[Federal Register Volume 64, Number 121 (Thursday, June 24, 1999)]
[Rules and Regulations]
[Pages 33762-33785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15329]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 22 and 90

[WT Docket No. 96-18; PR Docket No. 93-253; FCC 99-98]


Future Development of Paging Systems

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document concerns rules and policies for the geographic 
area licensing of Common Carrier Paging and exclusive 929 MHz Private 
Carrier Paging, and competitive bidding procedures for auctioning 
mutually exclusive applications for these licenses. This document also 
adopts rules concerning the partitioning and disaggregation of paging 
licenses, and institutes procedures designed to deter application fraud 
on shared paging channels. The intended effect of this action is to 
clarify and resolve issues pertaining to the paging service prior to 
the Commission's auctions of remaining spectrum within that service.

EFFECTIVE DATES: Effective August 23, 1999.

ADDRESSES: Federal Communications Commission, 445 Twelfth Street, SW, 
Washington DC 20554.

FOR FURTHER INFORMATION CONTACT: For non-auction information: Cyndi 
Thomas or Todd Slamowitz, Commercial Wireless Division, Wireless 
Telecommunications Bureau, at (202) 418-7240. For auction information: 
Anne Napoli, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau, at (202) 418-0660. TTY (202) 418-7233.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Memorandum Opinion 
and Order on Reconsideration and Third Report and Order in WT Docket 
No. 96-18 and PR Docket No. 93-253, FCC 99-98, adopted on May 13, 1999, 
and released on May 24, 1999. The complete text of this decision is 
available for inspection and copying during normal business hours in 
the

[[Page 33763]]

FCC Reference Center, 445 Twelfth Street, SW, Room CY-A257, Washington 
DC, and also may be purchased from the Commission's copy contractor, 
International Transcription Service, (202) 857-3800, 445 Twelfth 
Street, SW, Room CY-B400, Washington DC. The complete text is also 
available under the file name fcc99098.wp on the Commission's internet 
site at http://www.fcc.gov/Bureaus/Wireless/Orders/1999.

Paperwork Reduction Act

    The Second R&O and this MO&O and Third R&O contain a revision to an 
existing information collection that has been approved by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act, Public 
Law No. 104-13 (3060-0697). The Commission, as part of its continuing 
effort to reduce paperwork burdens, will invite the general public and 
the OMB to comment on this information collection in a separate Federal 
Register publication.

Synopsis of Memorandum Opinion and Order on Reconsideration and 
Third Report and Order

Memorandum Opinion and Order on Reconsideration

    1. The Commission adopts a Memorandum Opinion and Order on 
Reconsideration (MO&O) and Third Report and Order (Third R&O) that 
responds to petitions for reconsideration or clarification of the 
Second Report and Order (Second R&O) and Further Notice of Proposed 
Rulemaking (Further Notice) adopted in this proceeding on February 19, 
1997. The Second R&O (62 FR 11616, March 12, 1997) established rules to 
govern the geographic area licensing of Common Carrier Paging (CCP) and 
exclusive 929 MHz Private Carrier Paging (PCP), and procedures for 
auctioning mutually exclusive applications for these licenses. In 
general, the MO&O affirms the rules adopted in the Second R&O, with 
some changes and clarifications, stating the Commission's continuing 
belief that the adopted rules will facilitate competition in the 
wireless market by encouraging a more diverse array of entities, 
including small businesses and rural telephone companies, to offer 
paging services to the public. The Further Notice (62 FR 11616, March 
12, 1997) sought comment on issues concerning partitioning and 
disaggregation of paging licenses, coverage requirements for nationwide 
geographic area licensees, and possible revisions to application 
procedures for shared channels. The Third R&O modifies the paging rules 
to permit partitioning by all nationwide geographic area licensees and 
to allow disaggregation by all geographic area licensees; adopts rules 
governing the coverage requirements for parties to partitioning or 
disaggregation agreements involving non-nationwide geographic area 
licenses, and the license term of partitioned or disaggregated 
geographic area licenses; permits geographic area licensees to combine 
partitioning and disaggregation; and establishes additional mechanisms 
to inform consumers of the rules governing paging licenses and the 
danger of fraudulent schemes perpetrated by application mills.

Dismissal of Pending Applications

    2. The MO&O denies the petitions seeking reconsideration of the 
Commission's decision to dismiss all mutually exclusive paging 
applications and all paging applications filed after July 31, 1996. In 
the Second R&O, the Commission stated that, in light of its decision to 
adopt geographic area licensing, it would dismiss all pending mutually 
exclusive paging applications, including those filed under the interim 
rules adopted in the First R&O (61 FR 21380, May 10, 1996), and all 
applications filed after July 31, 1996. On December 14, 1998, the 
Commercial Wireless Division of the Wireless Telecommunications Bureau 
dismissed these applications pursuant to the Second R&O.1
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    \1\ Revision of Part 22 and Part 90 of the Commission's Rules to 
Facilitate Future Development of Paging Systems, Order, WT Docket 
No. 96-18, DA 98-2543 (Dec. 14, 1998) (CWD Order).
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    3. The Commission disagrees with petitioners' arguments that the 
Commission did not notify the public prior to release of the Second R&O 
of its intent to dismiss these applications; that the Commission is 
unlawfully applying new rules retroactively; that applicants reasonably 
relied on the Commission's prior procedures for processing 
applications; and that the only reason for licensing paging spectrum 
through competitive bidding is to raise money for the Federal 
government. The Commission notes that courts have consistently 
recognized that the filing of an application creates no vested right to 
continued application of licensing rules that were in effect when the 
application was filed, and an application may be dismissed if 
substantive standards subsequently change. In this proceeding, the 
Commission dismissed pending applications based on its substantive rule 
changes establishing geographic area licensing for paging. In light of 
the notice the Commission gave of its interest in instituting 
geographic area licensing, and of its intent not to process 
applications filed after July 31, 1996, the Commission does not believe 
that any applicants could have reasonably relied on its processing 
applications filed after that date.
    4. Moreover, the Commission does not think that carriers that had 
previously pending applications will be irreparably harmed by a 
decision to proceed to the auction of paging licenses without any 
further processing of site-specific applications because such 
applications were dismissed without prejudice and these applicants may 
therefore file applications to participate in the auctions. The 
Commission states that the reasons for adopting competitive bidding 
procedures for paging licenses are set forth at length in the Notice of 
Proposed Rulemaking (Notice) (61 FR 6199, February 16, 1996) and Second 
R&O, and these reasons do not include revenue-raising considerations. 
The Commission also notes that it concluded in the Competitive Bidding 
Second R&O (59 FR 162981, May 4, 1994) that mutually exclusive initial 
paging applications were auctionable under the auction authority 
provided the Commission by the 1993 Budget Act. This conclusion is 
unchanged by the Balanced Budget Act of 1997, which amended Section 
309(j) to expand the Commission's auction authority.
    5. Petitioners also assert that dismissal of pending applications 
undermines the policy goal of expediting the licensing of paging 
spectrum because dismissal will delay the initiation of paging service 
in many market areas and will prevent the expansion of networks. The 
Commission finds, however, that it was the formidable administrative 
burden of processing site-by-site applications, and the substantial 
number of mutually exclusive applications that were filed, which 
created a backlog of pending applications and caused their processing 
to be delayed. The Commission further rejects petitioners' suggestion 
to hold an additional auction for the purpose of resolving mutually 
exclusive site-by-site licenses, prior to conducting an auction for 
geographic areas containing these same sites, because it would be 
grossly inefficient.
    6. Citing section 309(j)(6)(E) of the Communications Act of 1934, 
petitioners contend that the Commission may not proceed to geographic 
area licensing without first attempting to avoid mutual exclusivity 
through ``engineering solutions, negotiation, threshold qualifications, 
service regulations, and other means.'' The Commission has previously

[[Page 33764]]

construed Section 309(j)(6)(E) to mean that it has an obligation to 
attempt to avoid mutual exclusivity by the methods prescribed therein 
only when it would further the public interest goals of Section 
309(j)(3). In the Second R&O, the Commission concluded that the public 
interest would be better served by licensing all remaining paging 
spectrum through a geographic area licensing scheme than by processing 
additional site-specific licenses. The Commission thereby effectively 
determined that it would not be in the public interest to implement 
other licensing schemes or other processes that avoid mutual 
exclusivity, thus fulfilling its obligation under Section 309(j)(6)(E).
    7. Several petitions for reconsideration and an application for 
review were filed in response to the CWD Order. The parties generally 
reiterate the same arguments against dismissing their applications that 
were set forth in the petitions for reconsideration filed in response 
to the Second R&O. Having already considered these arguments, the 
Commission denies the application for review filed by Robert J. and 
Laurie F. Keller d/b/a Western Maryland Wireless Company on December 
28, 1998, and petitions for reconsideration filed on January 13, 1999, 
by: AirTouch Paging, AirTouch Paging of California, AirTouch Paging of 
Kentucky, AirTouch Paging of Texas, AirTouch Paging of Virginia, Allcom 
Communications, Inc., Arch Capitol District, Inc., Arch Connecticut 
Valley, Inc., Arch Southeast Communications, Inc., Becker Beeper, Inc., 
Blasiar, Inc., Electronic Engineering Company, Hello Pager Company, 
Paging Systems Management, Inc., PowerPage Inc., Robert Kester et al., 
Satellite Paging, Inc., South Texas Paging, Inc. (Arthur Flemmer), USA 
Mobile Communications, Inc. II, Westlink Licensee Corporation, and 
Westlink of New Mexico Licensee.

Geographic Areas

    8. The Commission grants the petitions that request the Commission 
to use Major Economic Areas (MEAs) instead of Major Trading Areas 
(MTAs) for geographic licensing of the upper bands (929 and 931 MHz). 
When the Commission adopted the Second R&O, it had not established 
MEAs, which were first developed by the Commission to define geographic 
license areas for the Wireless Communications Service (WCS). Although 
MTAs and MEAs are substantially similar, the Commission finds that 
geographic area licensing based on MEAs will provide geographic area 
licensees with benefits that could not be obtained if the Commission 
maintained MTAs as the geographic area for the 929-931 MHz band. 
Licensees with paging systems in both the upper bands and the lower 
bands (35-36 MHz, 43-44 MHz, 152-159 MHz, and 454-460 MHz), which will 
be licensed as EAs, will benefit from the use of MEAs for the upper 
bands because MEAs are composed of EAs. The fact that the geographic 
borders of MEAs coincide with those of the EAs contained within the 
MEAs will enable licensees with both upper and lower band systems to 
operate more efficiently. The Commission also finds that adopting MEAs 
on the upper bands will enhance competition between the paging systems 
on the lower channels and the paging systems on the upper bands because 
the paging systems on the lower channels will be able to combine their 
EAs to form MEAs. The Commission also acknowledges that licensees will 
benefit economically from licensing based on a geographic designation 
that is in the public domain.
    9. The Commission rejects one petitioner's contention that the 
decision to eliminate section 90.496 of the Commission's rules was 
arbitrary and capricious and an unlawful retroactive rulemaking without 
the opportunity for notice and comment. In the Second R&O, the 
Commission eliminated section 90.496 of its rules, which provided for 
extended implementation of construction and operations deadlines for 
proposed systems on the 929-930 MHz band that qualified for regional or 
nationwide channel exclusivity. As explained in the Notice, the 
Commission found that extended implementation would be unnecessary 
under its geographic area licensing scheme and, in fact, would hinder 
geographic area licensing because construction extensions for 
incumbents could effectively allow them to occupy an entire geographic 
area. The Commission sought comment in the Notice on its proposal to 
eliminate extended implementation and to dismiss all ``slow growth'' 
applications pending at the time an order pursuant to the Notice was 
adopted without prejudice to refile under its geographic area licensing 
scheme. The Commission affirms removal of section 90.496 of its rules 
and clarifies that removal of the rule does not affect the rights 
associated with extended implementation authority granted under that 
rule as of May 12, 1997, the effective date of the Second R&O. In 
addition, any requests pending as of May 12, 1997, are dismissed 
without prejudice to obtain licenses under the geographic area 
licensing rules.
    10. The Commission rejects one petitioner's request to use BTAs for 
geographic area licensing in the lower bands, affirming its 
determination that EAs are appropriate for geographic area licensing on 
the 35-36 MHz, 43-44 MHz, 152-159 MHz, and 454-460 MHz bands. The 
petitioner contends that the size of EAs will prevent small and rural 
paging companies from participating in the geographic area licensing 
auctions; that EAs contain major urban areas as well as rural and 
suburban areas, and that small and rural companies are only interested 
in the rural and suburban areas of the EA; and that partitioning does 
not address the concerns of small and rural companies. Contrary to the 
petitioner's arguments, the Commission believes that the size of EA 
geographic areas will not prevent paging operators of smaller systems 
from participating in geographic area licensing auctions. The 
Commission also believes bidding credits will allow small businesses to 
compete against larger bidders. Further, small and rural paging 
companies will not be prevented from expanding their systems even if 
they choose not to participate in the geographic area licensing 
auctions, because the Commission will allow geographic area licensees 
to partition their service areas and it has no reason to believe that 
geographic area licensees will be unwilling to enter into partitioning 
agreements. The Commission continues to conclude that EAs, which the 
majority of commenters supported, best reflect the geographic area that 
the paging licensees on the lower channels seek to serve.
    11. The Commission amends section 22.503(b)(3) of the Commission's 
rules to include three additional EA-like areas for the U.S. 
territories, which the Commission inadvertently omitted in the Second 
R&O. The Commission adds the following three EA-like service areas: 
Guam and the Northern Mariana Islands (EA 173); Puerto Rico and the 
United States Virgin Islands (EA 174); and American Samoa (EA 175).

Highly Encumbered Areas

    12. The Commission denies petitions arguing that those incumbent 
licensees that have previously satisfied certain coverage requirements 
should receive a geographic area license without competitive bidding. 
Petitioners advocate granting a market area license to an incumbent 
providing coverage to at least 70 percent, two-thirds, or a similar 
portion of the market. Petitioners propose a two-step process for 
granting market area licenses. First,

[[Page 33765]]

where an incumbent operator certifies that it covers 70 percent of a 
market area's population or geographic area, the Commission should 
grant a market area license to that incumbent. If multiple incumbents 
serving a market on a single frequency together cover 70 percent of the 
population or geographic area, those licensees should be permitted 
jointly to file an application that demonstrates their joint coverage, 
and receive a market area license on that basis. In the second step, 
interested parties could file applications for all remaining available 
frequencies in each market. Mutually exclusive applications would then 
be subject to the Commission's auction rules. Petitioners alternatively 
propose to limit eligible bidders to the same channel incumbents 
operating within the geographic area or in an area adjacent to the 
geographic area license.
    13. To support their proposals, petitioners argue, for example, 
that, under the Commission's rules adopted in the Second R&O, new 
opportunities for greenmail and speculative applications will result in 
inflated auction prices, and reliable service will decline because 
auctions introduce additional parties for coordination and negotiation 
and customers will be unable to receive or obtain services if multiple 
providers are using the same channel within a market area. Petitioners 
further argue that new entrants will increase the potential for co-
channel interference; ``dead zones'' will occur between the incumbent 
and geographic area licensee's service areas; the incumbent's ability 
to expand to provide the ``widest area coverage'' will be blocked if a 
new entrant wins at auction; new entrants will be encouraged to enter 
markets where it would not be economically viable to do so; and 
customers will not reap the benefits of competition. In addition, 
petitioners state that an applicant is not qualified if it cannot meet 
the construction benchmark of covering two-thirds of the population of 
an MTA where operating incumbents already meet the coverage 
requirements. Petitioners further assert that the Commission's current 
rules do not meet its statutory obligation to avoid mutual exclusivity, 
while mutual exclusivity could be avoided through ``threshold 
qualifications,'' identified in their percent-of-coverage proposals.
    14. While the Commission recognizes that some geographic areas are 
significantly served by incumbent licensees, it believes that the 
market should decide whether an economically viable paging system can 
be established in the unserved area of a geographic market. For 
instance, a paging provider that primarily serves an adjacent 
geographic market may have a strong desire to serve the unserved area 
in its neighbor's ``home'' market. In addition, even where only 30 
percent of a geographic area is available to a potential new entrant, 
the Commission does not believe that it has been shown that the new 
entrant cannot establish a viable system that serves the public as well 
as the incumbent. Thus, the Commission cannot conclude that an 
incumbent licensee is entitled to a geographic area license without 
competitive bidding simply because its paging system may cover a 
substantial portion of the geographic area. The Commission continues to 
believe that open eligibility promotes prompt service to the public by 
allocating spectrum to the entity that values it most.
    15. The Commission also believes that the benefits of open 
eligibility outweigh the risks that speculators and misguided 
applicants pose to the competitive bidding process. Indeed, while 
speculation can be a problem when licenses are awarded through such 
systems as lotteries, the Commission believes that auctions deter 
speculation. The Commission has auctioned other highly encumbered 
services and has not seen any evidence that speculative applications 
have raised bidding prices. Petitioners also have not provided any 
evidence that speculative applications have raised bidding prices in 
prior auctions.
    16. Other issues raised by petitioners are addressed in other 
sections of the MO&O. The Commission states that a new entrant will be 
able to meet its coverage requirements by providing ``substantial 
service'' within the geographic area and geographic area licensees must 
provide co-channel protection to all incumbents. Moreover, the 
Commission notes that petitioners have not provided any evidence that 
the ``border'' issues raised here, including problems related to ``dead 
zones,'' are any different from issues that arise under other 
circumstances where one licensee is adjacent to another. Finally, 
turning to its obligation to attempt to avoid mutual exclusivity when 
it is in the public interest, the Commission does not believe that 
Congress intended the Commission to interpret the term ``threshold 
qualifications'' in Section 309(j)(6)(E) to mean that carriers should 
receive licenses for unserved areas without competitive bidding simply 
because they already hold certain licenses for other areas in the 
vicinity, particularly because the result of such an approach would be 
to preclude the dissemination of licenses to new entrants.

Basic Exchange Telecommunications Radio Systems Licensees

    17. The Second R&O directs that Basic Exchange Telecommunications 
Radio Systems (BETRS) licensed under the Rural Radiotelephone Service 
should be subject to geographic area licensing and competitive bidding, 
and also allows providers in these services to obtain site licenses on 
a secondary basis. It further provides that all existing BETRS 
operating on a co-primary basis remain in place and receive full 
protection from interference by geographic area licensees. BETRS 
licensees may also enter into partitioning agreements with auction 
participants and auction winners both before and after the paging 
auctions. In the Second R&O, the Commission stated that ``[i]f a 
geographic area licensee is concerned that a BETRS facility operating 
on secondary sites may cause interference to the geographic area 
licensee's existing or planned facilities, the BETRS provider must 
discontinue use of the interfering channel no later than six months 
after the geographic area licensee notifies the BETRS provider of the 
actual or potential interference.'' This policy is codified at section 
22.723 of the rules.
    18. Several petitioners argue that BETRS is essential to the 
Commission's universal service goal of delivering local exchange 
service to remote, rural areas and should be licensed on a site-by-
site, co-primary basis with geographic area licensees, and exempt from 
competitive bidding procedures. These petitioners contend that 
participation in auctions will impair the ability of rural telephone 
companies to respond to their customers' needs for local exchange 
service in remote rural areas.
    19. The Commission declines to adopt rules that permit site-by-site 
licensing of BETRS on a co-primary basis with geographic area paging 
licensees. The Commission agrees that BETRS provide an important 
service, but finds that BETRS do not require exemption from competitive 
bidding to ensure continued BETRS service and lower costs to 
subscribers. The rules that the Commission adopted in the Second R&O 
provide competitive bidding benefits to small businesses that will 
enable them to compete more effectively with larger auction 
participants. The Commission also believes that BETRS operators will be 
able to obtain interests in paging licenses or actual paging licenses 
through entering into partitioning arrangements both before and after 
the paging auctions. The

[[Page 33766]]

Commission emphasizes that it is committed to promoting service in 
rural areas and believes that the rules adopted for BETRS in the Second 
R&O will further that goal. If a BETRS operator demonstrates that it 
cannot serve a particular need in a rural area under these rules, the 
Commission will consider appropriate action to address specific 
concerns.
    20. Petitioners contend that, contrary to the Commission's 
universal service goals, section 22.723 of the Commission's rules will 
allow geographic area licensees to terminate BETRS upon any allegation 
of harmful co-channel interference, resulting in a loss of 
communications services essential to the public in rural areas. 
Petitioners argue that the Commission must either retain existing rules 
or establish safeguards against allowing geographic area licensees to 
``shut down BETRS operations.'' Another petitioner, however, seeks 
clarification that section 22.723 confers no right on rural radio 
service licensees to continue operations that cause actual interference 
to geographic area licenses for six months after receiving notice of 
the interference. The Commission affirms its earlier decision to allow 
BETRS licensees to obtain site licenses and operate facilities on a 
secondary basis. The Commission clarifies that under section 22.723 of 
its rules, the geographic area licensee must provide notification to 
the BETRS provider that the relevant BETRS facility causes or will 
cause interference with the geographic area licensee's service contour 
in violation of the Commission's interference rules. Where the BETRS 
facility would create interference with a facility the geographic area 
licensee is proposing to build, the geographic area licensee may not 
provide notification of impermissible interference to the BETRS 
provider earlier than six months prior to the date it intends to 
initiate operation of the proposed facility. Thus, the geographic area 
licensee may not force the BETRS provider to discontinue service before 
the geographic area licensee initiates service. Where the BETRS 
facility is constructed after the geographic area licensee's facility 
is already constructed and the BETRS facility causes interference with 
that existing facility, the BETRS operator must discontinue use of the 
interfering channel in accordance with the Commission's interference 
rules. Where a geographic area licensee plans construction and 
initially determines that the BETRS facility would not cause 
interference, but after construction determines the BETRS facility is 
causing interference, the BETRS operator must discontinue use of its 
facility within six months of receiving notification. If a dispute 
arises, either party may submit the interference information to the 
Commission to resolve the dispute. If the geographic area licensee 
provides proper notification to the BETRS provider, no adjustments will 
be made to the initial six month period. If the Commission determines 
that the notification was improper or inaccurate, the geographic area 
licensee, where appropriate, must submit a new, corrected notification 
to the BETRS provider. In the latter case, the six month period would 
restart.
    21. Contrary to petitioners' argument, the Commission has not 
exceeded its statutory authority by employing competitive bidding 
procedures to issue geographic area paging licenses. Section 309(j) of 
the Communications Act, as amended, gives the Commission authority to 
issue geographic area paging licenses through competitive bidding. 
Petitioners have offered no evidence to support their assertion that 
revenue for the federal treasury ``appears to be the real reason for 
the Commission's proposal.'' The recovery of a portion of the value of 
the public spectrum made available through competitive bidding does not 
amount to maximizing revenue, nor is it the Commission's sole 
objective.
    22. Certain petitioners also argue that the Commission did not 
adequately consider adopting ``mandatory partitioning'' of rural areas 
of the geographic area license, at no cost to the rural telephone 
company, to offset the unwillingness of geographic area licensees to 
enter into agreements for the provision of BETRS service. The 
Commission affirms its conclusion in the Second R&O that BETRS 
licensees may acquire partitioned licenses from other licensees by: (1) 
participating in bidding consortia; or (2) acquiring partitioned 
licenses from other licensees through private negotiation and agreement 
either before or after the auctions. The Commission has no reason to 
believe that auction winners will not be willing to enter into 
partitioning arrangements. Petitioners themselves argue that winning 
geographic area licensees may have no desire or intention to build in 
rural areas. If this is true, there appears to be little incentive for 
these licensees to demand unreasonable amounts of money for the rural 
portion of a license prior to or subsequent to the auction, especially 
if the choice is between selling to a willing buyer or leaving the 
rural area unserved. Where possible, the Commission encourages market 
forces and the business judgment of companies to dictate the formation 
of business relationships. The Commission believes voluntary agreements 
will be an adequate means of accommodating BETRS licensees seeking 
modifications to existing BETRS or wishing to establish new systems, 
and that mandatory partitioning is unnecessary.

Spectrum Reversion

    23. The Commission reaffirms that where an incumbent permanently 
discontinues operations at a given site, as defined by the Commission's 
rules, the spectrum automatically reverts to the geographic area 
licensee. In the Second R&O, the Commission concluded that spectrum 
within a geographic area recovered by the Commission from a non-
geographic area licensee should automatically revert to the geographic 
area licensee. The Commission found that granting this right to 
geographic area licensees would give them greater flexibility in 
managing their spectrum, establish greater consistency with cellular 
and PCS rules, and reduce the regulatory burdens on both licensees and 
the Commission with respect to future management of the spectrum.
    24. One petitioner suggests that the Commission should clarify that 
recovered spectrum automatically reverts to the geographic area 
licensee in all instances except where an incumbent licensee 
discontinues operations in a location wholly encompassed by the 
incumbent licensee's valid composite interference contours. The 
petitioner argues that the geographic area licensee would not be able 
to serve such an area, and that reversion would be contrary to the 
Commission's policy of allowing fill-in transmitters anywhere within 
the incumbent's outer perimeter interference contour. The Commission 
disagrees. As an initial matter, the Commission notes that an 
incumbent's valid composite interference contour does not include areas 
surrounded by the composite interior contour that is not part of the 
interference contours of the incumbent's individual sites. The 
Commission further finds that the petitioner has not demonstrated that 
a geographic area licensee would be unable to serve areas wholly 
surrounded by an incumbent; such service by the geographic area 
licensee would be subject to the Commission's interference rules. 
Moreover, where an incumbent discontinues service to an area, the 
Commission does not believe it serves the public interest to withhold 
that area from the geographic area licensee in the hope that the 
incumbent may wish to

[[Page 33767]]

resume service sometime in the future. Should an incumbent desire to 
serve the reverted area in the future, it is free to reach an agreement 
with the geographic area licensee for the partitioning of this area. 
This approach is consistent with the Commission's treatment of reverted 
spectrum in the 800 MHz SMR service, and it is in the public interest, 
as it promotes use of the spectrum.

System-wide Licensing

    25. The Commission clarifies certain aspects of its rules regarding 
system-wide licensing. In the Second R&O, the Commission allowed all 
incumbent paging licensees to either continue operating under existing 
authorizations or trade in their site-specific licenses for a single 
system-wide license. The Commission stated that such a system-wide 
license would be demarcated by the aggregate of the interference 
contours around each of the incumbent licensee's contiguous sites 
operating on the same channel. The Commission also concluded that 
incumbent licensees may add or modify sites within their existing 
interference contours without filing site-specific applications, but 
may not expand their existing interference contours without the consent 
of the geographic area licensee.
    26. Although system-wide licenses and site-specific licenses are 
identical in terms of operational and technical flexibility, some 
licensees may realize administrative benefits from consolidating site-
specific licenses. Petitioners seek clarification of the procedures for 
converting site-specific licenses to a system-wide license. In the ULS 
Order (63 FR 856163, December 14, 1998), the Commission stated that 
conversions from site-specific to system-wide licenses are minor 
modifications subject to the Commission's prior approval. Applicants 
requesting a system-wide license will be notified by public notice of 
the action taken on their request and public notices granting such 
requests will indicate the new call sign associated with the system-
wide license. The expiration date of the system-wide license will be 
determined by the earliest expiration date of the site-specific 
licenses that are consolidated into the system-wide license. Once a 
system-wide license is approved, the licensee must submit a timely 
renewal application for the system-wide license based on that 
expiration date. The Commission emphasizes, however, that the licensee 
is solely responsible for filing timely renewal applications for site-
specific licenses included in a system-wide license request until the 
request is approved. If the situation arises where a site-specific 
renewal application for a site included in a system-wide license 
request and the system-wide license request itself are pending at the 
same time before the Wireless Telecommunications Bureau, the Bureau may 
elect to complete the site-specific license renewal proceeding prior to 
making a determination on the system-wide license request. Renewal 
applications will be placed on public notice as accepted for filing 
pursuant to the Commission's rules. To minimize administrative burdens 
on licensees and conserve government resources, the Bureau will use 
electronic filing to the greatest extent possible in accepting and 
processing these applications.
    27. Several petitioners seek clarification of the definition of 
``contiguous sites'' for the purpose of determining an incumbent's 
``aggregate interference contour.'' Petitioners also urge the 
Commission to modify section 22.503(i) to define non-geographic area 
incumbent systems according to the composite interference contours of 
all authorized transmitters, including valid construction permits, 
regardless of the grant date. The Commission has consistently stated 
that system-wide licenses are defined by interference contours and it 
now clarifies that contiguous sites are defined by overlapping 
interference contours, not service contours. The Commission further 
clarifies that all authorized site-specific paging licenses and 
construction permits are included in a composite interference contour. 
The Commission is continuing to process site-specific applications that 
were not mutually exclusive and were filed prior to July 31, 1996, and 
it will not revoke authorized construction permits before the 
construction deadline. In addition, the Commission is continuing to 
resolve pending petitions that might result in grants of applications. 
The Commission also notes that for purposes of due diligence it intends 
to release, prior to auction, a list of site-specific applications and 
petitions pending at that time. Accordingly, the Commission amends 
section 22.503(i) to clarify that geographic area licensees must 
provide co-channel interference protection in accordance with sections 
22.537 or 22.567, as appropriate for the channel involved, to all 
authorized co-channel facilities of exclusive licensees within the 
paging geographic area.
    28. Petitioners also contend that system-wide licenses should 
include areas where an incumbent's interference contours do not 
overlap, but where no other licensee could place a transmitter because 
of interference rules. The Commission concludes that a system-wide 
license is merely a consolidation of a system's call signs such that 
one call sign will be associated with the system-wide license. The 
contours of the system-wide license remain as the aggregate of the 
contours of the individual sites. The Commission finds that inclusion 
of areas that are outside of an incumbent's interference contours 
within a system-wide license would be contrary to the Commission's 
objective of prohibiting encroachment on the geographic area licensee's 
operations. A system-wide license is not intended to expand an 
incumbent's system beyond the contours of its individual sites. 
Incumbent licensees seeking to expand their contours may participate in 
the auction of geographic area licenses, or may seek partitioning 
agreements with the geographic area licensee.
    29. One petitioner seeks clarification as to whether the 
discontinuance of operation of an interior site would jeopardize a 
system-wide license. Where a system-wide licensee allows an area within 
its system to revert to the geographic area licensee, the system-wide 
license shall remain intact; however, the parameters of the system-wide 
license shall be amended to the demarcation of the remaining contiguous 
interference contours.
    30. The Commission will allow licensees to include in system-wide 
licenses remote, stand-alone transmitters that are linked to contiguous 
systems via control/repeater facilities or by satellites. Including 
these remote, stand-alone sites in the system-wide license, however, in 
no way expands the licensee's composite interference contours. The 
Commission will also permit licensees to maintain separate site-
specific licenses for remote, stand-alone transmitters. The Commission 
further finds that an incumbent licensee should be permitted to obtain 
multiple system-wide licenses where applicable.

Interference

    31. The Commission affirms its earlier decision to use Tables E-1 
and E-2 to determine interference contours for both perimeter and 
``fill-in'' transmitters. Co-channel interference rules are designed to 
protect licensees from interference caused by other licensees operating 
facilities on the same channel. Exclusive paging systems are protected 
from co-channel interference by a variety of rules that govern 
transmitter height and power, distance between transmission stations, 
the licensee's protected service area, and the field strength of the 
licensee's service and interfering signals. For the CCP channels below 
931 MHz, the Commission uses

[[Page 33768]]

mathematical formulas to determine the distance from each transmitting 
site to its service and interference contours along the eight cardinal 
radials from the transmitter site. To determine service and 
interference contours for the 931 MHz channels, the Commission uses two 
tables of fixed radii, Tables E-1 and E-2. Prior to adoption of the 
Second R&O, for the 929 MHz exclusive channels, the Commission used 
geographic separation rules that agreed with the separations that 
result from the application of the fixed radii tables for 931 MHz. 
Unlike the Commission's CCP rules, at that time, the PCP rules did not 
formally define a protected service or interference contour for each 
station.
    32. In the Notice, the Commission proposed to adopt the eight-
radial contour method and new mathematical formulas, rather than fixed 
tables, to determine the service and interference contours for the 
exclusive 929 MHz and 931 MHz channels. The commenters addressing this 
issue strenuously objected to the Commission's proposal, stating that 
the proposed method could require incumbents to reduce coverage or be 
required to accept interference from geographic area licensees. 
Consequently, the Commission decided not to adopt the proposed 
formulas. The Commission did, however, adopt Tables E-1 and E-2 for the 
exclusive 929 MHz channels, thus maintaining the status quo for 931 MHz 
channels and conforming 929 MHz channels to the current procedures for 
931 MHz channels.
    33. Several petitioners now request that instead of using Tables E-
1 and E-2, the Commission permit incumbents to employ alternative 
formulas to determine the interference contours of ``fill-in'' 
transmitters. One petitioner suggests using signal strength criteria, 
rather than alternative formulas, for determining the interference 
contours of ``fill-in'' transmitters. The Commission does not find that 
permitting incumbents to use different formulas for ``fill-in'' 
transmitters will serve the public interest. The record in this 
proceeding supports the decision to use Tables E-1 and E-2 to determine 
interference and service contours for all 929 MHz and 931 MHz 
transmitters. The Commission finds that to permit incumbents to add 
sites under alternative formulas depending on the location and power of 
each of their transmitters significantly raises the risk of 
encroachment on a geographic area licensee's territory. In addition, 
the incumbent will have the opportunity to cover any existing gaps in 
coverage by either competing for the geographic area license or by 
partitioning from the geographic area licensee.
    34. The Commission affirms its previous conclusion to require 
geographic area licensees to negotiate to resolve interference problems 
with adjacent geographic area licensees. In the Second R&O, the 
Commission concluded that geographic area licensees should be able to 
negotiate mutually acceptable agreements with all adjacent geographic 
area licensees if their interfering contours extend into other 
geographic areas. The Commission also indicated that adjacent licensees 
have a duty to negotiate in good faith with one another regarding co-
channel interference protection. The Commission noted that lack of 
adequate service to the public because of failure to negotiate 
reasonable solutions with adjacent geographic area licensees could 
reflect negatively on licensees seeking renewal.
    35. Certain parties now seek clarification of the good faith 
negotiation requirement, arguing the standard is vague and invites 
litigation. One petitioner further notes that while the cellular 
industry has negotiated agreements, paging coordination will be more 
difficult because paging carriers operate on only one frequency, while 
cellular carriers have many channels with which to negotiate. The 
Second R&O adopted the good faith standard to provide flexibility for 
licensees to negotiate mutually acceptable agreements. Providing for 
adjacent geographic area licensees to negotiate mutually acceptable 
agreements should reduce the amount of unserved area that could result 
from specifying a minimum distance a geographic area licensee's 
transmitter must be from a geographic border. In other services, such 
as the Multipoint Distribution Service (MDS), the Commission has 
expected licensees to cooperate among themselves to resolve 
interference issues before bringing them to the attention of the 
Commission. Based on the limited number of interference complaints that 
it has been called upon to resolve, the Commission believes this policy 
has worked well in the MDS service. Moreover, none of the parties have 
proposed a better way to achieve flexibility and the reduction of 
unserved areas.
    36. The Commission clarifies various issues regarding channel 
exclusivity on the 929-930 MHz bands. Prior to 1993, all PCP channels 
were assigned on a non-exclusive basis. In 1993, the Commission 
established rules allowing PCP carriers in the 929-930 MHz band to 
obtain channel exclusivity as local, regional, and nationwide paging 
systems on thirty-five of the forty 929 MHz PCP channels. Those 
licensees that qualified for exclusivity as a local, regional, or 
nationwide system at that time were grandfathered as exclusive 
licensees, and required to maintain their existing sharing arrangements 
with other licensees, but were protected from the addition of other 
licensees on these channels. Thus, no application for a new paging site 
would be granted on a channel assigned to an incumbent who qualified 
for exclusivity if the applicant proposed a paging facility that did 
not comply with the separation standards based on antenna height and 
transmitter power of the respective systems. All other incumbent 
licensees were grandfathered with respect to their existing systems as 
shared licensees, and required to continue to share channels with each 
other. The Commission notes that grandfathered licensees could not add 
stations to their existing systems in areas where a co-channel licensee 
had qualified for exclusivity. Therefore, on these thirty-five 929 MHz 
channels, the Commission has: (1) exclusive incumbents: grandfathered 
exclusive systems that are exclusive with respect to new licensees, but 
share with other grandfathered licensees; (2) non-exclusive incumbents: 
grandfathered shared licensees; (3) licensees who failed to construct 
enough sites to qualify for exclusivity under the PCP Exclusivity Order 
(considered ``secondary'' with respect to licensees with earned 
exclusivity); and (4) licensees with earned exclusivity. In the Second 
R&O, the Commission concluded that geographic area licensees must 
provide co-channel protection to all incumbent licensees.
    37. Certain petitioners seek clarification as to whether non-
exclusive 929 MHz licensees operating on the thirty-five exclusive 
channels (i.e., categories 2 and 3 in the above paragraph) will receive 
the same interference protection as an exclusive licensee. Other 
petitioners seek clarification that the Commission did not elevate 
incumbent licensees operating on shared channels to exclusive status. 
One petitioner specifically argues that section 22.503(i) will require 
that nationwide geographic area licensees terminate sharing 
arrangements they have with non-exclusive licensees and provide 
interference protection to them, while another contends that section 
22.503(i) does not require the termination of existing channel sharing 
arrangements involving exclusive incumbent licensees and non-exclusive 
incumbent licensees. Non-exclusive incumbent licensees on

[[Page 33769]]

the thirty-five exclusive 929 MHz channels will continue to operate 
under the same arrangements established with the exclusive incumbent 
licensees and other non-exclusive incumbent licensees prior to the 
adoption of the Second R&O. The Commission further clarifies that MEA, 
EA, and nationwide geographic area licensees will be able to share with 
non-exclusive incumbent licensees on a non-interfering shared basis. 
The non-exclusive incumbent licensees must cooperate with the 
nationwide and geographic area licensees' right to share on a non-
interfering shared basis. Accordingly, the Commission amends section 
22.503(i) to clarify that nationwide and geographic area licensees are 
afforded the right to share with non-exclusive incumbent licensees on a 
non-interfering shared basis. As for shared PCP channels, the 
Commission concluded in the Second R&O that licensees on these channels 
will not be converted to exclusive status and that these channels will 
not be subject to competitive bidding. Therefore, licensees on these 
shared channels will continue to share with any future licensees.
    38. The Commission declines to grant one petitioner's request to 
grant full interference protection to existing control link operations 
on the UHF and VHF paired channels originally allocated for mobile 
telephone service once the ``auction for the UHF and VHF common carrier 
channels'' is completed. The petitioner contends that in reliance on 
the Commission's proceeding in CC Docket 87-120, which permitted paging 
carriers to use these two-way channels as control links, ``numerous 
carriers have configured their paging systems on [the] basis of their 
protected use of a VHF or UHF frequency to link their base stations.'' 
Another petitioner requests clarification as to whether incumbent 
mobile telephone service providers operating on the lower paging 
frequencies will be protected from interference from geographic area 
licensees. Furthermore, the petitioner requests that incumbent mobile 
telephone service providers be permitted to obtain additional site 
licenses on a secondary basis.
    39. The Commission concludes that the petitioner's request to 
protect control link operations is unclear and outside the scope of 
this proceeding. The Commission's rules do not generally provide 
protection from interference to fixed stations and the petitioner's 
request would require a rulemaking to develop interference criteria, 
which is beyond the scope of this proceeding. In addition, the 
petitioner's request is unclear. For example, the petitioner does not 
specify whether any protection provided should apply to the mobile 
channel used as a control link or the base channel used as a control 
link. The Commission therefore denies the request. With respect to the 
request for clarification, the Commission reiterates that geographic 
area licensees must provide co-channel protection to all incumbent 
licensees, including incumbent mobile telephone service providers 
operating on the 150 MHz and 450 MHz bands.
    40. The Commission will not, however, grant the petitioner's 
request that incumbent mobile telephone service providers be permitted 
to obtain additional site licenses on a secondary basis. While the 
Commission is generally aware that two-way incumbent mobile telephone 
service providers serve rural areas in the western part of the country, 
the petitioner provides no information at all for determining whether 
to permit incumbent mobile telephone service providers to operate 
facilities on a secondary basis. The Commission therefore denies the 
request.

Shared Channels

    41. The Commission affirms its decision to not impose a limit or 
``cap'' on the number of licensees for each of the shared channels. In 
the Notice, the Commission sought comment on whether to use geographic 
area licensing for the shared PCP channels in the 152-158 MHz, 462 MHz, 
and 465 MHz bands. Most commenters who responded to this issue in the 
Notice were opposed to geographic area licensing for the shared 
channels and sought to retain the status quo. In the Second R&O, the 
Commission found that the cost and disruption caused by converting 
shared channels to exclusive channels and subjecting them to 
competitive bidding would outweigh the benefits. The Commission did not 
impose a limit or ``cap'' on the number of licensees for each of the 
shared channels, as it found that capacity limits of paging channels 
are based primarily on use and not the number of licensees. Thus, 
``capping'' the number of licensees would not necessarily ensure 
efficient spectrum use. The Commission also determined in the Second 
R&O that pending the resolution of issues related to consumer fraud 
addressed in the Further Notice, it would retain the interim licensing 
rules, which limited applications to incumbents seeking to expand their 
systems. The Commission did, however, eliminate the 40-mile requirement 
for new sites, allowing incumbents to file for new sites at any 
location. Finally, noting that it would not grant applications 
proposing operations on a commercial basis, the Commission allowed new 
applicants to file applications for private, internal-use systems, and 
reiterated that Special Emergency Radio Service providers would remain 
exempt from the licensing freeze and could continue to file 
applications on shared channels.
    42. Petitioners oppose granting new applicants licenses for 
private, internal-use systems, alleging that allowing new applications 
would encourage speculative applications and result in harmful 
congestion on the shared PCP channels. As a remedy, petitioners urge 
the Commission to retain the interim rules, which limit the filing of 
new applications primarily to incumbents. Petitioners further urge the 
Commission to limit incumbents' expansion applications to sites that 
are within 75 miles of an existing facility, in lieu of the 40-mile 
requirement that the Commission has eliminated, to deter incumbents 
from filing speculative applications, and ask that the Commission 
permit applications from public safety and medical services providers 
for shared channels only upon certification that no public safety 
channels are available to meet those providers' needs.
    43. The Commission does not believe that eliminating the 
opportunity for new licensees to establish service on shared channels 
serves the public interest because it does not promote efficient use of 
spectrum. The Commission does not believe that concerns about 
speculation or congestion on shared channels are sufficient at this 
time to warrant additional burdens on new applicants. The Commission's 
goal is to increase the use of these shared channels, not to unduly 
restrict access to them. Therefore, the Commission affirms its previous 
decision and declines to impose limits on the number of licensees for 
each channel in a particular area. The Commission will take further 
action if it finds that the transition of the exclusive channels to 
geographic area licensing results in congestion and interference 
problems on the shared channels. The Commission also declines to adopt 
a certification requirement for public safety providers. Finally, as 
described below, the Commission will be removing the interim licensing 
rules on all the shared paging channels. Accordingly, the Commission 
declines to impose any mileage limitations on expansion applications to 
provide service on shared paging channels.
    44. One petitioner contends that the Commission should reconsider 
its

[[Page 33770]]

decision not to subject the five 929 MHz non-exclusive channels to 
competitive bidding. The Commission declines to reconsider this 
decision. Petitioner's arguments to include shared channels in 
competitive bidding are effectively a request to limit the number of 
licensees authorized to operate on shared channels. As previously 
stated, the Commission declines to impose limits on the number of 
licensees for each channel in a particular area.
    45. The Commission also denies another petitioner's request to 
adopt specific interference rules for shared frequencies, and provide 
shared frequency licensees with some form of exclusivity protection. In 
the Second R&O, the Commission found that shared channels are heavily 
used by incumbent systems, many of whom have entered into time-sharing 
or interconnection agreements to avoid interference with one another. 
The Commission believes the imposition of specific interference 
requirements at this time could jeopardize the viability of some of 
these existing relationships.

Coordination with Canada

    46. The Commission clarifies rules regarding coordination 
requirements with Canada. The Commission states that it is bound by 
international agreement to coordinate with the Canadian government 
(Industry Canada) stations using certain frequencies north of Line A or 
east of Line C. Incumbent and geographic area licensees on the lower 
paging channels must submit a Form 600 (or Form 601) to obtain 
authorization to operate stations north of Line A or east of Line C 
because the lower paging channels are subject to the Above 30 
Megacycles per Second Agreement with Industry Canada. The U.S.-Canada 
Interim Coordination Considerations for the Band 929-932 MHz, as 
amended, assigns specific 929 and 931 MHz frequencies to the United 
States for licensing along certain longitudes above Line A, and assigns 
other specific 929 and 931 MHz frequencies to Canada for licensing 
along certain longitudes along the U.S.-Canada border. As a result, the 
Commission notes that frequency coordination with Canada is not 
required for the 929 and 931 MHz frequencies that U.S. licensees are 
permitted to use north of Line A pursuant to that agreement. In 
addition, the 929 and 931 MHz frequencies assigned to Canada are 
unavailable for use by U.S. licensees above Line A as set out in the 
agreement. Finally, the Commission is implementing electronic filing 
and automated coordination procedures to the extent practical and 
allowable under its agreements with Canada.

Power Requirements

    47. The Commission clarifies that 929 MHz licensees, with certain 
limitations, do not need to file a modification application to increase 
the effective radiated power (ERP). Thus, the Commission states that 
licensees may modify power levels without filing a modification 
application only to the extent that their composite interference 
contour, as determined by Table E-2, remains constant or decreases. 
Again, the Commission restates that, pursuant to the First R&O, an 
incumbent licensee is not permitted to increase its composite 
interference contour.

Coverage Requirements

    48. The Commission reaffirms coverage requirements for MEA and EA 
licensees. In the Second R&O, the Commission concluded that for each 
MTA or EA the geographic area licensee must provide coverage to one-
third of the population of the entire area within three years of the 
license grant, and to two-thirds of the population of the entire area 
within five years of the license grant; or in the alternative, the MTA 
or EA licensee may provide substantial service to the geographic 
license area within five years of license grant. In addition, the 
Commission concluded that failure to meet the coverage requirements 
would result in automatic termination of the geographic area license. 
The Commission stated that it would reinstate any licenses that were 
authorized, constructed, and operating at the time of termination of 
the geographic area license.
    49. One petitioner advocates requiring the geographic area licensee 
to provide coverage to one-third of the market area within one year, 
and two-thirds within three years. Other petitioners argue, however, 
that small companies will have difficulty meeting these suggested 
coverage requirements, especially if they must construct in rugged 
areas with low population density to cover two-thirds of the 
population. The Commission declines to adopt the proposal. The 
Commission believes that its previously adopted coverage requirements 
adequately promote prompt service to the public without being unduly 
burdensome on licensees that require a reasonable amount of time to 
complete construction. The Commission finds that areas which are 
currently unserved have remained so in spite of the fact that paging 
service has existed for many years and is extremely competitive in some 
markets. This finding suggests that providers of service in these areas 
may face unusual difficulties. Moreover, the Commission finds that 
overly stringent coverage requirements would unfairly favor incumbents 
by erecting a formidable barrier to entry.
    50. Petitioners argue that the ``substantial service'' alternative 
should be eliminated because it will encourage speculation, greenmail 
and anticompetitive conduct. However, in some MEAs or EAs, an incumbent 
licensee may already serve more than one-third of the population. The 
elimination of the substantial service alternative would prevent a 
potential co-channel licensee other than the incumbent from bidding in 
these markets because the five-year coverage requirement could only be 
satisfied by the incumbent. The option of providing a showing of 
substantial service allows those MEA and EA licensees who cannot meet 
the three-year and five-year coverage requirements because of the 
existence of incumbent co-channel licensees to satisfy a construction 
requirement. Moreover, the Commission recognizes that the unserved 
areas of many MEAs and EAs are rural areas that may be more difficult 
to serve than urban areas. The Commission thinks it is in the public 
interest to encourage build-out in rural areas by allowing licensees to 
make a substantial service showing. Further, the substantial service 
option enables licensees to use spectrum flexibly to provide new 
services without being concerned that they must meet a specific 
percentage of the coverage benchmark or lose their license.
    51. Certain petitioners argue that the vagueness of the definition 
of ``substantial service'' will result in an abundance of litigation. 
One petitioner suggests that substantial service could be defined as 
coverage of fifty percent at three years, and seventy-five percent at 
five years, of the geographic area that is not served by co-channel 
incumbent licensees; and that the Commission could require licensees to 
show a specified level of infrastructure investment by the three-year 
and five-year deadlines. Another petitioner suggests that the 
Commission provide specific examples of what construction levels would 
satisfy the substantial service test.
    52. The Commission declines to adopt specific coverage requirements 
as the sole means of defining ``substantial service.'' As already 
noted, the unserved area of an MEA or EA license (i.e., the area not 
served by co-channel incumbent licensees at the time the MEA or EA 
license is granted) may consist largely of spectrum in rural

[[Page 33771]]

areas. The Commission believes that imposing strict coverage 
requirements to define substantial service in the unserved area would 
discourage new entrants from attempting to acquire licenses to serve 
rural areas. Nonetheless, the Commission finds that establishing an 
objective criterion as one means of meeting the substantial service 
option in the unserved areas of an MEA or EA would be useful. 
Therefore, the Commission will presume that the substantial service 
coverage requirement is satisfied if an MEA or EA licensee provides 
coverage to two-thirds of the population in the unserved area of the 
MEA or EA within five years of license grant.
    53. At the same time, the Commission recognizes the need for 
flexibility in areas where stringent coverage requirements would 
discourage provision of any service. Therefore, the Commission 
clarifies that an MEA or EA licensee may be able to satisfy the 
substantial service requirement even if it does not provide coverage to 
two-thirds of the population in the unserved area within five years of 
license grant. The Commission offered guidance to WCS licensees with 
regard to factors that it would consider in evaluating whether the 
substantial service requirement has been met, and the Commission now 
applies this additional guidance to paging licensees. Thus, the 
Commission may consider such factors as whether the licensee is 
offering a specialized or technologically sophisticated service that 
does not require a high level of coverage to be of benefit to 
customers, and whether the licensee's operations serve niche markets. A 
licensee may also demonstrate that it is providing service to unserved 
or underserved areas without meeting a specific percentage, as the 
Commission permitted SMR providers in the 800 MHz band to do. Because 
the substantial service requirement can be met in a variety of ways, 
the Wireless Telecommunications Bureau will review licensees' showings 
on a case-by-case basis.
    54. Petitioners request clarification as to whether licensees who 
fail to meet coverage requirements will be permitted to retain licenses 
for those facilities authorized, constructed, and operating at the time 
the geographic area license is cancelled, or only those authorized, 
constructed, and operating at the time of grant of the geographic area 
license. The Commission agrees with the argument that licenses 
reinstated after termination of the geographic area license should be 
limited to the sites authorized, constructed, and operating at the time 
the geographic area license was granted. In other words, the right to 
use channels any place in the geographic area will be forfeited, but 
any licenses for which individual sites were constructed and operating 
prior to the grant of the geographic area license will be reinstated. 
The Commission believes that this approach properly balances its 
overarching goal of ensuring, to the extent possible, continuous 
service to the public and the Commission's policy of discouraging 
speculation and spectrum warehousing. Accordingly, the Commission 
amends section 22.503(k) to provide that licensees who fail to meet 
their coverage requirements will be permitted to retain licenses only 
for those facilities authorized, constructed, and operating at the time 
the geographic area license was granted. In such instances, incumbent 
licensees will have the burden of showing when their facilities were 
authorized, constructed, and operating, and they should retain 
necessary records of these sites until they have fulfilled their 
construction requirements.

Geographic Area Licensing for Nationwide Channels

    55. The Commission affirms its decision in the Second R&O to grant 
nationwide geographic area licenses without competitive bidding to 
those licensees that met the exclusivity criteria established under its 
previous rules. The Second R&O awarded nationwide geographic area 
licenses on three 931 MHz channels and to the eighteen licensees who 
had constructed sufficient stations to obtain nationwide exclusivity on 
929 MHz channels under the Commission's rules as of February 8, 1996. 
In addition, the Commission granted nationwide geographic area licenses 
to four licensees on the 929 MHz band that had sufficient 
authorizations, as of February 8, 1996, to qualify for nationwide 
exclusivity on a conditional basis, but had not completed build-out at 
that time. The Commission also granted nationwide exclusivity to 
Nationwide 929.8875 LLC on 929.8875 MHz based on showings that it had 
met the criteria for nationwide exclusivity as of February 8, 1996.
    56. Certain petitioners argue that the exemption from competitive 
bidding for nationwide licensees is arbitrary and capricious because it 
results in similarly situated licensees being treated in a disparate 
manner. According to petitioners, incumbents that have met their five-
year coverage requirement are similar to nationwide licensees that met 
the Commission's previous build-out requirements to qualify for 
exclusivity. The Commission does not believe that its decision to 
exempt nationwide licensees from competitive bidding discriminates 
against other paging systems. This decision merely recognizes licenses 
granted prior to this rulemaking proceeding. The exclusivity rules 
provided nationwide licensees with the right to continue to build out 
anywhere in the country on their designated channels, whereas non-
nationwide paging licensees have been afforded no right to expand their 
service area beyond their interference contours. Thus, there are no 
areas available for auction on the channels on which nationwide 
geographic area licensees operate, while there are available areas on 
the channels on which non-nationwide licensees operate.
    57. The Commission affirms its decision to deny Mobile 
Telecommunications Technologies, Inc. (MTel) a nationwide geographic 
area license on the 931.4375 MHz channel. The Commission disagrees with 
MTel's argument that denying MTel a nationwide grant on 931.4375 MHz is 
inconsistent with the Commission's grant of nationwide geographic area 
licenses to paging carriers in the 929 MHz band. The Commission 
recognizes that MTel is extensively licensed on 931.4375 MHz with over 
800 transmitters in various locations throughout the United States. In 
addition, several other 931 MHz channels are extensively licensed by 
one carrier. But these 931 MHz channels, including 931.4375 MHz, have 
never been designated as nationwide channels. The Commission did not 
establish rules for a licensee to earn nationwide exclusivity on the 
thirty-seven channels in the 931 MHz band reserved for local and 
regional paging, as it did for the thirty-five exclusive 929 MHz 
channels, so MTel could not reasonably have expected to be granted 
nationwide status.

Competitive Bidding

    58. The MO&O declines to adopt proposals regarding various 
operational aspects of the paging auctions, including: the sequence of 
the auctions (e.g., auctioning the lower band channels prior to the 
upper band channels); modification of the hybrid simultaneous/license-
by-license stopping rule adopted in the Second R&O (e.g., replacing it 
with a market-by-market or license-by-license stopping rule); and the 
information disclosure to bidders during the Paging auctions (e.g., 
whether bidder identities will be announced). The Commission concludes 
that, consistent with the Balanced Budget Act of 1997, the Wireless 
Telecommunications Bureau

[[Page 33772]]

will seek further comment on these matters during the pre-auction 
process. Doing so will allow the Bureau, pursuant to its delegated 
authority, to fully consider these matters in the unique context of the 
Paging auctions, and will provide adequate notice and opportunity for 
comment on auction procedures prior to the commencement of the 
auctions.
    59. The MO&O declines to require paging auctions participants to 
identify on the FCC Form 175 each market for which they wish to bid and 
submit an upfront payment for each identified license. The Commission's 
current rules allow bidders to apply to bid for all available markets 
and submit an upfront payment that corresponds to the maximum number of 
bidding units on which a bidder expects to be active in a single round. 
The Commission believes that this approach provides bidders the 
flexibility to pursue back-up strategies and adequately protects 
against insincere bidding.
    60. The MO&O rejects a proposal that the Commission modify its bid 
withdrawal rule to allow the withdrawal of high bids placed due to 
typographical or clerical error. The Commission concludes that recent 
modifications to its bid software adequately protect against the 
placement of erroneous bids. The MO&O also rejects petitions for 
reconsideration of the Commission's decision to apply its general anti-
collusion rule, see 47 CFR 1.2105(c), in the Paging auctions. These 
petitions seek safe harbors for business discussions regarding such 
topics as mergers/consolidations and intercarrier agreements. The 
Commission concludes that sufficient guidance regarding application of 
the anti-collusion rule currently is readily available, and that 
applicants, not the Commission, are in the best position to determine 
whether their conduct or discussions may give rise to a potential 
violation of the rule.
    61. In response to petitions for clarification of the Commission's 
attribution rules and small business definitions, the MO&O clarifies 
that personal net worth is not attributable for purposes of determining 
eligibility for small business bidding credits, and that controlling 
interests in an applicant are not required to hold a minimum amount of 
equity. In addition, the MO&O adopts a definition of ``controlling 
interest,'' which focuses on the concepts of de jure and de facto 
control, to further clarify the application of the attribution rule. 
Moreover, the MO&O declines to conclude that intercarrier agreements 
among otherwise independent entities do not constitute affiliation 
under the Commission's Rules, and explains that such agreements may 
rise to the level of affiliation if they meet the criteria set forth in 
the affiliation rule, see 47 CFR 22.223(d).
    62. Finally, although the MO&O declines to eliminate the 
availability of bidding credits for small businesses, it does eliminate 
the availability of installment payments for these entities. This 
action is consistent with the Commission's prior decision in Part 1 
Third R&O and Second Further Notice (63 FR 2315, January 15, 1998), to 
eliminate installment payments for all future auctions, including the 
Paging auctions. To balance the impact of this action, however, the 
MO&O increases the level of bidding credits available to small and very 
small businesses respectively from ten percent to twenty-five percent, 
and from fifteen percent to thirty-five percent. These amounts are 
based on the schedule of bidding credits adopted in the Part 1 Third 
R&O and Second Further Notice. Finally, the MO&O further conforms the 
paging competitive bidding rules with the Commission's general 
competitive bidding rules by allowing winning bidders to make their 
final payments within ten business days of the deadline, provided they 
also pay a late fee equal to five percent of the amount due. These 
actions will allow participants in the Paging auctions to enjoy the 
same advantages as bidders in other recent spectrum auctions.

Third Report and Order

    63. In the Second R&O, the Commission adopted rules governing 
geographic area licensing of paging systems for exclusive channels in 
the 35-36 MHz, 43-44 MHz, 152-159 MHz, 454-460 MHz, 929-930 MHz, and 
931-932 MHz bands allocated for paging. The Commission adopted 
competitive bidding rules for granting mutually exclusive applications, 
adopted partitioning for non-nationwide geographic area licenses, 
imposed coverage requirements on non-nationwide geographic area 
licenses, and awarded nationwide geographic area licenses on the 929 
MHz and 931 MHz bands. The Commission concurrently adopted a Further 
Notice seeking comment on whether it should adopt coverage requirements 
for nationwide geographic area licenses, various rules related to 
partitioning and disaggregation by paging licensees, and whether the 
Commission should revise the application procedures for shared 
channels.

Coverage Requirements for Nationwide Geographic Area Licenses

    64. The Commission elects to defer a decision on whether to impose 
coverage requirements on nationwide geographic area licensees. As 
discussed in the MO&O, the Commission designated three channels in the 
931 MHz band for exclusive nationwide use. In 1993, to encourage the 
development of wide-area paging systems, the Commission also 
implemented exclusive licensing of qualified local, regional, and 
nationwide paging systems on thirty-five of the forty 929 MHz channels 
licensed, at that time, under Part 90 of its rules. In the Second R&O, 
the Commission noted that its existing Part 22 and Part 90 requirements 
for construction of nationwide systems were not consistent, and both 
sets of requirements differ from the construction and coverage 
requirements applicable to nationwide narrowband PCS licenses. As a 
result, the Commission sought comment in the Further Notice on whether 
to impose minimum coverage requirements for nationwide paging licenses, 
and on what the appropriate coverage area should be. The Commission 
also sought comment on whether it should auction the entire nationwide 
license, or just a portion of the license, if the licensee fails to 
meet the coverage requirements.
    65. The Commission rejects the constitutional and statutory 
arguments commenters make in opposition to coverage requirements. The 
Commission also disagrees with several commenters that argue that 
nationwide licensees' compliance with existing rules created a 
reasonable expectation that they would enjoy exclusivity on a 
nationwide basis, and imposing additional coverage requirements would 
improperly subject those licensees to retroactive rulemaking. Certain 
commenters also argue against nationwide coverage requirements on the 
basis that nationwide licensees are not similarly situated with either 
MEA/EA paging licensees or narrowband PCS licensees. Commenters that 
oppose coverage requirements also oppose any cancellation of nationwide 
licenses based on a failure to meet such requirements.
    66. While petitioners have not persuaded the Commission that there 
are any legal impediments to the adoption of coverage requirements for 
nationwide geographic area paging licensees, the Commission concludes 
that it is best to defer any decision on this issue until the 
Commission resolves similar issues raised in the Narrowband PCS Further 
Notice (62 FR 27507, May 20, 1997). Doing so will allow the

[[Page 33773]]

Commission to more fully consider the question of whether regulatory 
parity with respect to coverage requirements is appropriate not only 
for nationwide and MEA/EA paging licensees, but also for nationwide 
paging and narrowband PCS carriers. In the Narrowband PCS Further 
Notice, the Commission sought comment on whether to conform its 
narrowband PCS coverage rules to its paging rules by allowing 
narrowband PCS licensees to meet their performance requirements through 
a demonstration of substantial service as an alternative to meeting the 
coverage requirements provided under the existing rules. The Commission 
further sought comment on whether to conform MTA-based narrowband PCS 
coverage requirements to the same requirements adopted for MTA and EA 
paging licenses in this proceeding. As a result, commenters in the 
Narrowband PCS proceeding have raised the issue of whether narrowband 
PCS, nationwide paging, and MTA/EA licensees provide substantially 
similar services. The Commission believes that it needs to consider 
this issue more carefully and to make a decision on nationwide paging 
coverage requirements in conjunction with a decision on narrowband PCS. 
Accordingly, the Commission defers resolution of whether to impose 
coverage requirements on nationwide paging geographic area licensees to 
the Narrowband PCS Further Notice proceeding. If it ultimately 
determines that coverage requirements are appropriate for nationwide 
paging geographic area licensees, the Commission will decide, at that 
time, what the consequence of failing to meet those requirements should 
be.

Partitioning and Disaggregation

    67. In the Second R&O, the Commission adopted partitioning rules 
that permit all MEA and EA paging licensees to partition to any party 
eligible to be a paging licensee. In the Further Notice, the Commission 
sought comment as to whether nationwide geographic area licensees 
should also be permitted to partition their license areas. In the Third 
R&O, the Commission adopts rules that permit partitioning of nationwide 
geographic area licenses to any eligible party. The Commission agrees 
with the commenters that geographic partitioning would be an effective 
means of providing nationwide geographic area licensees with the 
flexibility to tailor their service offerings to meet market demands 
and facilitating greater participation in the paging industry by small 
businesses and rural telephone companies. The Commission found that the 
overall goal of partitioning--operational flexibility--outweighs any 
possible disadvantage of allowing nationwide licensees to receive a 
financial windfall though partitioning. Finally, consistent with the 
partitioning rules established for MEA and EA licensees, the Commission 
will permit partitioning of nationwide geographic area paging licenses 
based on any boundaries defined by the parties.
    68. Under the rules adopted in the Third R&O, all MEA and EA 
licensees may partition at any time after the grant of their geographic 
area licenses, and all nationwide geographic area licensees may 
partition upon the effective date of this Order. The Commission 
established two options for parties to a partitioning agreement 
involving an MEA or EA license to satisfy coverage requirements. Under 
the first option, both the partitioner and partitionee are individually 
responsible for meeting the coverage requirements for their respective 
areas. Therefore, partitionees of MEA or EA licenses must provide 
coverage to one-third of the population in their partitioned area 
within three years of the initial grant of the license, and to two-
thirds of the population in their partitioned area within five years of 
the initial grant of the license; or, licensees may provide, in the 
alternative, substantial service within five years of the grant of the 
MEA or EA license. The Commission states that failure by either party 
to meet its coverage requirements will result in the automatic 
cancellation of its license without further Commission action.
    69. Under the second option, the original licensee may certify at 
the time of the partitioning transaction that it has already met, or 
will meet, the coverage requirements for the entire geographic area. 
The Commission states that only the partitioner's license will be 
cancelled if it fails to meet the coverage requirements for the entire 
geographic area. The Commission also states that the partitionee will 
not be subject to coverage requirements except for those necessary to 
obtain renewal. Finally, the Commission states that partitioners whose 
licenses are cancelled will retain those sites authorized, constructed, 
and operating at the time the geographic area license was granted.
    70. The Commission rejects a proposal to eliminate the 
``substantial service'' option because the Commission explains that 
this option will encourage licensees to build out their systems while 
safeguarding the financial investments made by those licensees who are 
financially unable to meet specific population coverage requirements. 
Thus, the Commission states that the substantial service alternative 
will promote service growth while helping licensees to remain 
financially viable and retain their licenses.
    71. The Commission decided not to impose coverage requirements at 
this time on partitionees of a nationwide geographic area license, and 
will defer reaching a decision on this issue until it resolves the 
question of coverage requirements for nationwide licensees generally. 
The Commission believes that it would be inappropriate to subject 
entities that obtain partitioned licenses from nationwide geographic 
area licensees to coverage requirements when no such requirements have 
been established for partitioners. However, the Commission states that 
partitionees of nationwide licenses may be subject to coverage 
requirements in the future.
    72. The Commission determined that partitionees should be 
authorized to hold their licenses for the remainder of the 
partitioner's original ten-year term. The Commission rejected a 
proposal that a partitionee receive a one-year term when any 
partitioning transaction occurs within one year of the renewal date of 
the original license because, in this instance, the partitioner would 
be conferring greater rights than it was awarded under the terms of its 
license grant. The Commission also found that a partitionee should be 
granted the same renewal expectancy as the partitioner; a Commercial 
Mobile Radio Services (CMRS) licensee will be entitled to a renewal 
expectancy if it demonstrates that it has provided substantial service 
during the license term and has complied with the Commission's rules 
and policies and the Communications Act.
    73. Although several commenters oppose establishing disaggregation 
rules at this time, the Commission will permit MEA, EA, and nationwide 
geographic area licensees to engage in disaggregation. The Commission 
also will not impose a minimum limit on spectrum disaggregation in the 
paging service. The Commission concludes that the market should 
determine if paging spectrum is technically and economically feasible 
to disaggregate. In addition, the Commission notes that allowing 
disaggregation will encourage the further development of paging 
equipment capable of operating on less than 25 kHz. The Commission 
further concludes that allowing spectrum disaggregation at this time 
could potentially expedite the introduction of service to underserved 
areas, provide increased flexibility to licensees, and encourage 
participation by small businesses in the provision of services.

[[Page 33774]]

The Commission also finds that commenters have not provided sufficient 
evidence that interference to adjacent or co-channel licensees is a 
substantial risk that should preclude the Commission from allowing 
disaggregation of paging spectrum. The Commission finds that its 
existing technical rules provide parties with sufficient protection 
from interference. The Commission also believes that all qualified 
parties should be eligible to disaggregate any geographic area license. 
The Commission states that open eligibility to disaggregate spectrum 
promotes prompt service to the public by facilitating the assignment of 
spectrum to the entity that values it most.
    74. The Commission establishes two options for parties to a 
disaggregation agreement involving an MEA or EA license to satisfy 
coverage requirements. Under the first option, which is the option 
proposed in the Further Notice, the parties may agree that either the 
disaggregator or the disaggregatee will be responsible for meeting the 
coverage requirements for the geographic service area. Under this 
option, the disaggregating party certifying responsibility for the 
coverage requirements of an MEA or EA license will be required to 
provide coverage to one-third of the population of the licensed 
geographic area within three years of license grant, and to two-thirds 
of the population within five years of license grant; or, in the 
alternative, provide substantial service to the geographic area within 
five years of license grant. Under the second option, the disaggregator 
and disaggregatee may certify that they will share the responsibility 
for meeting the coverage requirements for the entire geographic area. 
Under this option, both parties jointly will be required to provide 
coverage to one-third of the population of the licensed geographic area 
within three years of license grant, and to two-thirds of the 
population within five years of license grant; or, in the alternative, 
provide substantial service to the geographic area within five years of 
license grant.
    75. The Commission recognizes that if the parties to a 
disaggregation agreement select the first option, situations may arise 
where a party minimally builds its system but will retain its license 
because the other party has met the coverage requirements for the 
geographic area. Nonetheless, the Commission believes that it is 
appropriate for one party to assume full responsibility for 
construction within the shared service area, because service would be 
offered to the required percentage of the population on a common 
frequency, even if not on the entire spectrum.
    76. Under the first option, if the certifying party fails to meet 
the coverage requirements for the entire geographic area, that party's 
license will be subject to cancellation, but the non-certifying party's 
license will not be affected. However, if the parties to a 
disaggregation agreement select the second option and jointly fail to 
satisfy the coverage requirements for the entire geographic area, both 
parties' licenses will be subject to cancellation. The Commission notes 
that MEA or EA licensees whose licenses are cancelled will retain those 
sites authorized, constructed, and operating at the time the geographic 
area license was granted.
    77. As the Commission did with respect to the issue of coverage 
requirements for partitionees of nationwide geographic area licenses, 
it will defer any decision on such requirements for disaggregatees of 
nationwide geographic area licenses until the Commission decides the 
question of whether to impose coverage requirements on nationwide 
geographic area licensees generally. Thus, the Commission notes that 
disaggregatees of nationwide licenses may be subject to coverage 
requirements in the future.
    78. Disaggregatees will be authorized to hold licenses for the 
remainder of the disaggregator's original ten-year term. As the 
Commission concluded with respect to partitioners, the disaggregator 
should not be entitled to confer greater rights than it was awarded 
under the initial license grant. The Commission also concludes that a 
disaggregatee should be afforded the same renewal expectancy as the 
disaggregator. The Commission also concludes that carriers may engage 
in combinations of partitioning and disaggregation. As in other 
wireless services, the Commission further concludes that in the event 
there is a conflict in the application of the partitioning and 
disaggregation rules, the partitioning rules should prevail.

Unjust Enrichment Provisions Regarding Partitioning and Disaggregation

    79. The Commission concludes that unjust enrichment provisions 
adopted in the Part 1 Third R&O and Second Further Notice will apply to 
any MEA or EA paging licensee that receives a bidding credit and later 
elects to partition or disaggregate its license. Specifically, the 
rules adopted in the Part 1 Third R&O and Second Further Notice 
indicate that if a licensee seeks to partition any portion of its 
geographic area, the amount of the unjust enrichment payment will be 
calculated based on the ratio of the population in the partitioned area 
to the overall population of the license area. In the event of 
disaggregation, the amount of the unjust enrichment payment will be 
based upon the ratio of the amount of spectrum disaggregated to the 
amount of spectrum held by the disaggregating licensee. When combined 
partitioning and disaggregation is proposed, the Commission will, 
consistent with its rules for other services, use a combination of both 
population of the partitioned area and amount of spectrum disaggregated 
to make these pro rata calculations. The Commission does not address 
how partitioning and disaggregation will affect installment payments 
because, in the MO&O, the Commission eliminated the use of installment 
payments for auctioned spectrum in the paging service.

Application Fraud

    80. To deter fraud by application mills on the shared channels, the 
Commission will add language to the long-form application regarding 
construction and coverage requirements, and will disseminate 
information regarding its licensing rules and the potential for fraud 
through public notices and the Commission's website. The Commission is 
currently in the process of modifying FCC Form 601 to include language 
near the signature block that warns applicants that the failure of the 
licensee to construct may result in cancellation of the license. The 
Commission believes this language will be helpful to applicants in all 
services and may be of some use in deterring fraud. The Commission also 
applauds the measures taken by the Personal Communications Industry 
Association (PCIA) (frequency coordinator) to make applicants aware of 
the potential for fraud by applications mills.
    81. Finally, once the Commission has completed the modification of 
FCC Form 601 to include warning language as described above, the 
Wireless Telecommunications Bureau will release a public notice that 
removes the interim licensing rules for both the lower band shared PCP 
channels and the five shared 929 MHz PCP channels. Presently, the 
interim paging rules for the shared PCP paging channels permit only 
incumbents to file for new sites at any location. The Commission allows 
non-incumbents to file applications, but only for private, internal-use 
systems. Once the interim licensing rules are removed, non-incumbents 
will be permitted to file applications on the shared PCP paging 
channels for new sites at any location. The Commission further notes 
that while frequency

[[Page 33775]]

coordination is no longer required on the exclusive paging channels, 
all applications for new sites filed on the shared PCP paging channels 
will continue to require frequency coordination prior to the filing of 
these applications with the Commission. Accordingly, the Commission 
amends section 90.175(f) to clarify that frequency coordination is only 
needed for shared frequencies in the 929-930 MHz band.

Supplemental Final Regulatory Flexibility Analysis

Memorandum Opinion and Order on Reconsideration

    82. As required by the Regulatory Flexibility Act (RFA), an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in Appendix A 
of the Notice in this proceeding, and a Final Regulatory Flexibility 
Analysis (FRFA) was incorporated in Appendix C of the subsequent Second 
R&O. As described below, two petitions for reconsideration of the 
Second R&O raise an issue concerning the previous FRFA. The MO&O 
addresses those reconsideration petitions, among others. This 
associated Supplemental Final Regulatory Flexibility Analysis 
(Supplemental FRFA) also addresses those petitions and conforms to the 
RFA.

I. Need for and Purpose of this Action

    83. In the Second R&O, the Commission adopted rules for geographic 
area licensing of Common Carrier Paging and exclusive 929 MHz Private 
Carrier Paging and procedures for auctioning mutually exclusive 
applications for these licenses. The actions taken in this MO&O are in 
response to petitions for reconsideration or clarification of the 
Second R&O. Throughout this proceeding, the Commission has sought to 
promote Congress's goal of regulatory parity for all CMRS, and to 
encourage the participation of a wide variety of applicants, including 
small businesses, in the paging industry. In addition, the Commission 
has sought to establish rules for the paging services that will 
streamline the licensing process and provide a flexible operating 
environment for licensees, foster competition, and promote the delivery 
of service to all areas of the country, including rural areas.

II. Summary of Significant Issues Raised in Response to the Final 
Regulatory Flexibility Analysis

    84. Priority Communications, Inc.'s (Priority) petition for 
reconsideration raises various issues, one of which is in direct 
response to the FRFA contained in the Second R&O. Priority states that 
the FRFA did not address alternatives to competitive bidding, e.g., 
granting geographic area licenses, without competitive bidding, to 
incumbents of highly encumbered areas. The Commission disagrees with 
the contention that the Commission failed to consider alternatives to 
competitive bidding. In the Second R&O, the Commission considered and 
rejected proposals to retain site-by-site licensing for the paging 
industry. In rejecting the proposals, the Commission found that 
geographic area licensing provides flexibility for licensees and ease 
of administration for the Commission, facilitates further build-out of 
wide-area systems, and enables paging operators to meet the needs of 
their customers more easily. Moreover, the Commission concluded that 
geographic area licensing will further the goal of providing carriers 
that offer substantially similar services more flexibility to compete, 
and will enhance regulatory symmetry between paging and other service 
in the CMRS marketplace.
    85. The Commission further concluded that it would grant mutually 
exclusive applications for geographic area licenses through competitive 
bidding even in areas extensively built out by an incumbent licensee. 
The Commission specifically considered and rejected proposals to award 
geographic area licenses, without competitive bidding, to any incumbent 
providing coverage to 70 percent or more of the population or to two-
thirds of the population in the license area. Similarly, the Commission 
rejected a proposal not to hold auctions where an incumbent licensee is 
serving at least 50 percent of the geographic area or 50 percent of the 
population in that market. The Commission also considered and rejected 
proposals to award a dispositive preference in the auction to a 
licensee that provides service to one-third or greater of the 
population, or one-half or greater of the geographic area, or to 
restrict competitive bidding to incumbent licensees. In rejecting these 
proposals, the Commission concluded that market forces, not regulation, 
should determine participation in competitive bidding for geographic 
area licenses.
    86. In its petition for reconsideration, the National Telephone 
Cooperative Association (NTCA) contends that the FRFA failed to address 
alternatives that parties suggested in response to the Notice to 
minimize the impact of the rule changes adopted in the Second R&O on 
small BETRS operators. NTCA specifically contends that the Commission 
did not address the investment BETRS operators would be unable to 
recover once they were required to terminate operations upon 
notification by a geographic area licensee of interference. NTCA 
further contends that the Commission did not address the adverse impact 
on small BETRS operators resulting from auctions that ``pit them 
against paging operations that have no interest in the site licenses 
needed for BETRS operations.'' Initially, the Commission notes that 
NTCA did not raise these issues in response to the Notice. NTCA has 
raised these issues only in response to the Second R&O. The Commission 
also disagrees with the contention that the Commission failed to 
consider alternatives that would minimize the impact on small BETRS 
operators. The Commission specifically found it unnecessary to adopt 
the plan that Puerto Rico Telephone proposed, under which (1) BETRS 
operators would be given preferential treatment over paging operators 
for mutually exclusive applications (on a site-by-site basis), and (2) 
the Commission would designate a frequency block for reallocated 
frequencies solely for BETRS use. Based on the potentially competitive 
environment in local exchange services, the Commission saw no basis for 
distinguishing BETRS from other commercial radio services that are 
auctionable under Section 309(j) of the Communications Act. Rather, the 
Commission determined that BETRS licensees should be required to 
participate in competitive bidding for paging licenses. In considering 
proposals to continue licensing BETRS facilities on a site-specific 
basis, the Commission decided that BETRS licensees could obtain site 
licenses on a secondary basis and enter into partitioning agreements 
with paging geographic area licensees. With respect to the issue of 
stranded costs, the Second R&O does not limit BETRS operators' options 
to that of obtaining licenses on a secondary basis. As already 
explained, they may also obtain co-primary licenses through 
partitioning. Moreover, the Commission has adopted specific procedures 
in the MO&O to limit the extent to which BETRS providers will be 
required to discontinue operations at secondary sites.

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

    87. The rules adopted in the MO&O will affect all small businesses 
that hold or seek to acquire commercial paging

[[Page 33776]]

licenses. As noted, a FRFA was incorporated into the Second R&O. In 
that analysis, the Commission described the small businesses that might 
be significantly affected at that time by the rules adopted in the 
Second R&O. Those entities include existing commercial paging operators 
and new entrants into the paging market. To ensure the more meaningful 
participation of small business entities in the auctions, the 
Commission adopted a two-tiered definition of small businesses in the 
Second R&O: (1) an entity that, together with its affiliates and 
controlling interests, has average gross revenues for the three 
preceding years of not more than $3 million; or (2) an entity that, 
together with affiliates and controlling interests, has average gross 
revenues for the three preceding years of not more than $15 million. 
Because the Small Business Administration (SBA) had not yet approved 
this definition, the Commission relied in the FRFA on the SBA's 
definition applicable at that time to radiotelephone companies, i.e., 
an entity employing less than 1,500 persons. Given the fact that nearly 
all radiotelephone companies had fewer than 1,000 employees, and that 
no reasonable estimate of the number of prospective paging licensees 
could be made, the Commission assumed, for purposes of the evaluations 
and conclusions in the FRFA, that all the auctioned 16,630 geographic 
area licenses would be awarded to small entities. In December 1998, the 
SBA approved the two-tiered size standards for paging services set 
forth in the Second R&O.
    88. In the FRFA, the Commission anticipated that approximately 
16,630 non-nationwide geographic area licenses will be auctioned. No 
party submitting or commenting on the petitions for reconsideration 
giving rise to this MO&O commented on the potential number of small 
businesses that might participate in the commercial paging auction and 
no reasonable estimate can be made. While the Commission is unable to 
predict accurately how many paging licensees meeting one of the above 
definitions will choose to participate in or be successful at auction, 
the Third CMRS Competition Report estimated that, as of January 1998, 
there were more than 600 paging companies in the United States. The 
Third CMRS Competition Report also indicates that at least ten of the 
top twelve publicly held paging companies had average gross revenues in 
excess of $15 million for the three years preceding 1998. Data obtained 
from publicly available company documents and SEC filings indicate that 
this is also true for the three years preceding 1999. While the 
Commission expects these ten companies to participate in the paging 
auction, the Commission also expects, for the purposes of the 
evaluations and conclusions in this Supplemental FRFA, that a number of 
geographic area paging licenses will be awarded to small businesses.

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

    89. With one exception, this MO&O does not impose additional 
recordkeeping or other compliance requirements beyond the requirements 
contained in the Second R&O. If an MEA or EA licensee fails to meet its 
coverage requirements, that licensee will have the burden of showing 
which of its facilities were authorized, constructed, and operating at 
the time the geographic area license was granted. MEA and EA licensees 
will need to retain necessary records of any such facilities until they 
meet the geographic area license coverage requirements.

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

    90. The previous FRFA stated that the rules adopted for geographic 
area licensing will affect the Common Carrier Paging and exclusive 929 
MHz Private Carrier Paging services. This Supplemental FRFA concludes 
that a number of geographic area commercial paging licenses may be 
awarded to small businesses. As described below, the Commission's 
actions taken to implement the transition to geographic area licensing 
and competitive bidding represent a balancing of various factors.
    91. Certain petitioners suggested replacing Rand McNally MTAs with 
Major Economic Areas (MEAs) for the 929 MHz and 931 MHz bands. 
Considering these requests, the Commission has decided to adopt MEAs 
instead of MTAs. Because MEAs are composed of EAs, licensees with 
paging systems on both the lower channels and the 929 and 931 MHz 
bands, including small businesses, will be able to operate their 
systems more efficiently. The MEA designation will also enhance 
competition because paging systems on the lower channels, including 
small business paging systems, will be able to combine their EAs to 
form MEAs. In addition, the Commission considered and rejected a 
recommendation to use Basic Trading Areas (BTAs) for geographic area 
licensing on the lower paging bands. In rejecting the BTA designation, 
the Commission concluded that EAs, which the majority of commenters 
supported, best reflect the geographic area that the paging licensees 
on the lower channels seek to serve. The Commission also found that the 
use of EAs will not prevent paging operators of small systems from 
participating in the auction. The Commission noted that bidding credits 
will allow small businesses to compete against larger bidders. In 
addition, the Commission's partitioning rules will allow entities, 
including small businesses, to acquire licenses for areas smaller than 
EAs.
    92. A number of petitioners have requested that the Commission 
reconsider its decision to grant mutually exclusive applications for 
geographic area licenses through competitive bidding even in areas 
extensively built out by an incumbent licensee. Again balancing various 
interests, the Commission has affirmed the use of competitive bidding 
to grant mutually exclusive paging applications. The Commission has 
rejected the petitioners' request because open eligibility promotes 
prompt service to the public by allocating spectrum to the entity that 
values it most. The Commission believes that the market should decide 
whether an economically viable paging system can be established in the 
unserved area of a geographic market. The Commission's decision on this 
issue will provide adjacent geographic area licensees and new entrants, 
including small businesses, with the opportunity to establish a viable 
system that serves the public as well as an incumbent. Moreover, the 
Commission sees no reason to give licensees that serve a substantial 
portion of a geographic area an advantage over other entities, 
including small businesses, that may also value the spectrum in that 
particular market.
    93. Several petitioners request that the Commission clarify section 
22.723 of its rules, which requires Rural Radiotelephone Service (RRS) 
licensees, including BETRS operators, to discontinue operations once 
the paging geographic area licensee notifies the RRS licensee that its 
co-channel secondary facilities may cause interference to the 
geographic area licensee's existing or planned facilities. The 
petitioners argue that the Commission's rules will allow geographic 
area licensees to terminate BETRS upon any allegation of harmful 
interference. In response to this concern, the Commission is adopting 
new procedures in the MO&O that geographic area licensees must follow 
in notifying a BETRS operator that its facility causes or will cause 
interference

[[Page 33777]]

with the geographic area licensee's service contour in violation of the 
Commission's interference rules. The new procedures limit the 
termination of operating BETRS co-channel secondary facilities until 
harmful interference would occur.
    94. In the Second R&O, the Commission defined a system-wide license 
by the aggregate of the interference contours around each of the 
incumbent's contiguous sites operating on the same channel. The 
Commission also concluded that incumbent licensees may add or modify 
sites within their existing interference contours without filing site-
specific applications, but may not expand their existing interference 
contours without the consent of the geographic area licensee. Several 
petitioners expressed confusion over the Commission's definition of 
``contiguous sites'' for the purpose of determining an incumbent's 
``aggregate interference contour.'' In addition, one petitioner asked 
that the Commission define ``composite interference contours'' to 
include all authorized transmitters, including valid construction 
permits, regardless of the grant date. Another petitioner requested 
that the Commission include remote transmitters within system-wide 
licenses, or in the alternative maintain separate licenses for any 
stand-alone or remote transmitter. Recognizing these concerns and 
balancing various interests as explained more fully in the MO&O, the 
Commission has maximized the definition of composite interference 
contour to reduce unnecessary regulatory burdens on licensees, reduce 
administrative costs on the industry, and thereby benefit consumers. In 
this regard, the Commission has clarified that contiguous sites, for 
the purpose of defining an incumbent's composite interference contour, 
are defined by overlapping interference contours, not service contours. 
The Commission further states that all authorized site-specific paging 
licenses and construction permits are included in a composite 
interference contour. Finally, the Commission has amended section 
22.507 to allow system-wide licensees to maintain separate licenses for 
any stand-alone or remote transmitters, or to include remote and stand-
alone sites within the system-wide license.
    95. On a related matter, petitioners asked the Commission to allow 
reversion to the geographic area licensee of spectrum recovered from an 
incumbent in all instances except where an incumbent licensee 
discontinues operations in a location wholly encompassed by the 
incumbent's composite interference contour. In balancing the various 
relevant considerations, the Commission concluded that no demonstration 
had been made showing that the geographic area licensee would be unable 
to serve areas wholly surrounded by an incumbent. Moreover, the 
Commission does not believe the public interest would be served by 
withholding such areas from the geographic area licensee in hope that 
the incumbent will one day resume service to those areas. The 
Commission further noted that if incumbents, including small 
businesses, wish to serve reverted areas, they may seek to enter into 
partitioning agreements with the geographic area licensees. Similarly, 
a number of petitioners contended that system-wide licenses should 
include areas where an incumbent licensees' interference contours do 
not overlap, but where no other licensee could place a transmitter 
because of interference rules. The Commission considered and rejected 
this proposal, finding that inclusion of areas outside of an 
incumbent's interference contours would be contrary to the objective of 
prohibiting encroachment on the geographic area licensee's operations. 
Incumbents seeking to expand their contours, including small 
businesses, may participate in the auction or seek partitioning 
agreements with geographic area licensees.
    96. In the Second R&O, the Commission elected not to impose a limit 
or ``cap'' on the number of licensees that may operate on shared paging 
channels. Two petitioners asked the Commission to reconsider that 
determination. Again, balancing the options, the Commission reaffirmed 
its prior decision. A ``cap'' would not promote efficient use of 
spectrum because the capacity limits on paging channels are based 
primarily on use and not the number of licensees. The Commission's goal 
is to increase the use of these shared channels, not to unduly restrict 
access to them. This decision will provide new entrants, including 
small businesses, with another opportunity to acquire paging spectrum.
    97. In the Second R&O, the Commission also eliminated the Part 90 
height and power limitations on 929 MHz stations and increased the 
maximum permitted effective radiated power (ERP) to 3,500 watts. Some 
petitioners have asked for clarification as to whether incumbent 929 
MHz licensees must file a modification application to increase the 
current ERP for their base stations up to the maximum permissible. In 
response to this request, the Commission has clarified that incumbent 
929 MHz licensees need not file a modification application to increase 
the ERP for base stations at any location, including exterior base 
stations, as long as they do not expand their existing composite 
interference contour. This clarification conforms the Commission's 
technical requirements for height and power with the general rule that 
incumbents need not file applications for internal system changes. 
Adopting this rule will minimize burdens on all entities, including 
small businesses, that increase the ERP of their base stations.
    98. One petitioner advocated that the Commission make its coverage 
requirements more stringent by requiring geographic area licensees to 
provide coverage to one-third of the market area within one year, and 
two-thirds within three years. The Commission considered and rejected 
this proposal because it believes that the coverage requirements 
adequately promote prompt service to the public without being unduly 
burdensome on licensees, including small businesses, that need a 
reasonable amount of time to complete construction. Moreover, the 
Commission believes that overly stringent coverage requirements 
unfairly favor incumbents by erecting formidable barriers to new 
entrants, including small businesses. Several petitioners also 
requested that the Commission eliminate the ``substantial service'' 
option for meeting MEA or EA coverage requirements. The Commission 
rejected this request because the Commission believes that the 
``substantial service'' option will facilitate build-out in rural 
areas, encourage licensees to provide new services, and enable new 
entrants to satisfy the Commission's coverage requirements in 
geographic areas where incumbents are already substantially built out. 
The Commission believes that rural service providers as well as new 
entrants are likely to include small businesses, and thus retaining the 
``substantial service'' option should benefit small businesses. While 
the Commission will presume that the ``substantial service'' option is 
satisfied if an MEA or EA licensee provides coverage to two-thirds of 
the population in unserved areas within five years of license grant, 
the Commission declines to adopt specific coverage requirements as the 
sole means of defining ``substantial service.'' Giving licensees 
flexibility to satisfy the ``substantial service'' option in different 
ways should benefit small businesses.
    99. In the Part 1 Third R&O and Further Notice, the Commission 
suspended the availability of installment payment financing for small 
businesses participating in future

[[Page 33778]]

auctions. Consistent with this decision, the MO&O rescinds installment 
payment financing for the paging auctions. To balance the impact of 
this decision on small businesses, however, the Commission is 
increasing the bidding credits available to qualifying entities. The 
revised rule conforms to a schedule of bidding credits adopted in the 
Part 1 Third R&O and Second Further Notice. Under this rule, an 
applicant will qualify for a twenty-five percent (25%) bidding credit 
if the average gross revenues for the preceding three years of the 
applicant, its affiliates and controlling interests do not exceed $15 
million. Similarly, an applicant will qualify for a thirty-five percent 
(35%) bidding credit if the average gross revenues for the preceding 
three years of the applicant, its affiliates and controlling interests 
do not exceed $3 million. As the Commission stated in the Part 1 Third 
R&O and Second Further Notice, the Commission believes that these 
increased bidding credits will provide small businesses with adequate 
opportunities to participate in the paging auctions. Moreover, the 
Commission is further conforming the paging competitive bidding rules 
to the Part 1 rules by allowing winning bidders to make their final 
payments within ten (10) business days after the payment deadline, 
provided that they also pay a late fee of five (5) percent of the 
amount due. As the Commission stated in the Part 1 Third R&O and Second 
Further Notice, it believes that this additional ten-day period 
provides winning bidders with adequate time to adjust for any last-
minute problems in arranging financing and making final payment.

VI. Report to Congress

    100. The Commission will send a copy of the MO&O, including this 
Supplemental FRFA, in a report to Congress pursuant to the Small 
Business Regulatory Enforcement Fairness Act of 1996. In addition, the 
Commission will send a copy of the MO&O, including this Supplemental 
FRFA, to the Chief Counsel for Advocacy of the Small Business 
Association. A copy of the MO&O and Supplemental FRFA (or summaries 
thereof) will also be published in the Federal Register.

Final Regulatory Flexibility Analysis

Third Report and Order

    101. As required by the Regulatory Flexibility Act (RFA), an 
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in 
Appendix D of the Second R&O and Further Notice in this proceeding. The 
Commission sought written public comment on the proposals in that 
Further Notice, including comment on the IRFA. As described below, no 
commenter raised an issue concerning the IRFA. The Commission's Final 
Regulatory Flexibility Analysis in this Third R&O conforms to the RFA.

I. Need for and Purpose of this Action

    102. In the Second R&O, the Commission adopted coverage 
requirements for and decided to allow partitioning by non-nationwide 
geographic area licensees, including small businesses. In the Further 
Notice, the Commission sought comment on whether to adopt coverage 
requirements for nationwide geographic area licenses, whether to allow 
partitioning by nationwide geographic area licensees, whether to permit 
disaggregation of paging licenses, and whether to revise the 
application procedures for shared channels. In the Third R&O, the 
Commission concludes that it is best to defer any decision on coverage 
requirements for nationwide geographic area licenses until similar 
issues raised in the Narrowband PCS Further Notice of Proposed 
Rulemaking are resolved. The Commission further modifies the paging 
rules to permit partitioning by all nationwide geographic area 
licensees and to allow disaggregation by all MEA, EA, and nationwide 
geographic area licensees. The Third R&O also adopts rules governing 
the coverage requirements for parties to partitioning or disaggregation 
agreements involving MEA or EA licenses, and the license term of 
partitioned or disaggregated MEA, EA, and nationwide geographic area 
licenses. Further, the Third R&O permits MEA, EA, and nationwide 
geographic area licensees to combine partitioning and disaggregation. 
These partitioning and disaggregation rules will allow entities in 
addition to the initial geographic area licensees, including small 
businesses, to participate in providing paging services. Indeed, 
partitioning and disaggregation should be well suited to small 
businesses that do not wish to acquire an entire geographic area 
license. Finally, the Third R&O establishes additional mechanisms to 
inform consumers of the rules governing paging licenses and the danger 
of fraudulent schemes perpetrated by application mills. These 
mechanisms should help to reduce application fraud and protect 
consumers.

II. Summary of Issues Raised in Response to the Initial Regulatory 
Flexibility Analysis

    103. None of the commenters submitted comments specifically in 
response to the IRFA. The Commission has, however, taken small business 
concerns into account in the Third R&O, as discussed in Sections V and 
VI of the FRFA.

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

    104. The rules adopted in the Third R&O will affect small 
businesses that hold or seek to acquire commercial paging licenses. 
These entities include small business nationwide geographic area 
licensees that decide to partition or disaggregate, small businesses 
that obtain MEA or EA licenses through auction and subsequently decide 
to partition or disaggregate, and small businesses that may acquire 
partitioned and/or disaggregated MEA, EA, or nationwide geographic area 
licenses. To ensure the more meaningful participation of small business 
entities in the auctions, the Commission adopted a two-tiered 
definition of small businesses in the Second R&O: (1) An entity that, 
together with affiliates and controlling interests, has average gross 
revenues for the three preceding years of not more than $3 million; or 
(2) an entity that, together with affiliates and controlling interests, 
has average gross revenues for the three preceding years of not more 
than $15 million. In December 1998, the Small Business Association 
approved the two-tiered size standards for paging services set forth in 
the Second R&O.

MEA and EA Licenses

    105. In the Final Regulatory Flexibility Analysis incorporated in 
Appendix C of the Second R&O, the Commission anticipated that 
approximately 16,630 non-nationwide geographic area licenses will be 
auctioned. No parties, however, commented in response to the Further 
Notice on the number of small businesses that might elect to use the 
proposed partitioning and disaggregation rules and no reasonable 
estimate can be made. While the Commission is unable to predict 
accurately how many paging licensees meeting one of the above 
definitions will participate in or be successful at auction, the Third 
CMRS Competition Report estimated that, as of January 1998, there were 
more than 600 paging companies in the United States. The Third CMRS 
Competition Report also

[[Page 33779]]

indicates that at least ten of the top twelve publicly held paging 
companies had average gross revenues in excess of $15 million for the 
three years preceding 1998. The Commission expects that these ten 
companies will participate in the paging auction and may employ the 
partitioning or disaggregation rules. The Commission also expects, for 
purposes of the evaluations and conclusions in this Final Regulatory 
Flexibility Analysis, that a number of paging licenses will be awarded 
to small businesses, and at least some of those small business 
licensees will likely also take advantage of the partitioning and 
disaggregation rules. The Commission is unable to predict accurately 
the number of small businesses that may choose to acquire partitioned 
or disaggregated MEA or EA licenses. The Commission expects, however, 
for purposes of the evaluations and conclusions in this Final 
Regulatory Flexibility Analysis, that entities meeting one of the above 
definitions will use partitioning and disaggregation as a means to 
obtain a paging license from an MEA or EA licensee at a cost lower than 
the cost of the license for the entire MEA or EA.

Nationwide Geographic Area Licenses

    106. The partitioning and disaggregation rules pertaining to 
nationwide geographic area licenses adopted in the Third R&O will 
affect the 26 licensees holding nationwide geographic area licenses to 
the extent they choose to partition or disaggregate, as well as any 
entity that enters into a partitioning or disaggregation agreement with 
a nationwide geographic area licensee. No parties, however, commented 
on the number of small business nationwide geographic area licensees 
that might elect to partition or disaggregate their licenses and no 
reasonable estimate can be made. While the Commission is unable to 
state accurately how many nationwide geographic area licensees meet one 
of the above small business definitions, the Third CMRS Competition 
Report indicates that at least eight of the top twelve publicly held 
paging companies hold nationwide geographic area licenses and had 
average gross revenues in excess of $15 million for the three years 
preceding 1998. The Commission expects at least some of these eight 
companies to employ the partitioning or disaggregation rules, and also 
expects, for the purposes of evaluations and conclusions in this Final 
Regulatory Flexibility Analysis, that nationwide geographic area 
licensees meeting one of the above definitions may use the partitioning 
or disaggregation rules. No parties commented on the number of small 
businesses that may choose to acquire partitioned or disaggregated 
licenses from nationwide geographic area licensees and, again, no 
reasonable estimate can be made. While the Commission is unable to 
predict accurately the number of small businesses that may choose to 
acquire partitioned or disaggregated licenses from nationwide 
geographic area licensees, the Commission expects, for purposes of the 
evaluations and conclusions in the Final Regulatory Flexibility 
Analysis, that entities meeting one of the above small business 
definitions will use partitioning and disaggregation as a means to 
obtain a paging license from a nationwide geographic area licensee.

Fraud on Shared Paging Channels

    107. The additional mechanisms established to inform consumers of 
the paging rules and the potential for paging application fraud on the 
shared channels will not affect small businesses seeking to acquire a 
license on a shared paging channel, except that small businesses 
interested in investing in shared channel licenses will be more 
informed of the potential for fraud.

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

    108. The rules adopted in the Third R&O impose reporting and 
recordkeeping requirements on small businesses, as well as others, 
seeking to obtain or transfer licenses through partitioning and 
disaggregation. The information requirements would be used to determine 
whether the proposed partitionee or disaggregatee is an entity 
qualified to obtain a partitioned license or disaggregated spectrum. 
This information will be a one-time filing by any applicant requesting 
such a license. The information can be submitted on FCC Form 490 or 
Form 603 for Part 22 paging services until July 1, 1999. Part 22 
applicants must file electronically in the Universal Licensing System 
(ULS) on Form 603 on or after July 1, 1999. The Commission estimates 
that the average burden on the applicant is three hours for the 
information necessary to complete these forms. The Commission estimates 
that seventy-five percent of the respondents, which may include small 
businesses, will contract out the burden of responding. The Commission 
estimates that it will take approximately 30 minutes to coordinate 
information with those contractors. The remaining twenty-five percent 
of respondents, which may include small businesses, are estimated to 
employ in-house staff to provide the information. Applicants filing 
electronically, including small businesses, will not incur any per 
minute on-line charge. The Commission estimates that applicants 
contracting out the information would use an attorney or engineer 
(average of $200 per hour) to prepare the information.

V. Steps Taken to Minimize Burdens on Small Entities

    109. The rules adopted in the Third R&O are designed to implement 
Congress' goal of giving small businesses, as well as other entities, 
the opportunity to participate in the provision of spectrum-based 
services. The rules are also consistent with the Communications Act's 
mandate to identify and eliminate market entry barriers for 
entrepreneurs and small businesses in the provision and ownership of 
telecommunications services.

Partitioning and Disaggregation

    110. Partitioning of nationwide geographic area licenses and 
disaggregation of MEA, EA, and nationwide geographic area licenses will 
facilitate market entry by parties that may lack the financial 
resources to participate in auctions, including small businesses. 
Partitioning and disaggregation are expected to enable small businesses 
to obtain licenses for areas smaller than MEA, EA, and nationwide 
areas, or smaller amounts of spectrum, at costs they will be able to 
afford. Allowing for the partitioning and disaggregation of MEA and EA 
licenses prior to fulfillment of construction requirements by the 
initial licensees will facilitate the immediate entry of new 
competitors, including small businesses, into the paging market. 
Finally, the Commission's decision to allow parties to partitioning or 
disaggregation agreements of MEA and EA licenses to choose between two 
options to meet the coverage requirements will provide small businesses 
with more flexibility in managing their resources.

Fraud on Shared Paging Channels

    111. As stated above, the additional mechanisms established to 
deter paging application fraud on the shared channels are not expected 
to have an impact on any small business or other entity applying for a 
paging license on a shared channel. The changes are intended to protect 
consumers from application fraud. Small businesses interested in 
investing in shared channel licenses, however, will be more informed of 
the potential for fraud.

[[Page 33780]]

VI. Significant Alternatives Considered

    112. The Commission considered and rejected the following 
alternative proposals concerning partitioning, disaggregation, coverage 
requirements for parties to partitioning and disaggregation agreements, 
and license terms.

Partitioning

    113. The Commission declined to adopt Paging Network, Inc.'s 
(PageNet) proposal that partitioning should be allowed only after the 
initial geographic area licensee has met the build-out requirements for 
the entire geographic area, and that partitioning before a geographic 
area licensee meets its construction requirements should be allowed 
only on a waiver basis where good cause is shown. PageNet's concern was 
that the ability to partition may encourage bidders in the auction to 
engage in unlawful contact with other bidders, particularly if the 
market is highly contested, and that geographic area licensees may seek 
to avoid the cancellation of their licenses by partitioning to a 
``straw man'' when they fail to meet the Commission's coverage 
requirements. The Commission found, however, that there was no evidence 
that ``sham'' arrangements between geographic area licensees and other 
parties to avoid construction requirements are likely to occur in the 
paging service or have already taken place in other services. The 
Commission also determined that any unlawful activity between bidders 
concerning partitioning falls within its anti-collusion rules. Finally, 
allowing parties to partition spectrum immediately after license grant 
will facilitate the entry of new competitors to the paging market, many 
of whom will be small businesses seeking to acquire a smaller service 
area or smaller amount of paging spectrum at a reduced cost.

Disaggregation

    114. A number of petitioners opposed the Commission's proposal to 
allow MEA, EA, and nationwide geographic area licensees to 
disaggregate, contending that disaggregation of paging spectrum is 
neither technically nor practically feasible. Small Business in 
Telecommunications (SBT) proposes that disaggregation should be limited 
only to small businesses during the original licensee's construction 
period. In considering and rejecting the petitioners' arguments, the 
Commission concluded that the market should determine whether it is 
technically or economically feasible to disaggregate spectrum. The 
Commission further concluded that all qualified parties should be 
eligible to disaggregate any geographic area license because open 
eligibility to disaggregate spectrum promotes prompt service to the 
public by facilitating the assignment of spectrum to the entity that 
values it most. The Commission found that allowing spectrum 
disaggregation at this time could potentially expedite the introduction 
of service to underserved areas, provide increased flexibility to 
licensees, and encourage participation by small businesses in the 
provision of services.

Coverage Requirements

    115. The Commission declined to adopt Metrocall, Inc.'s proposal 
that geographic area licensees' coverage benchmarks should be based on 
the entire geographic area, including the partitioned area, to prevent 
the geographic area licensee from using partitioning to circumvent 
coverage requirements. As stated previously, the Commission found that 
there was no evidence that ``sham'' arrangements between geographic 
area licensees and other parties to avoid construction requirements are 
likely to occur in the paging service or have already taken place in 
other services. The Commission also declined to adopt PCIA's proposal 
that the partitioner should be responsible for build-out in the 
partitioned area if the partitionee fails to build out, and that the 
entire license should be cancelled if build-out in the partitioned area 
is not completed by either the partitionee or the partitioner. The 
decision not to place the ultimate responsibility for the partitionee's 
coverage requirements on the partitioner, as well as the decision to 
provide parties to partitioning agreements with two options for meeting 
the coverage requirements, is expected to encourage more partitioning 
agreements, including agreements involving small businesses. The 
resulting benefits will be the same for disaggregation arrangements.
    116. Finally, the Commission declined to adopt commenters' proposal 
to eliminate the ``substantial service'' option as it applies to 
coverage requirements in the partitioning and disaggregation context. 
The Commission found that maintaining the ``substantial service'' 
option will encourage licensees to build out their systems while 
safeguarding the financial investments made by those licensees who are 
financially unable to meet specific population coverage requirements. 
Thus, the Commission found that the substantial service alternative 
will promote service growth while helping licensees to remain 
financially viable and retain their licenses. Retaining the 
``substantial service'' option will also allow small businesses 
flexibility in meeting their coverage requirements.

License Term

    117. The Commission declines to adopt SBT's proposal that when an 
area is partitioned within one year of the renewal date of the original 
ten-year license term, the partitionee should receive the license for a 
one-year term. The Commission found that adopting this proposal would 
result in the partitioner conferring greater rights than it was awarded 
under the original terms of its license grant.

VII. Report to Congress

    118. The Commission shall send a copy of the Third R&O, including 
this Final Regulatory Flexibility Analysis, in a report to Congress 
pursuant to the Small Business Regulatory Enforcement Fairness Act of 
1996. In addition, the Commission will send a copy of the Third R&O, 
including this Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Association. A copy of the 
Third R&O and Final Regulatory Flexibility Analysis (or summaries 
thereof) will also be published in the Federal Register.

Ordering Clauses

    119. Authority for issuance of this Memorandum Opinion and Order on 
Reconsideration and Third Report and Order is contained in Sections 
4(i), 303(r), 309(j), 332, and 405 of the Communications Act of 1934, 
as amended, 47 U.S.C. 154(i), 303(r), 309(j), 332, and 405.
    120. Accordingly, it is ordered that the petitions for 
reconsideration or clarification listed in Appendix A are granted to 
the extent provided herein and otherwise are denied; and that the 
Petition for Partial Reconsideration of PSWF Corporation filed April 
11, 1997, is to the extent provided herein dismissed as moot. This 
action is taken pursuant to Sections 4(i), 303(r), 309(j), 332, and 405 
of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
303(r), 309(j), 332, and 405, and Section 1.429(i) of the Commission's 
rules, 47 CFR 1.429(i).
    121. It is further ordered that the petitions for reconsideration 
and application for review of the CWD Order listed in footnote 51 are 
denied. This action is taken pursuant to Sections 4(i), 303(r), 309(j), 
332, and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 
154(i), 303(r), 309(j), 332, and 405, and Sections

[[Page 33781]]

1.429(i) and 1.115 of the Commission's rules, 47 CFR 1.429(i), 1.115.
    122. It is further ordered that the Commission's rules are amended 
as set forth in Appendix B. It is further ordered that the provisions 
of this Memorandum Opinion and Order on Reconsideration and Third 
Report and Order and the Commission's rules, as amended in Appendix B, 
shall become effective 60 days after publication of this Memorandum 
Opinion and Order on Reconsideration and Third Report and Order in the 
Federal Register.
    123. It is further ordered that a Public Notice will be issued by 
the Wireless Telecommunications Bureau following the adoption of this 
Memorandum Opinion and Order on Reconsideration and Third Report and 
Order that will remove the interim licensing rules on the shared PCP 
channels from the Commission's rules.
    124. it is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Memorandum Opinion and Order on Reconsideration and Third Report and 
Order, including the Supplemental Final Regulatory Flexibility Analysis 
and Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

List of Subjects

47 CFR Part 22

    Public mobile services.

47 CFR Part 90

    Private land mobile radio services.

Rule Changes

    For the reasons stated in the preamble, parts 22 and 90 of title 47 
of the Code of Federal Regulations is amended as follows:

PART 22--PUBLIC MOBILE SERVICES

    1. The authority citation for Part 22 continues to read as follows:

    Authority: Sections 4, 303, 309 and 332, 48 Stat. 1066, 1082, as 
amended; 47 U.S.C. 154, 303, 309 and 332, unless otherwise noted.

    2. Section 22.213 is added to read as follows:


Sec. 22.213  Long-form application (FCC Form 601).

    Each successful bidder for a paging geographic area authorization 
must submit a ``long-form'' application (Form 601) within ten (10) 
business days after being notified by Public Notice that it is the 
winning bidder. Applications for paging geographic area authorizations 
on FCC Form 601 must be submitted in accordance with Sec. 1.2107 and 
Sec. 1.2112 of this chapter, all applicable procedures set forth in the 
rules in this part, and any applicable Public Notices that the FCC may 
issue in connection with an auction. After an auction, the FCC will not 
accept long-form applications for paging geographic area authorizations 
from anyone other than the auction winners and parties seeking 
partitioned authorizations pursuant to agreements with auction winners 
under Sec. 22.221 of this part.
    3. Section 22.215 is amended by revising paragraph (a) to read as 
follows:


Sec. 22.215  Authorization, grant, denial, default, and 
disqualification.

    (a) Each winning bidder will be required to pay the full balance of 
its winning bid no later than ten (10) business days following the 
release date 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 no later than ten (10) business days after 
the payment deadline, provided that it also pays a late fee equal to 
five (5) 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 authorization(s) and subject to the 
applicable default payments. Authorizations will be awarded upon the 
full and timely payment of winning bids and any applicable late fees.
* * * * *
    4. Section 22.217 is amended by revising paragraph (a) and adding 
paragraph (b)(4) to read as follows:


Sec. 22.217  Bidding credits for small businesses.

    (a) A winning bidder that qualifies as a small business or a 
consortium of small businesses as defined in Sec. 22.223(b)(1)(i) of 
this part may use a bidding credit of thirty-five (35) percent to lower 
the cost of its winning bid. A winning bidder that qualifies as a small 
business or a consortium of small businesses as defined in 
Sec. 22.223(b)(1)(ii) of this part may use a bidding credit of twenty-
five (25) percent to lower the cost of its winning bid.
    (b) * * *
    (4) If a small business that utilizes a bidding credit under this 
section partitions its authorization or disaggregates its spectrum to 
an entity not meeting the eligibility standards for the same bidding 
credit, the partitioning or disaggregating licensee will be subject to 
the provisions concerning unjust enrichment as set forth in 
Sec. 1.2111(e) (2) and (3) of this chapter.


Sec. 22.219  [Removed]

    5. Section 22.219 is removed.
    6. Section 22.221 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec. 22.221  Eligibility for partitioned licenses.

* * * * *
    (b) Each party to an agreement to partition the authorization must 
file a long-form application (FCC Form 601) for its respective, 
mutually agreed-upon geographic area together with the application for 
the remainder of the MEA or EA filed by the auction winner.
    (c) If the partitioned authorization is being applied for as a 
partial assignment of the MEA or EA authorization following grant of 
the initial authorization, request for authorization for partial 
assignment of an authorization shall be made pursuant to Sec. 1.948 of 
this part.
    7. Section 22.223 is amended by revising paragraphs (b)(1)(i), 
(b)(1)(ii) and (b)(2) and adding paragraphs (b)(4) and (e) to read as 
follows:


Sec. 22.223  Definitions concerning competitive bidding process.

* * * * *
    (b) * * *
    (1) * * *
    (i) Together with its affiliates and controlling interests has 
average gross revenues that are not more than $3 million for the 
preceding three years; or
    (ii) Together with its affiliates and controlling interests has 
average gross revenues that are not more than $15 million for the 
preceding three years.
    (2) For purposes of determining whether an entity meets either the 
$3 million or $15 million average annual gross revenues size standard 
set forth in paragraph (b)(1) of this section, the gross revenues of 
the entity, its affiliates, and controlling interests shall be 
considered on a cumulative basis and aggregated.
    (3) * * *
    (4) Applicants without identifiable controlling interests. Where an 
applicant (or licensee) cannot identify controlling interests under the 
standards set forth in this section, the gross revenues of all interest 
holders in the applicant, and their affiliates, will be attributable.
* * * * *
    (e) Controlling interest. (1) For purposes of this section, 
controlling interest includes individuals or entities with de jure and 
de facto control of the applicant. De jure control is greater than 50 
percent of the voting stock of a corporation, or in the case of a

[[Page 33782]]

partnership, the general partner. De facto control is determined on a 
case-by-case basis. An entity must disclose its equity interest and 
demonstrate at least the following indicia of control to establish that 
it retains de facto control of the applicant:
    (i) The entity constitutes or appoints more than 50 percent of the 
board of directors or management committee;
    (ii) The entity has authority to appoint, promote, demote, and fire 
senior executives that control the day-to-day activities of the 
licensee; and
    (iii) The entity plays an integral role in management decisions.
    (2) Calculation of certain interests. (i) Ownership interests shall 
be calculated on a fully diluted basis; all agreements such as 
warrants, stock options and convertible debentures will generally be 
treated as if the rights thereunder already have been fully exercised.
    (ii) Partnership and other ownership interests and any stock 
interest equity, or outstanding stock, or outstanding voting stock 
shall be attributed as specified below.
    (iii) Stock interests held in trust shall be attributed to any 
person who holds or shares the power to vote such stock, to any person 
who has the sole power to sell such stock, and, to any person who has 
the right to revoke the trust at will or to replace the trustee at 
will. If the trustee has a familial, personal, or extra-trust business 
relationship to the grantor or the beneficiary, the grantor or 
beneficiary, as appropriate, will be attributed with the stock 
interests held in trust.
    (iv) Non-voting stock shall be attributed as an interest in the 
issuing entity.
    (v) Limited partnership interests shall be attributed to limited 
partners and shall be calculated according to both the percentage of 
equity paid in and the percentage of distribution of profits and 
losses.
    (vi) Officers and directors of an entity shall be considered to 
have an attributable interest in the entity. The officers and directors 
of an entity that controls a licensee or applicant shall be considered 
to have an attributable interest in the licensee or applicant.
    (vii) Ownership interests that are held indirectly by any party 
through one or more intervening corporations will be determined by 
successive multiplication of the ownership percentages for each link in 
the vertical ownership chain and application of the relevant 
attribution benchmark to the resulting product, except that if the 
ownership percentage for an interest in any link in the chain exceeds 
50 percent or represents actual control, it shall be treated as if it 
were a 100 percent interest.
    (viii) Any person who manages the operations of an applicant or 
licensee pursuant to a management agreement shall be considered to have 
an attributable interest in such applicant or licensee if such person 
or its affiliate pursuant to paragraph (d) of this section has 
authority to make decisions or otherwise engage in practices or 
activities that determine, or significantly influence,
    (A) The nature or types of services offered by such an applicant or 
licensee;
    (B) The terms upon which such services are offered; or
    (C) The prices charged for such services.
    (ix) Any licensee or its affiliate who enters into a joint 
marketing arrangement with an applicant or licensee, or its affiliate, 
shall be considered to have an attributable interest, if such applicant 
or licensee, or its affiliate, has authority to make decisions or 
otherwise engage in practices or activities that determine, or 
significantly influence,
    (A) The nature or types of services offered by such an applicant or 
licensee;
    (B) The terms upon which such services are offered; or
    (C) The prices charged for such services.
    8. Section 22.225 is amended by revising paragraphs (a)(1), (b)(1) 
and (e) to read as follows:


Sec. 22.225  Certifications, disclosures, records maintenance and 
audits.

    (a) * * *
    (1) The identity of the applicant's controlling interests and 
affiliates, and, if a consortium of small businesses, the members of 
the joint venture; and
* * * * *
    (b) * * *
    (1) Disclose separately and in the aggregate the gross revenues, 
computed in accordance with Sec. 22.223, for each of the following: the 
applicant, the applicant's affiliates, the applicant's controlling 
interests, and, if a consortium of small businesses, the members of the 
joint venture;
* * * * *
    (e) Definitions. The terms affiliate, small business, consortium of 
small businesses, gross revenues, and controlling interest used in this 
section are defined in Sec. 22.223.
    9. Section 22.503 is amended by revising paragraphs (b)(2), (b)(3), 
(h), (i), and (k)(1) and (k)(2) to read as follows:


Sec. 22.503  Paging geographic area authorizations.

* * * * *
    (b) * * *
    (2) Major Economic Areas (MEAs) and Economic Areas (EAs) are 
defined below. EAs are defined by the Department of Commerce, Bureau of 
Economic Analysis. See Final Redefinition of the MEA Economic Areas, 60 
FR 13114 (March 10, 1995). MEAs are based on EAs. In addition to the 
Department of Commerce's 172 EAs, the FCC shall separately license Guam 
and the Northern Mariana Islands, Puerto Rico and the United States 
Virgin Islands, and American Samoa, which have been assigned FCC-
created EA numbers 173-175, respectively, and MEA numbers 49-51, 
respectively.
    (3) The 51 MEAs are composed of one or more EAs as defined in the 
following table:

------------------------------------------------------------------------
             MEAs                                 EAs
------------------------------------------------------------------------
1 (Boston)...................  1-3.
2 (New York City)............  4-7, 10.
3 (Buffalo)..................  8.
4 (Philadelphia).............  11-12.
5 (Washington)...............  13-14.
6 (Richmond).................  15-17, 20.
7 (Charlotte-Greensboro-       18-19, 21-26, 41-42, 46.
 Greenville-Raleigh).
8 (Atlanta)..................  27-28, 37-40, 43.
9 (Jacksonville).............  29, 35.
10 (Tampa-St. Petersburg-      30, 33-34.
 Orlando).
11 (Miami)...................  31-32.
12 (Pittsburgh)..............  9, 52-53.
13 (Cincinnati-Dayton).......  48-50.
14 (Columbus)................  51.

[[Page 33783]]

 
15 (Cleveland)...............  54-55.
16 (Detroit).................  56-58, 61-62.
17 (Milwaukee)...............  59-60, 63, 104-105, 108.
18 (Chicago).................  64-66, 68, 97, 101.
19 (Indianapolis)............  67.
20 (Minneapolis-St. Paul)....  106-107, 109-114, 116.
21 (Des Moines-Quad Cities)..  100, 102-103, 117.
22 (Knoxville)...............  44-45.
23 (Louisville-Lexington-      47, 69-70, 72.
 Evansville).
24 (Birmingham)..............  36, 74, 78-79.
25 (Nashville)...............  71.
26 (Memphis-Jackson).........  73, 75-77.
27 (New Orleans-Baton Rouge).  80-85.
28 (Little Rock).............  90-92, 95.
29 (Kansas City).............  93, 99, 123.
30 (St. Louis)...............  94, 96, 98.
31 (Houston).................  86-87, 131.
32 (Dallas-Fort Worth).......  88-89, 127-130, 135, 137-138.
33 (Denver)..................  115, 140-143.
34 (Omaha)...................  118-121.
35 (Wichita).................  122.
36 (Tulsa)...................  124.
37 (Oklahoma City)...........  125-126.
38 (San Antonio).............  132-134.
39 (El Paso-Albuquerque).....  136, 139, 155-157.
40 (Phoenix).................  154, 158-159.
41 (Spokane-Billings)........  144-147, 168.
42 (Salt Lake City)..........  148-150, 152.
43 (San Francisco-Oakland-San  151, 162-165.
 Jose).
44 (Los Angeles-San Diego)...  153, 160-161.
45 (Portland)................  166-167.
46 (Seattle).................  169-170.
47 (Alaska)..................  171.
48 (Hawaii)..................  172.
49 (Guam and the Northern      173.
 Mariana Islands).
50 (Puerto Rico and U.S.       174.
 Virgin Islands).
51 (American Samoa)..........  175.
------------------------------------------------------------------------

* * * * *
    (h) Adjacent geographic area coordination required. Before 
constructing a facility for which the interfering contour (as defined 
in Sec. 22.537 or Sec. 22.567 of this part, as appropriate for the 
channel involved) would extend into another paging geographic area, a 
paging geographic area licensee must obtain the consent of the relevant 
co-channel paging geographic area licensee, if any, into whose area the 
interfering contour would extend. Licensees are expected to cooperate 
fully and in good faith attempt to resolve potential interference 
problems before bringing matters to the FCC. In the event that there is 
no co-channel paging geographic area licensee from whom to obtain 
consent in the area into which the interfering contour would extend, 
the facility may be constructed and operated subject to the condition 
that, at such time as the FCC issues a paging geographic area 
authorization for that adjacent geographic area, either consent must be 
obtained or the facility modified or eliminated such that the 
interfering contour no longer extends into the adjacent geographic 
area.
    (i) Protection of existing service. All facilities constructed and 
operated pursuant to a paging geographic area authorization must 
provide co-channel interference protection in accordance with 
Sec. 22.537 or Sec. 22.567, as appropriate for the channel involved, to 
all authorized co-channel facilities of exclusive licensees within the 
paging geographic area. Non-exclusive licensees on the thirty-five 
exclusive 929 MHz channels are not entitled to exclusive status, and 
will continue to operate under the sharing arrangements established 
with the exclusive licensees and other non-exclusive licensees that 
were in effect prior to February 19, 1997. MEA, EA, and nationwide 
geographic area licensees have the right to share with non-exclusive 
licensees on the thirty-five exclusive 929 MHz channels on a non-
interfering basis.
* * * * *
    (k) Coverage requirements. Failure by an MEA or EA licensee to meet 
either the coverage requirements in paragraphs (k)(1) and (k)(2) of 
this section, or alternatively, the substantial service requirement in 
paragraph (k)(3) of this section, will result in automatic termination 
of authorizations for those facilities that were not authorized, 
constructed, and operating at the time the geographic area 
authorization was granted. MEA and EA licensees have the burden of 
showing when their facilities were authorized, constructed, and 
operating, and should retain necessary records of these sites until 
coverage requirements are fulfilled. For the purpose of this paragraph, 
to ``cover'' area means to include geographic area within the composite 
of the service contour(s) determined by the methods of Secs. 22.537 or 
22.567 as appropriate for the particular channel involved. Licensees 
may determine the population of geographic areas included within their 
service contours using either the 1990 census or the 2000 census, but 
not both.
    (1) No later than three years after the initial grant of an MEA or 
EA geographic area authorization, the licensee must construct or 
otherwise acquire and operate sufficient facilities to cover one third 
of the population in the paging geographic area. The licensee

[[Page 33784]]

must notify the FCC at the end of the three-year period pursuant to 
Sec. 1.946 of this chapter, either that it has satisfied this 
requirement or that it plans to satisfy the alternative requirement to 
provide substantial service in accordance with paragraph (k)(3) of this 
section.
    (2) No later than five years after the initial grant of an MEA or 
EA geographic area authorization, the licensee must construct or 
otherwise acquire and operate sufficient facilities to cover two thirds 
of the population in the paging geographic area. The licensee must 
notify the FCC at the end of the five year period pursuant to 
Sec. 1.946 of this chapter, either that it has satisfied this 
requirement or that it has satisfied the alternative requirement to 
provide substantial service in accordance with paragraph (k)(3) of this 
section.
* * * * *
    10. Section 22.507 is amended by revising paragraph (c) to read as 
follows:


Sec. 22.507  Number of transmitters per station.

* * * * *
    (c) Consolidation of separate stations. The FCC may consolidate 
site-specific contiguous authorizations upon request (FCC Form 601) of 
the licensee, if appropriate under paragraph (a) of this section. 
Paging licensees may include remote, stand-alone transmitters under the 
single system-wide authorization, if the remote, stand-alone 
transmitter is linked to the system via a control/repeater facility or 
by satellite. Including a remote, stand-alone transmitter in a system-
wide authorization does not alter the limitations provided under 
Sec. 22.503(f) on entities other than the paging geographic area 
licensee. In the alternative, paging licensees may maintain separate 
site-specific authorizations for stand-alone or remote transmitters. 
The earliest expiration date of the authorizations that make up the 
single system-wide authorization will determine the expiration date for 
the system-wide authorization. Licensees must file timely renewal 
applications for site-specific authorizations included in a single 
system-wide authorization request until the request is approved. 
Renewal of the system-wide authorization will be subject to Sec. 1.949 
of this chapter.


Sec. 22.509  [Amended]

    11. Paragraph (c) of Sec. 22.509 is removed.
    12. Section 22.513 is added to read as follows:


Sec. 22.513  Partitioning and disaggregation.

    MEA and EA licensees may apply to partition their authorized 
geographic service area or disaggregate their authorized spectrum at 
any time following grant of their geographic area authorizations. 
Nationwide geographic area licensees may apply to partition their 
authorized geographic service area or disaggregate their authorized 
spectrum at any time as of August 23, 1999.
    (a) Application required. Parties seeking approval for partitioning 
and/or disaggregation shall apply for partial assignment of a license 
pursuant to Sec. 1.948 of this chapter.
    (b) Partitioning. In the case of partitioning, requests for 
authorization for partial assignment of a license must include, as 
attachments, a description of the partitioned service area and a 
calculation of the population of the partitioned service area and the 
authorized geographic service area. The partitioned service area shall 
be defined by 120 sets of geographic coordinates at points at every 3 
degrees azimuth from a point within the partitioned service area along 
the partitioned service area boundary unless either an FCC-recognized 
service area is used (e.g., MEA or EA) or county lines are followed. 
The geographical coordinates must be specified in degrees, minutes, and 
seconds to the nearest second latitude and longitude, and must be based 
upon the 1983 North American Datum (NAD83). In the case where FCC-
recognized service areas or county lines are used, applicants need only 
list the specific area(s) through use of FCC designations or county 
names that constitute the partitioned area.
    (c) Disaggregation. Spectrum may be disaggregated in any amount.
    (d) Combined partitioning and disaggregation. Licensees may apply 
for partial assignment of authorizations that propose combinations of 
partitioning and disaggregation.
    (e) License term. The license term for a partitioned license area 
and for disaggregated spectrum shall be the remainder of the original 
licensee's license term as provided for in Sec. 1.955 of this chapter.
    (f) Coverage requirements for partitioning. (1) Parties to a 
partitioning agreement must satisfy at least one of the following 
requirements:
    (i) The partitionee must satisfy the applicable coverage 
requirements set forth in Sec. 22.503(k)(1), (2) and (3) for the 
partitioned license area; or
    (ii) The original licensee must meet the coverage requirements set 
forth in Sec. 22.503(k)(1), (2) and (3) for the entire geographic area. 
In this case, the partitionee must meet only the requirements for 
renewal of its authorization for the partitioned license area.
    (2) Parties seeking authority to partition must submit with their 
partial assignment application a certification signed by both parties 
stating which of the above options they select.
    (3) Partitionees must submit supporting documents showing 
compliance with their coverage requirements as set forth in 
Sec. 22.503(k)(1), (2) and (3).
    (4) Failure by any partitionee to meet its coverage requirements 
will result in automatic cancellation of the partitioned authorization 
without further Commission action.
    (g) Coverage requirements for disaggregation.
    (1) Parties to a disaggregation agreement must satisfy at least one 
of the following requirements:
    (i) Either the disaggregator or disaggregatee must satisfy the 
coverage requirements set forth in Sec. 22.503 (k)(1), (2) and (3) for 
the entire license area; or
    (ii) Parties must agree to share responsibility for meeting the 
coverage requirements set forth in Sec. 22.503 (k)(1), (2) and (3) for 
the entire license area.
    (2) Parties seeking authority to disaggregate must submit with 
their partial assignment application a certification signed by both 
parties stating which of the above requirements they meet.
    (3) Disaggregatees must submit supporting documents showing 
compliance with their coverage requirements as set forth in Sec. 22.503 
(k)(1), (2) and (3).
    (4) Parties that accept responsibility for meeting the coverage 
requirements and later fail to do so will be subject to automatic 
license cancellation without further Commission action.
    13. Section 22.531 is amended by revising paragraph (f) to read as 
follows:


Sec. 22.531  Channels for paging operation.

* * * * *
    (f) For the purpose of issuing paging geographic authorizations, 
the paging geographic areas used for UHF channels are the MEAs, and the 
paging geographic areas used for the low and high VHF channels are the 
EAs (see Sec. 22.503(b)).

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

    14. Section 90.175 is amended by revising paragraph (f) to read as 
follows:


Sec. 90.175  Frequency coordination requirements.

* * * * *

[[Page 33785]]

    (f) For frequencies in the 929-930 MHz band listed in paragraph (b) 
of Sec. 90.494: A statement is required from the coordinator 
recommending the most appropriate frequency.
* * * * *
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-15329 Filed 6-23-99; 8:45 am]
BILLING CODE 6712-01-P