA is thus limited 
to matters raised in response to the Second R&O or the Third R&O that 
are granted on reconsideration in the MO&O. This Supplemental FRFA 
conforms to the RFA, as amended by the Contract with America 
Advancement Act of 1996 (CWAAA).\4\
---------------------------------------------------------------------------

    \3\ See 5 U.S.C. 603.
    \4\ Public Law No. 104-121, 110 Stat. 846 (1996), codified at 5 
U.S.C. 601-612. Title II of the CWAAA is The Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA).
---------------------------------------------------------------------------

I. Need for and Objectives of the Action

    62. The actions taken in this MO&O are in response to petitions for 
reconsideration or clarification of the service rules adopted in the 
Third R&O to implement service in the 220-222 MHz frequency band (220 
MHz service), and in response to petitions for reconsideration or 
clarification of license modification rules adopted in the Second R&O. 
The petitions are denied, with the following exceptions. The rule 
changes adopted in the MO&O grant in part the petitions that Phase I 
licensees be permitted to modify their authorizations to the extent 
that Phase I licensees will be permitted to make modifications to their 
authorizations which do not expand their 38 dBu service contours. Phase 
I licensees will also be permitted to convert their site-by-site 
licenses to a single license. The Commission's objective in permitting 
such modifications is to provide Phase I licensees with maximum 
flexibility while striking a fair balance between the interests of 
incumbent licensees and Phase II licensees.
    63. The Commission also grants the petition that the antenna height 
limitation for stations operating in the 220 MHz band be associated 
with the HAAT of the station's transmitting antenna, rather than the 
antenna's height above ground. The Commission's objective is to 
eliminate instances of licensees inadvertently causing interference to 
adjacent channel operations.
    64. The MO&O removes the 220 MHz service spectrum efficiency 
standard, and thus grants the petition that the Commission eliminate 
the efficiency standard as applied to paging operations. In light of 
the observations of petitioners regarding the unavailability of 
equipment that would meet the standard, the Commission now believes 
that imposition of the standard could inadvertently deny the provision 
of certain services in the 220-222 MHz band, contrary to the intent of 
the Third R&O. The Commission's objective in removing the standard is 
to facilitate the provision of a wide range of services in the 220 MHz 
band.
    65. In addition, the Commission addresses certain issues that the 
Part I Third R&O directs be resolved in this proceeding. Consistent 
with the conclusions reached in the Part I Third R&O, the Commission 
eliminates installment payment plans for small and very small 
businesses participating in the 220 MHz service auction, and increases 
the level of bidding credits for such entities. The Commission will 
also amend its rules to permit auction winners to make their final 
payments within 10 business days after the applicable deadline, 
provided that they also pay a late fee of 5 percent of the amount due.

II. Summary of Significant Issues Raised by the Public in Response 
to the Final Regulatory Flexibility Analyses

    66. No comments were received in direct response to the FRFAs. 
Small Business in Telecommunications (SBT) commented that the 
Commission's position regarding license modifications appeared to 
express more concern for future licensees than for incumbent licensees 
who are currently providing service to the public. The actions taken in 
this MO&O reflect the Commission's recognition that licensed sites may 
become unusable for a variety of reasons. The Commission is persuaded 
by arguments that, in order to maintain the economic and technical 
viability of a licensee's 220 MHz service, Phase I incumbent licensees 
should be permitted to modify their authorizations as long as doing so 
does not expand their service contour. Modifications to Phase I 
licensees' authorizations which do not expand their 38 dBu service 
contour will therefore be permitted.
    67. Phase I licensees will also be able to add new transmitters 
within their 38 dBu service contour without prior authorization from 
the Commission so long as signals from such transmitters do not expand 
the 38 dBu service contour. These modification applications will not be 
subject to public notice and petition to deny provisions in the 
Commission's rules, and will not be subject to mutually exclusive 
applications. In addition, the Commission will allow Phase I 220 MHz 
licensees to convert their site-by-site licenses to a single license 
authorizing operations throughout the incumbents' contiguous and 
overlapping 38 dBu service contours of their constructed multiple 
sites. The Commission believes this decision strikes a fair balance 
between the interests of incumbents and Phase II licensees.
    68. The MO&O, as provided in the Part I Third R&O, eliminates 
installment payment financing for small and very small businesses 
participating in the Phase II 220 MHz service auction. At the same 
time, in order to offer small and very small businesses a meaningful 
opportunity to participate in the auction, the Commission has offered 
higher bidding credits, consistent with those available through a loan.

III. Description and Estimate of the Number of Small Entities to 
Which Rules Will Apply

A. Phase II Licensees

    69. As in the FRFAs, the service regulations the Commission adopts 
to implement the Phase II 220 MHz service would apply to all entities 
seeking a Phase II 220 MHz license. As discussed in the FRFAs, using 
the Small Business Administration (SBA) definitions applicable to 
radiotelephone companies and to cable and pay television services,

[[Page 32588]]

a majority of 220 MHz service entities may be small businesses.
    70. The Commission had not developed a more refined definition of 
small entities applicable to the 220 MHz service, prior to the Third 
R&O, because the Phase II 220 MHz service is a new service. The RFA 
amendments were not in effect until after release of the Third Notice, 
therefore no data was received establishing the number of small 
businesses associated with the Phase II 220 MHz service. In the Third 
R&O, the Commission adopted criteria for defining small businesses and 
very small businesses for purposes of determining their eligibility for 
special provisions such as bidding credits and installment payments. 
The SBA has approved these definitions for Phase II licensees. The 
Commission will use the definitions in estimating the potential number 
of small entities applying for auctionable spectrum.
    71. The Commission defined a small business as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues not exceeding $15 million for the preceding three years. 
Additionally, bidding credits and an installment payment plan were made 
available to each applicant that is a very small business, defined as 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $3 
million for the preceding three years.
    72. No parties submitting or commenting on the petitions for 
reconsideration giving rise to this MO&O commented on the potential 
number of entities that would be small businesses or very small 
businesses, and the Commission is unable to predict accurately the 
number of applicants for the Phase II 220 MHz service that would fit 
the definition of a small business or a very small business for 
competitive bidding purposes.
    73. In the FRFAs, the Commission estimated that it would receive 
approximately 2,220 total applications for the Phase II 220 MHz 
service, i.e., 2,000 Public Safety applications (including 1,000 EMRS 
applications), 90 applications for Economic Area channels, 20 
applications for Regional channels, 100 applications for secondary 
service, and 10 applications for Nationwide channels. These applicants 
(many of whom may be small entities), as well as Phase I 220 MHz 
licensees (discussed below), and at least six equipment manufacturers 
(three of which may be small entities), were subject to the rules 
adopted in the Third R&O.
    74. The Commission justified the auctions-related estimate of 
participation, including an estimate of 120 small entities, by 
referring to its experience in the auction of the 900 MHz SMR service, 
a service similar to the 220 MHz service. In the 900 MHz SMR service, 
which utilized an identical definition for small business, 1,050 
licenses were made available and a total of 128 applications were 
received in the auction. Of these applications, 71 qualified as very 
small businesses and 30 qualified as small businesses. A total of 908 
licenses will be made available for authorization in the 220 MHz 
service auction. Given that 128 qualified applications were received in 
the 900 MHz SMR auction, the Commission anticipated receiving slightly 
fewer or 120 applications in the 220 MHz service auction. Given that 71 
applicants qualified as very small businesses and 30 applicants 
qualified as small businesses in the 900 MHz SMR auction, the 
Commission estimated that proportionately fewer, or 65 applicants, 
would qualify as very small businesses and 27 applicants would qualify 
as small businesses in the 220 MHz service auction.
    75. Because the elimination of installment payments is 
counterbalanced by the Commission's decision to elevate the size of 
bidding credits, the Commission anticipates that the figures it has 
presented regarding the estimated number of small entities 
participating in the 220 MHz service auction will remain unchanged. The 
Commission therefore anticipates that approximately 55 percent of the 
120 applicants will qualify as very small businesses and 23 percent 
will qualify as small businesses.

B. Phase I Licensees

    76. The Commission has not developed a definition of small entities 
applicable to 220 MHz Phase I licensees, or equipment manufacturers for 
purposes of this Supplemental FRFA, and, since the RFA amendments were 
not in effect until after the release of the Third Notice and the 220 
MHz Fourth Notice of Proposed Rulemaking (60 FR 46566, September 7, 
1995) was closed, the Commission did not request information regarding 
the number of small businesses that are associated with the 220 MHz 
service.
    77. To estimate the number of Phase I licensees and the number of 
220 MHz equipment manufacturers that are small businesses the 
Commission shall use the relevant definitions provided by SBA.
    78. There are approximately 1,515 non-nationwide Phase I licensees 
and four nationwide licensees currently authorized to operate in the 
220 MHz band. To estimate the number of such entities that are small 
businesses, the Commission applies the definition of a small entity 
under SBA rules applicable to radiotelephone companies. This definition 
provides that a small entity is a radiotelephone company employing no 
more than 1,500 persons. According to the Bureau of the Census, only 12 
radiotelephone firms out of a total of 1,178 such firms which operated 
during 1992 had 1,000 or more employees. Therefore, even if all 12 of 
these firms were 220 MHz service companies, nearly all 220 MHz service 
companies were small businesses under the SBA's definition.

C. Radio Equipment Manufacturers

    79. The Commission anticipates that at least six radio equipment 
manufacturers will be affected by the decisions in this proceeding. 
According to SBA regulations, a radio and television broadcasting and 
communications equipment manufacturer must have 750 or fewer employees 
in order to qualify as a small business concern. Census Bureau data 
indicate that there are 858 U.S. firms that manufacture radio and 
television broadcasting and communications equipment, and that 778 of 
these firms have no more than 750 employees and would therefore be 
classified as small entities. The Commission does not have information 
that indicates how many of the six radio equipment manufacturers 
associated with this proceeding are among these 778 firms. However, 
because three of these manufacturers (Motorola, Ericsson, and E.F. 
Johnson) are major, nationwide radio equipment manufacturers, the 
Commission concludes that these manufacturers would not qualify as 
small business.

IV. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    80. Phase I non-nationwide licensees who modify their 
authorizations as outlined in this MO&O or add new transmitters within 
their 38 dBu service contour will be required to file an FCC Form 600 
with the Commission. Phase I non-nationwide licensees who decide to 
convert their site-by-site licenses to a single license authorizing 
operations throughout the incumbents' contiguous and overlapping 38 dBu 
service contours of their constructed multiple sites will also be 
required to file an FCC Form 600. Phase I, non-nationwide licensees 
will be required to file an FCC Form 600 to comply with the requirement 
that they modify their authorization to reflect the ERP at which they 
were operating at the time the decisions adopted in the Third R&O

[[Page 32589]]

became effective. The FCC Form 600 is currently in use and has already 
received OMB clearance.
    81. Phase I licensees authorized on Channels 161-200 and Channels 
1-40 will be required to coordinate the addition, removal, or 
modification of station sites among themselves to avoid interference. 
Such licensees will also be required to include, in their application 
for minor modification of their authorization to add, remove, or modify 
a station site, a certification that the station has been appropriately 
coordinated. Phase I licensees authorized on Channels 161-200 will be 
required to coordinate the addition, removal, or modification of 
station sites with Phase II licensees authorized on Channels 1-40. Such 
Phase I licensees will also be required to include, in their 
application for minor modification of their authorization to add, 
remove, or modify a station site, a certification that the station has 
been appropriately coordinated. Licensees seeking a waiver of 
Sec. 90.729(b) of the Commission's rules to operate fixed stations in 
the 221-222 MHz band at a power level of 500 watts ERP will be required 
to gain the consent for such operation from all affected 220 MHz 
licensees.

V. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    82. The actions taken in this MO&O are in response to petitions for 
reconsideration including, the Commission believes, several filed by 
small businesses. The changes minimize any possible significant 
economic impact on small entities, while remaining consistent with the 
objectives of this proceeding.
    83. The MO&O grants the petitions of Phase I licensees to the 
extent of permitting, upon application, modifications to Phase I 
licensees' authorizations which do not expand their 38 dBu service 
contour. Phase I licensees also will be permitted to convert their 
site-by-site licenses to a single license. The deregulatory nature of 
these steps helps minimize the economic impact of telecommunications 
regulation on small entities.
    84. By removing the 220 MHz service spectrum efficiency standard, 
the MO&O grants the petition that the Commission eliminate the 
efficiency standard as applied to paging operations. The deregulatory 
nature of this step helps to minimize the economic impact of 
telecommunications regulation on small entities. We considered 
retaining the standard and exempting paging only, but rejected this 
course as potentially discouraging the provision of innovative 
services. The Commission also considered replacing the standard with a 
more lenient standard that would be made stricter over time, but 
rejected this course because the Commission believes operators would 
continue using equipment acquired under the more lenient standard, in 
which case the later standard would have little effect. The Commission 
also considered conforming the 220 MHz band spectrum efficiency 
standard to the standard used in the Refarming proceeding. The 
Commission concluded, however, that because it applies only to 
aggregated, contiguous channels, and expires in 2001, the 220 MHz 
standard touches too few licensees for too short a time to 
significantly increase equipment development for the refarmed bands.
    85. The Commission also believes that small businesses may be 
prominent players in developing this spectrum, and these businesses 
would directly benefit from a flexible spectrum use policy that enables 
them to respond efficiently to marketplace demand. Given the relatively 
small amount of spectrum assigned in a 220 MHz license, the Commission 
thinks it is reasonable to expect that acquisition of the 220 MHz Phase 
II licenses may be relatively affordable and therefore this service may 
be particularly attractive to small businesses.
    86. Consistent with the conclusions reached in the Part 1 Third 
R&O, the MO&O eliminates installment payment plans for small and very 
small businesses participating in the 220 MHz service auction, and 
increase the level of bidding credits for such entities. The Commission 
will also amend its rules to permit auction winners to make their final 
payments within 10 business days after the applicable deadline, 
provided that they also pay a late fee of 5 percent of the amount due.
    87. While installment payment plans for small entities in the 220 
MHz service are eliminated in the MO&O, the Commission found that 
better alternatives to assist small businesses as well as ensure 
provision of new services to the public are to raise bidding credits 
for existing categories of small entities. The Commission believes that 
bidding credits of sufficient size will enable small businesses to 
secure private financing. This suggestion is consistent with the 
Commission's experience in other auctions in which installment payments 
were not offered and small entities nevertheless have been successful 
(e.g., the auction of Wireless Communications Service licenses, for 
which bidding credits were heightened to accommodate the lack of 
installment payments). Prior to the MO&O, bidding credits of 10 percent 
were offered to small businesses and 25 percent to very small 
businesses. The Commission now offers bidding credits of 25 percent to 
small businesses and 35 percent to very small businesses. The levels of 
bidding credits adopted offer a reasonable accommodation for the 
elimination of installment payments.

VI. Report to Congress

    88. The Commission will send a copy of this Supplementary Final 
Regulatory Flexibility Analysis, along with the MO&O, in a report to 
Congress pursuant to the Small Business Regulatory Enforcement Fairness 
Act of 1996.5 In addition, the Commission will send a copy 
of the MO&O, including this Supplemental FRFA to the Chief Counsel for 
Advocacy for SBA.
---------------------------------------------------------------------------

    \5\ See 5 U.S.C. 801(a)(1)(A).
---------------------------------------------------------------------------

Ordering Clauses

    89. Accordingly, it is ordered, that the petitions for 
reconsideration or clarification filed by American Mobile 
Telecommunications Association; Incom Communications Corporation, SEA, 
Inc., In Touch Services, Inc., Philip Adler dba Communications 
Management Company, and Aircom Communications, Inc.; In Touch Services, 
Inc.; Police Emergency Services, Inc. and Bostom and Associates 
Company; and SMR Advisory Group, L.C. with respect to the 220 MHz 
Second Report and Order in PR Docket No. 89-552 and GN Docket No. 93-
252, are granted to the extent provided herein and otherwise are 
denied. This action is taken pursuant to sections 4(i), 4(j), 303(d), 
303(r), 309(j), 332, and 405 of the Communications Act of 1934, 47 
U.S.C. 154(i), 154(j), 303(d), 303(r), 309(j), 332, 405.
    90. It is further ordered, that the petitions for reconsideration 
or clarification filed by American Mobile Telecommunications 
Association, Inc.; Comtech Communications, Inc.; Glenayre Technologies, 
Inc.; Global Cellular Communications, Inc.; INTEK Diversified Corp.; 
Metricom, Inc.; National Communications Group, Capital Communications 
Group, Columbia Communications Group, Lonesome Dove Communications, 
All-American Communications Partners, and Shiner Bock Group; Personal 
Communications Industry Association; SEA Inc.; Rush Network Corp.; and 
SMR Advisory Group L.C. with respect to the 220 MHz Third Report and 
Order in PR Docket No. 89-552 and GN Docket No. 93-252, are granted to 
the extent provided herein and otherwise are

[[Page 32590]]

denied. This action is taken pursuant to sections 4(i), 4(j), 303(d), 
303(r), 309(j), 332, and 405 of the Communications Act of 1934, 47 
U.S.C. 154(i), 154(j), 303(d), 303(r), 309(j), 332, 405.
    91. It is further ordered that the Commission's rules are amended 
as indicated. It is further ordered that the provisions of this Order 
and the Commission's rules, as amended in this decision, shall become 
effective August 11, 1998.
    92. It is further ordered that a Public Notice will be issued by 
the Wireless Telecommunications Bureau following the adoption of this 
Order announcing when applications must be filed by Phase I, non-
nationwide licensees in order to enable such licensees to comply with 
the requirement that they modify their authorization to reflect the ERP 
at which they were operating at the time the decisions adopted in the 
220 MHz Third Report and Order became effective.
    93. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Order, including the Supplemental Final Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 90

    Radio.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    For the reasons stated in the preamble part 90 of title 47 of the 
Code of Federal Regulations is amended as follows:

PART 90--PRIVATE LAND MOBILE SERVICES

    1. The authority citation for Part 90 continues to read as follows:

    Authority: 47 U.S.C. 154, 251-2, 303, 309, and 332, unless 
otherwise noted.

    2. Section 90.203 is amended by revising paragraph (k) to read as 
follows:


Sec. 90.203  Type acceptance required.

* * * * *
    (k) For transmitters operating on frequencies in the 220-222 MHz 
band, type acceptance will only be granted for equipment with channel 
bandwidths up to 5 kHz, except that type acceptance will be granted for 
equipment operating on 220-222 MHz band Channels 1 through 160 
(220.0025 through 220.7975/221.0025 through 221.7975), 171 through 180 
(220.8525 through 220.8975/221.8525 through 221.8975), and 186 through 
200 (220.9275 through 220.9975/221.9275 through 221.9975) with channel 
bandwidths greater than 5 kHz.
    3. Section 90.711 is amended by revising paragraph (a) introductory 
text to read as follows:


Sec. 90.711  Processing of Phase II applications.

    (a) Phase II applications for authorizations on Channels 166 
through 170 and Channels 181 through 185 will be processed on a first-
come, first-served basis. When multiple applications are filed on the 
same day for these frequencies in the same geographic area, and 
insufficient frequencies are available to grant all applications (i.e., 
if all applications were granted, violation of the station separation 
provisions of Sec. 90.723(k) would result), these applications will be 
considered mutually exclusive and will be subject to random selection 
procedures pursuant to Sec. 1.972 of this chapter.
* * * * *
    4. Section 90.723 is amended by revising paragraphs (e) and (f), 
redesignating paragraphs (g), (h), and (i) as paragraphs (i), (j), and 
(k), respectively, and by adding paragraphs (g) and (h) to read as 
follows:


Sec. 90.723  Selection and assignment of frequencies.

* * * * *
    (e) Phase II licensees authorized on 220-221 MHz frequencies 
assigned from Sub-band B will be required to geographically separate 
their base station or fixed station transmitters from the base station 
or fixed station receivers of Phase I licensees authorized on 221-222 
MHz frequencies 200 kHz removed or less in Sub-band A in accordance 
with the Table in paragraph (d) of this section. Such Phase II 
licensees will not be required to geographically separate their base 
station or fixed station transmitters from receivers associated with 
additional transmitter sites that are added by such Phase I licensees 
in accordance with the provisions of Sec. 90.745(a).
    (f) Phase II licensees with base or fixed stations transmitting on 
220-221 MHz frequencies assigned from Sub-band B and Phase II licensees 
with base or fixed stations receiving on Sub-band A 221-222 MHz 
frequencies, if such transmitting and receiving frequencies are 200 kHz 
or less removed from one another, will be required to coordinate the 
location of their base stations or fixed stations to avoid interference 
and to cooperate to resolve any instances of interference in accordance 
with the provisions of Sec. 90.173(b).
    (g) Phase I licensees with base or fixed stations transmitting on 
220-221 MHz frequencies assigned from Sub-band B and Phase I licensees 
with base or fixed stations receiving on Sub-band A 221-222 MHz 
frequencies (if such transmitting and receiving frequencies are 200 kHz 
or less removed from one another) that add, remove, or modify station 
sites in accordance with the provisions of Sec. 90.745(a) will be 
required to coordinate such actions with one another to avoid 
interference and to cooperate to resolve any instances of interference 
in accordance with the provisions of Sec. 90.173(b).
    (h) Phase I licensees with base or fixed stations transmitting on 
220-221 MHz frequencies assigned from Sub-band B that add, remove, or 
modify station sites in accordance with the provisions of 
Sec. 90.745(a) will be required to coordinate such actions with Phase 
II licensees with base or fixed stations receiving on Sub-band A 221-
222 MHz frequencies 200 kHz or less removed.
* * * * *
    5. Section 90.729 is amended by revising paragraphs (b) and (c) 
introductory text to read as follows:


Sec. 90.729  Limitations on power and antenna height.

* * * * *
    (b) The maximum permissible ERP for mobile units is 50 watts. 
Portable units are considered as mobile units. Licensees operating 
fixed stations or paging base stations transmitting on frequencies in 
the 221-222 MHz band may not operate such fixed stations or paging base 
stations at power levels greater than 50 watts ERP, and may not 
transmit from antennas that are higher than 7 meters above average 
terrain, except that transmissions from antennas that are higher than 7 
meters above average terrain will be permitted if the effective 
radiated power of such transmissions is reduced below 50 watts ERP by 
20 log10(h/7) dB, where h is the height above average 
terrain (HAAT), in meters.
    (c) Base station and fixed station transmissions on base station 
transmit Channels 196-200 are limited to 2 watts ERP and a maximum 
antenna HAAT of 6.1 meters (20 ft). Licensees authorized on these 
channels may operate at power levels above 2 watts ERP or with a 
maximum antenna HAAT greater than 6.1 meters (20 ft) if:
* * * * *
    6. Section 90.733 is amended by revising paragraphs (d), (e), and 
(g) to read as follows:

[[Page 32591]]

Sec. 90.733  Permissible operations.

* * * * *
    (d) Licensees, except for licensees authorized on Channels 161 
through 170 and 181 through 185, may combine any number of their 
authorized, contiguous channels (including channels derived from 
multiple authorizations) to form channels wider than 5 kHz.
    (e) In combining authorized, contiguous channels (including 
channels derived from multiple authorizations) to form channels wider 
than 5 kHz, the emission limits in Sec. 90.210(f) must be met only at 
the outermost edges of the contiguous channels. Transmitters shall be 
tested to confirm compliance with this requirement with the 
transmission located as close to the band edges as permitted by the 
design of the transmitter. The frequency stability requirements in 
Sec. 90.213 shall apply only to the outermost of the contiguous 
channels authorized to the licensee. However, the frequency stability 
employed for transmissions operating inside the outermost contiguous 
channels must be such that the emission limits in Sec. 90.210(f) are 
met over the temperature and voltage variations prescribed in 
Sec. 2.995 of this chapter.
* * * * *
    (g) The transmissions of a Phase I non-nationwide licensee's paging 
base station, or fixed station transmitting on frequencies in the 220-
221 MHz band, must meet the requirements of Secs. 90.723(d), (g), (h), 
and (k), and 90.729, and such a station must operate at the effective 
radiated power and antenna height-above-average-terrain prescribed in 
the licensee's land mobile base station authorization.
* * * * *
    7. Section 90.745 is added to read as follows:


Sec. 90.745  Phase I licensee service areas.

    (a) A Phase I licensee's service area shall be defined by the 
predicted 38 dBu service contour of its authorized base station or 
fixed station transmitting on frequencies in the 220-221 MHz band at 
its initially authorized location or at the location authorized in 
accordance with Secs. 90.751, 90.753, 90.755 and 90.757 if the licensee 
has sought modification of its license to relocate its initially 
authorized base station. The Phase I licensee's predicted 38 dBu 
service contour is calculated using the F(50,50) field strength chart 
for Channels 7-13 in Sec. 73.699 (Fig. 10) of this chapter, with a 9 dB 
correction factor for antenna height differential, and is based on the 
authorized effective radiated power (ERP) and antenna height-above-
average-terrain of the licensee's base station or fixed station. Phase 
I licensees are permitted to add, remove, or modify transmitter sites 
within their existing service area without prior notification to the 
Commission so long as their predicted 38 dBu service contour is not 
expanded. The incumbent licensee must, however, notify the Commission 
within 30 days of the completion of any changes in technical parameters 
or additional stations constructed through a minor modification of its 
license. Such notification must be made by submitting the appropriate 
FCC form and must include the appropriate filing fee, if any. These 
minor modification applications are not subject to public notice and 
petition to deny requirements or mutually exclusive applications.
    (b) Phase I licensees holding authorizations for service areas that 
are contiguous and overlapping may exchange these authorizations for a 
single license, authorizing operations throughout the contiguous and 
overlapping service areas. Phase I licensees exercising this license 
exchange option must submit specific information for each of their 
external base station sites.
    8. The section heading of Sec. 90.769 is revised to read as 
follows:


Sec. 90.769  Construction and implementation of Phase II nationwide 
licenses.

* * * * *
    9. Section 90.1011 is revised to read as follows:


Sec. 90.1011  Submission of upfront payments and down payments.

    (a) The Commission will require applicants to submit an upfront 
payment prior to the start of a 220 MHz Service auction. The amount of 
the upfront payment for each geographic area license auctioned and the 
procedures for submitting it will be set forth by the Wireless 
Telecommunications Bureau in a public notice in accordance with 
Sec. 1.2106 of this chapter.
    (b) Each winning bidder in a 220 MHz Service auction must submit a 
down payment to the Commission in an amount sufficient to bring its 
total deposits up to 20 percent of its winning bid within ten (10) 
business days following the release of a Public Notice announcing the 
close of bidding.
    10. Section 90.1013 is revised to read as follows:


Sec. 90.1013  Long-form application (FCC Form 601).

    Each successful bidder for a 220 MHz geographic area license must 
submit a long-form application (FCC Form 601) within ten (10) business 
days after being notified by Public Notice that it is the winning 
bidder. Applications for 220 MHz geographic area licenses on FCC Form 
601 must be submitted in accordance with Sec. 1.2107 of this chapter, 
all applicable procedures set forth in the rules in this part, and any 
applicable Public Notices that the Commission may issue in connection 
with an auction. After an auction, the Commission will not accept long-
form applications for 220 MHz geographic area licenses from anyone 
other than the auction winners and parties seeking partitioned licenses 
pursuant to agreements with auction winners under Sec. 90.1019 of this 
chapter.
    11. Section 90.1015 is revised to read as follows:


Sec. 90.1015  License grant, denial, default, and disqualification.

    (a) Unless otherwise specified by Public Notice, auction winners 
are required to pay the balance of their winning bids in a lump sum 
within ten (10) business days following the release of a Public Notice 
establishing the payment deadline. If a winning bidder fails to pay the 
balance of its winning bids in a lump sum by the applicable deadline as 
specified by the Commission, it will be allowed to make payment within 
ten (10) business days after the payment deadline, provided that it 
also pays a late fee equal to five percent of the amount due. When a 
winning bidder fails to pay the balance of its winning bid by the late 
payment deadline, it is considered to be in default on its license(s) 
and subject to the applicable default payments. Licenses will be 
awarded upon the full and timely payment of winning bids and any 
applicable late fees.
    (b) A bidder that withdraws its bid subsequent to the close of 
bidding, defaults on a payment due, or is disqualified, is subject to 
the payments specified in Sec. 1.2104(g), Sec. 1.2109, and Sec. 90.1007 
of this chapter, as applicable.
    12. Section 90.1017 is revised to read as follows:


Sec. 90.1017  Bidding credits for small businesses and very small 
businesses.

    (a) Bidding credits. A winning bidder that qualifies as a small 
business or a consortium of small businesses as defined in 
Sec. 90.1021(b)(1) or Sec. 90.1021(b)(4) may use a bidding credit of 25 
percent to lower the cost of its winning bid. A winning bidder that 
qualifies as a very small business or a consortium of very small 
businesses as defined in Sec. 90.1021(b)(2) or Sec. 90.1021(b)(4) may 
use a bidding credit

[[Page 32592]]

of 35 percent to lower the cost of its winning bid.
    (b) Unjust enrichment--Bidding credits. (1) If a small business or 
very small business (as defined in Secs. 90.1021(b)(1) and 
90.1021(b)(2), respectively) that utilizes a bidding credit under this 
section seeks to transfer control or assign an authorization to an 
entity that is not a small business or a very small business, or seeks 
to make any other change in ownership that would result in the licensee 
losing eligibility as a small business or very small business, the 
small business or very small business must seek Commission approval and 
reimburse the U.S. government for the amount of the bidding credit, 
plus interest based on the rate for ten year U.S. Treasury obligations 
applicable on the date the license was granted, as a condition of 
approval of the assignment, transfer, or other ownership change.
    (2) If a very small business (as defined in Sec. 90.1021(b)(2)) 
that utilizes a bidding credit under this section seeks to transfer 
control or assign an authorization to a small business meeting the 
eligibility standards for a lower bidding credit, or seeks to make any 
other change in ownership that would result in the licensee qualifying 
for a lower bidding credit under this section, the licensee must seek 
Commission approval and reimburse the U.S. government for the 
difference between the amount of the bidding credit obtained by the 
licensee and the bidding credit for which the assignee, transferee, or 
licensee is eligible under this section, plus interest based on the 
rate for ten year U.S. Treasury obligations applicable on the date the 
license was granted, as a condition of the approval of such assignment, 
transfer, or other ownership change.
    (3) The amount of payments made pursuant to paragraphs (b)(1) and 
(b)(2) of this section will be reduced over time as follows: A transfer 
in the first two years of the license term will result in a forfeiture 
of 100 percent of the value of the bidding credit (or the difference 
between the bidding credit obtained by the original licensee and the 
bidding credit for which the post-transfer licensee is eligible); in 
year 3 of the license term the payment will be 75 percent; in year 4 
the payment will be 50 percent; and in year 5 the payment will be 25 
percent, after which there will be no assessment.

[FR Doc. 98-15710 Filed 6-11-98; 8:45 am]
BILLING CODE 6712-01-P