[Federal Register Volume 64, Number 212 (Wednesday, November 3, 1999)]
[Rules and Regulations]
[Pages 59656-59663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27874]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 20, and 95

[FCC 99-239; WT Docket No. 98-169]


218-219 MHz Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document modifies the regulations governing the licensing 
of the 218-219 MHz Service to maximize the efficient and effective use 
of the 218-219 MHz band. The Commission amends the rules to redesignate 
the 218-219 MHz Service from a strictly private radio service to a 
service that can be used in common carrier and private operations, 
extend the license term to ten years, adopt a ``substantial service'' 
analysis to replace the three-and five-year construction benchmarks, 
and permit partitioning and disaggregation of spectrum. Additionally, 
the Commission addresses the constitutional issues raised by Graceba 
Total Communications, Inc. that are before the Commission on remand 
from the D.C. Circuit Court of Appeals, together with similar issues 
raised by other commenters in the proceeding.

DATES: Effective January 3, 2000.
ADDRESSES: Federal Communications Commission, 445 12th Street, S.W., 
Room 4-C207, Washington, D.C. 20554. A copy of any comments on the 
information collection contained herein should be submitted to Judy 
Boley, Federal Communications Commission, 445 12th Street, S.W., Room 
1-C804, Washington, D.C. 20554 or via the Internet to [email protected]; 
and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, 
N.W., Washington, D.C. 20503 or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Jamison Prime, Shellie Blakeney or 
Nick Kolovos of the Policy and Rules Branch, Public Safety and Private 
Wireless Division, Wireless Telecommunications Bureau, (202) 418-0680. 
For further information concerning the information collection contained 
in the Report and Order and Memorandum Opinion and Order, contact Judy 
Boley at (202) 418-0215 or via the Internet to [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order and Memorandum Opinion and Order in WT Docket No. 98-169, FCC 
99-239, adopted September 7, 1999, and released September 10, 1999. The 
full text of the Report and Order and Memorandum Opinion and Order is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, 445 12th Street, S.W., Room CY-A257, 
Washington, D.C. 20554. The full text of the Report and Order and 
Memorandum Opinion and Order may also be purchased from the 
Commission's copy contractor, International Transcription Services, 
1231 20th Street, N.W., Washington, D.C. 20036, telephone (202) 857-
3800, facsimile (202) 857-3805. The full text of the Report and Order 
and Memorandum Opinion and Order may also be downloaded at: <http://
www.fcc.gov/Bureaus/Wireless/Orders/1999/fcc99239.wp. 
Alternative formats (computer diskette, large print, audio cassette, 
and Braille) are available to persons with disabilities by contacting 
Martha Contee at (202) 418-0260, TTY (202) 418-2555, or at 
[email protected].

Synopsis of the Report and Order and Memorandum Opinion and Order

    The Report and Order gives maximum flexibility to 218-219 MHz 
Service providers, letting them choose their regulatory status. Mobile 
service providers may elect their regulatory status as either 
commercial (under the Commercial Mobile Radio Service [CMRS] rules) or 
private (under the Private Mobile Radio Service rules). Fixed service 
providers may elect their regulatory status as either common carrier or 
private, under the conditions set forth in Title III of the 
Communications Act of 1934, as amended. Regardless of regulatory 
status, the Report and Order further clarifies that both one-and two-
way communications are permissible, as well as Response Transmitter 
Unit-to-Response Transmitter Unit (RTU-to-RTU) communications (in 
addition to RTU interconnection with the public switched network or any 
CMRS service). License terms are extended to ten years, regardless of 
whether the license was obtained by lottery or auction.
    Regarding payment options, existing licensees that (a) were current 
in installment payments (i.e., less than 90 days delinquent) as of 
March 16, 1998, or (b) had properly filed grace period requests under 
the former installment payment rules, are eligible for a new payment 
structure. These eligible licensees may choose between (a) 
reamortization of principal and interest installment payments over the 
new ten-year period; (b) amnesty wherein licensees surrender any 
licenses they choose to the Commission for subsequent auction and, in 
return, have all of the outstanding debt on those licenses forgiven 
(together with a refund of any installment payments already made, 
either in full or applied toward retained licenses, as applicable); or 
(c) prepayment whereupon licensees may retain or return as many 
licenses as they desire. Licensees electing the prepayment option, 
however, must prepay the outstanding principal of any license they wish 
to retain.
    The Report and Order also resolves constitutional concerns raised 
by Graceba Total Communications, Inc. regarding a bidding preference 
for minorities and women that was used in the 1994 auction for what is 
now the 218-219 MHz Service. Now, every winning bidder that met the 
small business qualifications for that auction receives a 25 percent 
bidding credit, in order to achieve parity with the bidding credit 
formerly given to minorities and women. Minority-and women-owned 
winning bidders are not disadvantaged by this action because all such 
bidders also met the small business qualifications.
    Regarding service and construction requirements, the three-and 
five-year construction benchmarks are replaced by a ``substantial 
service'' construction requirement, defined as a ``service that is 
sound, favorable, and substantially above a level of mediocre service 
which might minimally warrant renewal.'' In addition, the following 
``safe harbor'' examples achieve compliance: (a) a demonstration of 
coverage to twenty percent of the population or land area of the 
licensed service area; (b) a demonstration of specialized or 
technologically sophisticated service that does not require a high 
level of coverage to be of benefit to customers; or (c) a demonstration 
of service to niche markets or a focus on serving populations outside 
of areas currently serviced by other licensees. These criteria are to 
be demonstrated at the time of license renewal.
    License transfer restrictions on lotteried licenses are relaxed, 
though they remain subject to case-by-case,

[[Page 59657]]

public interest analysis. Spectrum aggregation restrictions are also 
relaxed, so that cross-ownership is allowed of both frequency segment A 
(218.0-218.5 MHz) and frequency segment B (218.5-219.0 MHz) in the same 
service area. Partitioning and disaggregation are now allowed, and any 
partitionee/disaggregatee is authorized to hold its license for the 
remainder of the original licensee's term.
    The Report and Order revises several technical standards as well, 
responsive to changes in the original scope of use contemplated for the 
218-219 MHz Service. The duty cycle limitation, of a maximum of five 
seconds per hour for each RTU, is eliminated. The 100 milliwatt power 
limitation on mobile RTUs is reduced to an average of 4 watts, while 
maintaining protection for TV Channel 13 reception. Automatic power 
control restrictions are eliminated. The cell transmitter station (CTS) 
antenna height/transmitter power ratios are removed, but CTS antennas 
may still not be taller than is necessary to assure adequate service. 
The 20 watt maximum effective radiated power for transmitters is 
retained. Section 95.861(e) of the Commission's Rules continues to 
provide the framework for resolving interference complaints, with the 
further requirement that licensees produce an interference control plan 
that includes, as part of the planning process, an analysis of the 
proposed system and the methods used to eliminate co- and adjacent 
channel interference, together with updates to reflect changes in 
system design or construction.
    Finally, the Part 1, Subpart Q standardized auction rules are 
incorporated by reference, providing a uniform set of competitive 
bidding rules on issues concerning designated entities, application and 
payment, competitive bidding design, procedure and timing, and anti-
collusion. Small businesses and very small businesses will receive 
bidding credits consistent with the Part 1 rules, but installment 
payments will no longer be available as a means of financing winning 
bids. Small businesses are defined as having average annual gross 
revenues not to exceed $15 million for the preceding three years, and 
very small businesses are defined as having average annual gross 
revenues not to exceed $3 million for the preceding three years.
    The Memorandum Opinion and Order dismisses a Petition for 
Reconsideration filed by Interactive America Corporation (IAC). IAC 
challenged the Commission's failure, prior to the then-planned auction 
of IAC's defaulted licenses, to disclose IAC's pending appeal (Auction 
No. 13), but that argument is moot because the Commission subsequently 
postponed Auction No. 13, and the D.C. Circuit denied IAC's petition 
for review. IAC also argued that any 218-219 MHz Service auction should 
be delayed until final rules are adopted. However, this Report and 
Order adopts such rules, rendering that argument moot as well.

Regulatory Flexibility Act Final Analysis

    As required by the Regulatory Flexibility Act (RFA),\1\ an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in the 
Amendment of Part 95 of the Commission's Rules to Provide Regulatory 
Flexibility in the 218-219 MHz Service and Amendment of Part 95 of the 
Commission's Rules to Allow Interactive Video and Data Service 
Licensees to Provide Mobile Services, Order, Memorandum Opinion and 
Order, and Notice of Proposed Rulemaking.\2\ The Commission sought 
written public comment on the proposals in the 218-219 MHz Flex NPRM, 
including comment on the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.\3\
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    \1\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et. seq., has 
been amended by the Contract With America Advancement Act of 1996, 
Public Law Number 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of 
the CWAAA is the Small Business Regulatory Enforcement Fairness Act 
of 1996 (SBREFA).
    \2\ Amendment of Part 95 of the Commission's Rules to Provide 
Regulatory Flexibility in the 218-219 MHz Service and Amendment of 
Part 95 of the Commission's Rules to Allow Interactive Video and 
Data Service Licensees to Provide Mobile Services (proceeding 
terminated), Order, Memorandum Opinion and Order, and Notice of 
Proposed Rulemaking, 63 FR 52215 (Sept. 30, 1998), 13 FCC Rcd 19064, 
19101 (1998) (218-219 MHz Flex NPRM).
    \3\ See 5 U.S.C. 604.
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I. Need for, and Objectives of, the Report and Order

    This rulemaking proceeding was initiated to secure public comment 
on proposals to maximize the efficient and effective use of spectrum in 
the 218-219 MHz band, allocated in 1992 to the Interactive Video and 
Data Service (IVDS) in the Personal Radio Services, now redesignated as 
the 218-219 MHz Service. In attempting to maximize the use of the 218-
219 MHz band, we continue our efforts to improve the efficiency of 
spectrum use, reduce the regulatory burden on spectrum users, 
facilitate technological innovation, and provide opportunities for 
development of competitive new service offerings. The rules adopted in 
this Report and Order are also designed to implement Congress' goal of 
giving small businesses the opportunity to participate in the provision 
of spectrum-based services in accordance with Section 309(j) of the 
Communications Act of 1934, as amended (the Communications Act).\4\
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    \4\ 47 U.S.C. 257, 309(j).
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II. Summary of Significant Issues Raised by Public Comments in 
Response to the Initial Regulatory Flexibility Analysis

    No petitions were filed in direct response to the IRFA. In general, 
commenters and reply commenters supported our proposals to provide 
additional flexibility in the 218-219 MHz Service. Moreover, many of 
the commenters and reply commenters were existing 218-219 MHz Service 
licensees many of whom, as discussed infra, qualify as small 
businesses. These commenters overwhelmingly supported proposals that 
would permit (1) acquisitions by partitioning or disaggregation; (2) 
218-219 MHz Service licensees and applicants to choose regulatory 
status; and (3) non-defaulting 218-219 MHz Service licensees currently 
participating in the installment payment plan to elect one of three 
restructuring plans concerning their outstanding payments, despite the 
increased reporting requirements that these proposals may entail.

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

    The Regulatory Flexibility Act directs agencies to provide a 
description of and, where feasible, an estimate of the number of small 
entities that may be affected by the proposed rules, if adopted. The 
Regulatory Flexibility Act generally defines the term ``small entity'' 
as having the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' In addition, 
the term ``small business'' has the same meaning as the term ``small 
business concern'' under the Small Business Act, unless the Commission 
has developed one or more definitions that are appropriate for its 
activities.\5\ A small business concern is one which: (1) is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria

[[Page 59658]]

established by the SBA.\6\ A small organization is generally ``any not-
for-profit enterprise which is independently owned and operated and is 
not dominant in its field.'' \7\ Below, we further describe and 
estimate the number of small entity licensees and regulatees that may 
be affected by the proposed rules, if adopted.
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    \5\ U.S.C. 601(3) (incorporating by reference the definition of 
``small business concern'' in 15 U.S.C. 632). Pursuant to 5 U.S.C. 
601(3), the statutory definition of a small business applies 
``unless an agency after consultation with the Office of Advocacy of 
the Small Business Administration and after opportunity for public 
comment, establishes one or more definitions of such term which are 
appropriate to the activities of the agency and publishes such 
definition(s) in the Federal Register.''
    \6\ Small Business Act, 15 U.S.C. 632 (1996).
    \7\ 5 U.S.C. 601(4).
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    The rules adopted in this Report and Order affect a number of small 
entities who are either licensees, or who may choose to become 
applicants for licenses, in the 218-219 MHz Service. Such entities fall 
into two categories: (1) those using the 218-219 MHz Service for 
providing interactivity capabilities in conjunction with broadcast 
services; and (2) those using the 218-219 MHz Service to operate other 
types of wireless communications services with a wide variety of uses, 
such as commercial data applications and two-way telemetry services. 
Theoretically, an entity could fall into both categories. The spectrum 
uses in the two categories differ markedly.
    With respect to the first category, the provision of interactivity 
capabilities in conjunction with broadcast services could be described 
as a wireless provider of subscription television service. The SBA's 
rules applicable to subscription television services define small 
entities as those with annual gross revenues of $11 million or less.\8\ 
In the Competitive Bidding Tenth Report and Order, we extended special 
competitive bidding provisions to small businesses with annual gross 
revenues that are not more than $15 million, and additional benefits to 
very small businesses with annual gross revenues that are not more than 
$3 million.\9\ On January 6, 1998, the SBA approved of the small 
business size standards established in the Competitive Bidding Tenth 
Report and Order.\10\
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    \8\ 13 CFR 121.201, SIC Code 4841.
    \9\ Implementation of Section 309(j) of the Communications Act, 
Competitive Bidding, PP Docket No. 93-253, Tenth Report and Order, 
61 FR 60198 (Nov. 27, 1996), 11 FCC Rcd 19974, 19981-85 (1996) 
(Competitive Bidding Tenth Report and Order), recon. pending.
    \10\ See Letter to Daniel B. Phythyon, Chief, WTB, from Aida 
Alverez, Administrator, SBA, Dated Jan. 6, 1998.
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    The Commission's estimate of the number of small business entities 
operating in the 218-219 MHz band for interactivity capabilities with 
television viewers begins with the 1992 Bureau of Census report on 
businesses listed under SIC Code 4841, subscription television 
services, which is the most recent information available. The total 
number of entities under this category is 1,788.\11\ There are 1,463 
companies in the 1992 Census Bureau report which are categorized as 
small businesses providing cable and pay TV services.\12\ We know that 
many of these businesses are cable and television service businesses, 
rather than businesses operating in the 218-219 MHz band. We also know 
that, to date, we have issued 612 licenses in the 218-219 MHz Service. 
Therefore, the number of small entities currently providing 
interactivity capability to television viewers in the 218-219 MHz 
Service which will be subject to the rules will be less than 612.
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    \11\ U.S. Small Business Administration 1992 Economic Census 
Industry and Enterprise Report, Table 2D, SIC Code 4841 (Bureau of 
the Census data adapted by the Office of Advocacy of the U.S. Small 
Business Administration).
    \12\ The Census table divides those companies by the amount of 
annual receipts. There is a dividing point at companies with annual 
receipts of $10 million. The next increment is annual receipts of 
$17 million, a category that greatly exceeds the SBA definition of 
small businesses that provide subscription television services. 
However, there are 17 firms in this category, with revenues between 
$10-$17 million. Approximately 1,480 SIC Code 4841 category firms 
have annual gross receipts of $15 million or less. Only a small 
fraction of those 1,480 firms provide IVDS.
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    With respect to the second category, neither the Commission nor the 
SBA has developed a specific definition of small entities applicable to 
218-219 MHz band licensees that would provide wireless communications 
services other than that described above. Generally, the applicable 
definition of a small entity in this instance appears to be the 
definition under the SBA rules applicable to establishments primarily 
engaged in furnishing telegraph and other message communications, SIC 
Code 4822. This definition provides that a small entity is an entity 
with annual receipts of $5 million or less.\13\ The 1992 Census data, 
which is the most recent information available, indicates that of the 
286 firms under this category, 247 had annual receipts of $4.999 
million or less.\14\
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    \13\ 13 CFR 121.201, SIC Code 4822.
    \14\ 1992 Economic Census Industry and Enterprise Receipts Size 
Report, U.S. Bureau of the Census, U.S. Department of Commerce, 
Table 2D, SIC Code 4822 (industry data prepared by the Census Bureau 
under contract to the U.S. SBA Office of Advocacy).
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    The first auction of 218-219 MHz spectrum resulted in 170 entities 
winning licenses for 594 Metropolitan Statistical Area (MSA) licenses. 
Of the 594 licenses, 557 were won by entities qualifying as a small 
business. For that auction, we defined a small business as an entity, 
together with its affiliates, that has no more than a $6 million net 
worth and, after federal income taxes (excluding any carry over 
losses), has no more than $2 million in annual profits each year for 
the previous two years.\15\ We cannot estimate, however, the number of 
licenses that will be won by entities qualifying as small or very small 
businesses under our rules in future auctions of 218-219 MHz spectrum. 
Given the success of small businesses in the previous auction, and the 
above discussion regarding the prevalence of small businesses in the 
subscription television services and message communications industries, 
we assume for purposes of this FRFA that in future auctions, all of the 
licenses may be awarded to small businesses, which would be affected by 
the rule changes we propose.
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    \15\ Implementation of Section 309(j) of the Communications Act, 
Competitive Bidding, PP Docket No. 93-253, Fourth Report and Order, 
59 FR 24947 (May 13, 1994), 9 FCC Rcd 2330, 2336 (1994).
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IV. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    The final rules adopted in this Report and Order alter the 
reporting and recordkeeping requirements for a number of small business 
entities. Specifically, (1) 218-219 MHz Service licensees will not be 
required to file a license renewal application after five years from 
the date of grant of the license, but will be required to file a 
license renewal application after ten years after the date of grant of 
the license; (2) 218-219 MHz Service licensees will not be required to 
file construction reports at specified intervals after initial 
licensure, but will be obligated to demonstrate that they are providing 
``substantial service'' as a condition for renewal of their license; 
and (3) acquisitions by partitioning or disaggregation will be treated 
as assignments of a license and parties will be required to comply with 
the 218-219 MHz Service licensing requirements. In addition small 
business may make elections under the final rules that will alter their 
reporting and recordkeeping requirements. Specifically, (1) 218-219 MHz 
Service licensees and applicants may choose to elect regulatory status 
(common carrier, private, commercial mobile radio service, private 
mobile radio service) and file appropriate documentation coincident 
with the regulatory status elected; (2) non-defaulting 218-219 MHz 
Service licensees currently participating in the installment payment 
plan may elect one of three restructuring plans concerning their 
outstanding payments; and (3) 218-219 MHz Service licensees electing to 
continue making installment payments may be required to execute loan 
documents as a condition of the

[[Page 59659]]

reamortization of its installment payment plan under the revised ten-
year term.

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

    In response to general comments filed in this proceeding we have 
adopted final rules designed to maximize opportunities for 
participation by, and growth of, small businesses in providing wireless 
services. Specifically, we expect that the extension of license terms 
from five to ten years and allowing partitioning and disaggregation of 
licenses, will specifically assist small businesses. We adopted a plan 
that provided for a reamortization of installment payment debt in 
conjunction with the extension of license term that differed from our 
original proposal in specific response to concerns raised in comments 
and reply comments. Commenters noted that our original proposal would 
have required licensees to pay two years worth of principal payments, 
as well as the accrued interest, in a lump sum, within ninety days of 
the Report and Order to retain their licenses, and claimed that such a 
plan would not allow licensees in particular, small businesses 
sufficient time to make new capital arrangements. Commenters proposed a 
variety of means of providing relief beyond that which we proposed in 
the 218-219 MHz Flex NPRM. We note that some of these proposals such as 
a ten-year payout schedule that would be entirely interest-free \16\ 
may have resulted in greater relief than that provided by the 
reamortization procedures adopted in the Report and Order.
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    \16\ See CRSPI Reply Comments at 2.
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    We also believe that our proposals regarding permissible uses of 
218-219 MHz Service, liberalization of construction requirements and 
technical restrictions, and elimination of the cross-ownership 
restriction, will make expansion of 218-219 MHz Service operations 
easier, and this flexibility assists all licensees, including small 
business licensees. We considered proposals by small business interests 
to eliminate (instead of liberalize) technical restrictions for the 
service,\17\ but concluded that limited technical restrictions are 
still necessary in order to protect other licensees offering services 
(such as TV Channel 13 broadcasting) operating in or in close proximity 
of the 218-219 MHz band. We further believe that by retroactively 
applying a bidding credit for small businesses to the IVDS auction and 
by adopting our general auction rules that provide for small business 
bidding credits, we will maximize opportunities for participation by, 
and growth of, small businesses in the 218-219 MHz Service. For these 
reasons, we did not consider any significant alternatives to our 
proposals to minimize significant economic impact on small entities, 
nor were any significant alternatives of this nature proposed by 
commenters and reply commenters.
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    \17\ See, e.g., Petty Comments at 1.
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Report to Congress

    The Commission will send a copy of the Report and Order, including 
this FRFA, in a report to be sent to Congress pursuant to the Small 
Business Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C. 
801(a)(1)(A). In addition, the Commission will send a copy of the 
Report and Order, including FRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration. A copy of the Report and Order and 
FRFA (or summaries thereof) will also be published in the Federal 
Register. See 5 U.S.C. 604(b).

List of Subjects in 47 CFR Parts 1, 20 and 95

    Communications equipment, Radio, Reporting and recordkeeping 
requirements.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR parts 1, 20 and 95 as follows:

PART 1--PRACTICE AND PROCEDURE

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

    Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154(j), 
155, 225, and 303(r).

    2. Section 1.2105 is amended by revising paragraph (a)(2)(xi) is to 
read as follows:


Sec. 1.2105  Bidding application and certification procedures; 
prohibition of collusion.

    (a) * * *
    (2) * * *
    (xi) For C block and 218-219 MHz Service applicants, an attached 
statement made under penalty of perjury indicating whether or not the 
applicant has ever been in default on any Commission licenses or has 
ever been delinquent on any non-tax debt owed to any Federal agency.
* * * * *

PART 20--COMMERCIAL MOBILE RADIO SERVICES

    3. The authority citation for Part 20 continues read as follows:

    Authority: 47 U.S.C. 154, 160, 251-254, 303, and 332 unless 
otherwise noted.

    4. Section 20.9 is amended by redesignating paragraph (a)(13) as 
(a)(14), redesignating paragraph (a)(12) as (a)(13) and by adding a new 
paragraph (a)(12) to read as follows:


Sec. 20.9  Commercial mobile radio services.

    (a) * * *
    (12) Mobile operations in the 218-219 MHz Service (part 95, subpart 
F of this chapter) that provide for-profit interconnected service to 
the public;
* * * * *

PART 95--PERSONAL RADIO SERVICES

    5. The authority citation for Part 95 continues to read as follows:

    Authority: Secs. 4, 303, 48 Stat. 1066, 1082, as amended; 47 
U.S.C. 154, 303.

    6. Section 95.1 is amended be revising paragraph (b) to read as 
follows:


Sec. 95.1  The General Mobile Radio Service (GMRS).

* * * * *
    (b) The 218-219 MHz Service is a two-way radio service authorized 
for system licensees to provide communication service to subscribers in 
a specific service area. The rules for this service are contained in 
subpart F of this part.

Subpart F Heading--[Revised]

    7. The heading for subpart F is revised to read, ``218-219 MHz 
Service.''
    8. Section 95.801 is revised to read as follows:


Sec. 95.801  Scope.

    This subpart sets out the regulations governing the licensing and 
operation of a 218-219 MHz system. This subpart supplements Part 1, 
Subpart F of this chapter, which establishes the requirements and 
conditions under which commercial and private radio stations may be 
licensed and used in the Wireless Telecommunications Services. The 
provisions of this subpart contain additional pertinent information for 
current and prospective licensees specific to the services governed by 
this part 95.
    9. Sections 95.803 (a) and (b) and the section heading are revised 
to read as follows:

[[Page 59660]]

Sec. 95.803  218-219 MHz Service description.

    (a) The 218-219 MHz Service is a two-way radio service authorized 
for system licensees to provide communication service to subscribers in 
a specific service area.
    (b) The components of each 218-219 MHz Service system are its 
administrative apparatus, its response transmitter units (RTUs), and 
one or more cell transmitter stations (CTSs). RTUs may be used in any 
location within the service area.
* * * * *
    10. Section 95.805 is revised to read as follows:


Sec. 95.805  Permissible communications.

    A 218-219 MHz Service system may provide any fixed or mobile 
communications service to subscribers within its service area on its 
assigned spectrum, consistent with the Commission's rules and the 
regulatory status of the system to provide services on a common carrier 
or private basis.
    11. Section 95.807 is added to read as follows:


Sec. 95.807  Requesting regulatory status.

    (a) Authorizations for systems in the 218-219 MHz Service will be 
granted to provide services on a common carrier basis or a private 
basis, or on both a common carrier and private basis in a single 
authorization.
    (1) Initial applications. An applicant will specify on FCC Form 601 
if it is requesting authorization to provide services on a common 
carrier basis, a private basis, or on both a common carrier and private 
basis.
    (2) Amendment of pending applications. Any pending application may 
be amended to:
    (i) Change the carrier status requested; or
    (ii) Add to the pending request in order to obtain both common 
carrier and private status in a single license.
    (3) Modification of license. A licensee may modify a license to:
    (i) change the carrier status authorized; or
    (ii) add to the status authorized in order to obtain both common 
carrier and private status in a single license. Applications to change, 
or add to, carrier status in a license must be submitted on FCC Form 
601 in accordance with Sec. 1.1102 of this chapter.
    (4) Pre-existing licenses. Licenses issued before [effective date 
of rules] are authorized to provide services on a private basis. 
Licensees may modify this initial status pursuant to paragraph (a)(3) 
of this section.
    (b) An applicant or licensee may submit a petition at any time 
requesting clarification of the regulatory status required to provide a 
specific communications service.
    12. Section 95.811 is amended by revise paragraphs (b), (c), and 
(d) to read as follows:


Sec. 95.811  License requirements.

* * * * *
    (b) A CTS must be individually licensed to the 218-219 MHz Service 
licensee for the service area in which the CTS is located in accordance 
with part 1, subpart F of this chapter if it:
    (1) Is in the vicinity of certain receiving locations (see 
Sec. 1.924 of this chapter);
    (2) May have significant environmental effect (see part 1, subpart 
I of this chapter);
    (3) Is part of an antenna structure that requires notification to 
the Federal Aviation Administration (see part 17, subpart B of this 
chapter); or
    (4) Has an antenna the tip of which exceeds:
    (i) 6.1 meters (20 feet) above ground level; or
    (ii) 6.1 meters (20 feet) above the top of an existing man-made 
structure (other than an antenna structure) on which it is mounted.
    (c) All CTSs not meeting the licensing criteria under paragraph (b) 
of this section are authorized under the 218-219 MHz Service system 
license.
    (d) Each component RTU in a 218-219 MHz Service system is 
authorized under the system license or if associated with an 
individually licensed CTS, under that CTS license.
    13. Section 95.812 is added to read as follows:


Sec. 95.812  License term.

    (a) The term of each 218-219 MHz Service system license is ten 
years from the date of original issuance or renewal.
    (b) Licenses for individually licensed CTSs will be issued for a 
period running concurrently with the license of the associated 218-219 
MHz Service system with which it is licensed.
    14. Section 95.813 is amended by removing paragraph (c) and by 
revising paragraph (b) to read as follows:


Sec. 95.813  License eligibility.

* * * * *
    (b) An entity that loses its 218-219 MHz Service authorization due 
to failure to meet the construction requirements specified in 
Sec. 95.833 of this part may not apply for a 218-219 MHz Service system 
license for three years from the date the Commission takes final action 
affirming that the 218-219 MHz Service license has been canceled.
    15. Section 95.815 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 95.815  License application.

    (a) In addition to the requirements of part 1, subpart F of this 
chapter, each application for a 218-219 MHz Service system license must 
include a plan analyzing the co- and adjacent channel interference 
potential of the proposed system, identifying methods being used to 
minimize this interference, and showing how the proposed system will 
meet the service requirements set forth in Sec. 95.831 of this part. 
This plan must be updated to reflect changes to the 218-219 MHz Service 
system design or construction.
    (b) In addition to the requirements of part 1, subpart F of this 
chapter, each request by a 218-219 MHz Service system licensee to add, 
delete, or modify technical information of an individually licensed CTS 
(see Sec. 95.811(b) of this part) must include a description of the 
system after the proposed addition, deletion, or modifications, 
including the population in the service area, the number of component 
CTSs, and an explanation of how the system will satisfy the service 
requirements specified in Sec. 95.831 of this part.
* * * * *
    16. Section 95.816 is revised to read as follows:


Sec. 95.816  Competitive bidding proceedings.

    (a) Mutually exclusive initial applications for 218-219 MHz Service 
system licenses are subject to competitive bidding procedures. The 
procedures set forth in part 1, Subpart Q of this chapter will apply 
unless otherwise provided in this part.
    (b) Installment payments. Eligible Licensees that elect resumption 
pursuant to Amendment of part 95 of the Commission's Rules to Provide 
Regulatory Flexibility in the 218-219 MHz Service, Report and Order and 
Memorandum Opinion and Order, FCC 99-239 (released September 10, 1999) 
may continue to participate in the installment payment program. 
Eligible Licensees are those that were current in installment payments 
(i.e. less than ninety days delinquent) as of March 16, 1998, or those 
that had properly filed grace period requests under the former 
installment payment rules. All unpaid interest from grant date through 
election date will be capitalized into the principal as of Election Day 
creating a new principal amount. Installment payments must be made on a 
quarterly basis. Installment payments will be calculated based on new 
principal

[[Page 59661]]

amount as of Election Day and will fully amortize over the remaining 
term of the license. The interest rate will equal the rate for five-
year U.S. Treasury obligations at the time of licensing.
    (c) Eligibility for small business provisions. 
    (1) A small business is an entity that, together with its 
affiliates and controlling interests, has average gross revenues not to 
exceed $15 million for the preceding three years.
    (2) A very small business is an entity that, together with its 
affiliates and controlling interests, has average gross revenues not to 
exceed $3 million for the preceding three years.
    (3) For purposes of determining whether an entity meets either of 
the definitions set forth in paragraph (b)(1) or (b)(2) of this 
section, the gross revenues of the entity, its affiliates, and 
controlling interests shall be considered on a cumulative basis and 
aggregated.
    (4) 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.
    (5) A consortium of small businesses (or a consortium of very small 
businesses) is a conglomerate organization formed as a joint venture 
between or among mutually independent business firms, each of which 
individually satisfies the definition in paragraph (b)(1) of this 
section (or each of which individually satisfies the definition in 
paragraph (b)(2) of this section). Where an applicant or licensee is a 
consortium of small businesses (or very small businesses), the gross 
revenues of each small business (or very small business) shall not be 
aggregated.
    (d) Controlling interest. 
    (1) For purposes of this section, controlling interests 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 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 Sec. 1.2110(b)(4) of this chapter, 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.
    (e) Bidding credits. A winning bidder that qualifies as a small 
business or a consortium of small businesses as defined in this 
subsection may use the bidding credit specified in 
Sec. 1.2110(e)(2)(ii) of this chapter. A winning bidder that qualifies 
as a very small business or a consortium of very small businesses as 
defined in this subsection may use the bidding credit specified in 
accordance to Sec. 1.2110(e)(2)(i) of this chapter.
    (f) Winning bidders in Auction No. 1, which took place on July 28-
29, 1994, that, at the time of that auction, met the qualifications 
under the Commission's rules then in effect, for small business status 
will receive a twenty-five percent bidding credit pursuant to Amendment 
of Part 95 of the Commission's Rules to Provide Regulatory Flexibility 
in the 218-219 MHz Service, Report and Order and Memorandum Opinion and 
Order, FCC 99-239 (released September 10, 1999).
    17. Section 95.819 is revised to read as follows:


Sec. 95.819  License transferability.

    (a) A 218-219 MHz Service system license acquired through 
competitive bidding procedures (including licenses obtained in cases of 
no mutual exclusivity), together with all of its component CTS 
licenses, may be transferred, assigned, sold, or given away only in 
accordance with the provisions and procedures set forth in 47 CFR 
1.2111.
    (b) A 218-219 MHz Service system license obtained through random 
selection procedures, together with all of its component CTS licenses, 
may be transferred, assigned, sold, or given away, to any other entity 
in accordance with the provisions and procedures set forth in 
Sec. 1.948 of this chapter.
    (c) If the transfer, assignment, sale, or gift of a license is 
approved, the new

[[Page 59662]]

licensee is held to the construction requirements set forth in 
Sec. 95.833 of this part.
    18. Section 95.823 is added to read as follows:


Sec. 95.823  Geographic partitioning and spectrum disaggregation.

    (a) Eligibility. Parties seeking Commission approval of geographic 
partitioning or spectrum disaggregation of 218-219 MHz Service system 
licenses shall request an authorization for partial assignment of 
license pursuant to Sec. 1.948 of this chapter.
    (b) Technical standards. 
    (1) Partitioning. In the case of partitioning, requests for 
authorization of 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 
licensed geographic service area. The partitioned service area shall be 
defined by coordinate points at every 3 seconds along the partitioned 
service area unless an FCC-recognized service area (i.e. Economic 
Areas) is utilized or county lines are followed. The geographic 
coordinates must be specified in degrees, minutes, and seconds, to the 
nearest second of latitude and longitude, and must be based upon the 
1983 North American Datum (NAD83). In the case where an FCC-recognized 
service area or county lines are utilized, applicants need only list 
the specific area(s) (through use of FCC designations or county names) 
that constitute the partitioned area.
    (2) Disaggregation. Spectrum maybe disaggregated in any amount.
    (3) Combined partitioning and disaggregation. The Commission will 
consider requests for partial assignments of licenses that propose 
combinations of partitioning and disaggregation.
    (c) Provisions applicable to designated entities. 
    (1) Unjust enrichment. See Sec. 1.2111(e) of this chapter.
    (2) Parties not qualified for installment payment plans.
    (i) When a winning bidder (partitionor or disaggregator) that 
elected to pay for its license through an installment payment plan 
partitions its license or disaggregates spectrum to another party 
(partitionee or disaggregatee) that would not qualify for an 
installment payment plan, or elects not to pay for its share of the 
license through installment payments, the outstanding principal balance 
owed by the partitionor or disaggregator shall be apportioned according 
to Sec. 1.2111(e)(3) of this chapter. The partitionor or disaggregator 
is responsible for accrued and unpaid interest through and including 
the consummation date.
    (ii) The partitionee or disaggregatee shall, as a condition of the 
approval of the partial assignment application, pay its entire pro rata 
amount of the outstanding principal balance on or before the 
consummation date. Failure to meet this condition will result in 
cancellation of the grant of the partial assignment application.
    (iii) The partitionor or disaggregator shall be permitted to 
continue to pay its pro rata share of the outstanding balance and, if 
applicable, shall receive loan documents evidencing the partitioning 
and disaggregation. The original interest rate, established pursuant to 
Sec. 1.2110(f)(3)(i) of this chapter at the time of the grant of the 
initial license in the market, shall continue to be applied to the 
partitionor's or disaggregator's portion of the remaining government 
obligation.
    (iv) A default on the partitionor's or disaggregator's payment 
obligation will affect only the partitionor's or disaggregator's 
portion of the market.
    (3) Parties qualified for installment payment plans.
    (i) Where both parties to a partitioning or disaggregation 
agreement qualify for installment payments, the partitionee or 
disaggregatee will be permitted to make installment payments on its 
portion of the remaining government obligation.
    (ii) Each party may be required, as a condition to approval of the 
partial assignment application, to execute loan documents agreeing to 
pay its pro rata portion of the outstanding principal balance due, as 
apportioned according to Sec. 1.2111(e)(3) of this chapter, based upon 
the installment payment terms for which it qualifies under the rules. 
Failure by either party to meet this condition will result in the 
automatic cancellation of the grant of the partial assignment 
application. The interest rate, established pursuant to 
Sec. 1.2110(f)(3)(i) of this chapter at the time of the grant of the 
initial license in the market, shall continue to be applied to both 
parties' portion of the balance due. Each party will receive a license 
for its portion of the partitioned market.
    (iii) A default on an obligation will affect only that portion of 
the market area held by the defaulting party.
    (d) Construction requirements.
    (1) Partitioning. Partial assignors and assignees for license 
partitioning have two options to meet construction requirements. Under 
the first option, the partitionor and partitionee would each certify 
that they will independently satisfy the applicable construction 
requirements set forth in Sec. 95.833 of this part for their respective 
partitioned areas. If either licensee failed to meet its requirement in 
Sec. 95.833 of this part, only the non-performing licensee's renewal 
application would be subject to dismissal. Under the second option, the 
partitionor certifies that it has met or will meet the requirement in 
Sec. 95.833 of this part for the entire market. If the partitionor 
fails to meet the requirement in Sec. 95.833 of this part, however, 
only its renewal application would be subject to forfeiture at renewal.
    (2) Disaggregation. Partial assignors and assignees for license 
disaggregation have two options to meet construction requirements. 
Under the first option, the disaggregator and disaggregatee would 
certify that they each will share responsibility for meeting the 
applicable construction requirements set forth in Sec. 95.833 of this 
part for the geographic service area. If parties choose this option and 
either party fails to do so, both licenses would be subject to 
forfeiture at renewal. The second option would allow the parties to 
agree that either the disaggregator or the disaggregatee would be 
responsible for meeting the requirement in Sec. 95.833 of this part for 
the geographic service area. If parties choose this option, and the 
party responsible for meeting the construction requirement fails to do 
so, only the license of the non-performing party would be subject to 
forfeiture at renewal.
    (3) All applications requesting partial assignments of license for 
partitioning or disaggregation must include the above-referenced 
certification as to which of the construction options is selected.
    (4) Responsible parties must submit supporting documents showing 
compliance with the respective construction requirements within the 
appropriate construction benchmarks set forth in Sec. 95.833 of this 
part.
    19. Section 95.831 is revised to read as follows:


Sec. 95.831  Service requirements.

    Subject to the initial construction requirements of Sec. 95.833 of 
this subpart, each 218-219 MHz Service system license must demonstrate 
that it provides substantial service within the service area. 
Substantial service is defined as a service that is sound, favorable, 
and substantially above a level of service which might minimally 
warrant renewal.
    20. Section 95.833 is revised to read as follows:


Sec. 95.833  Construction requirements.

    (a) Each 218-219 MHz Service licensee must make a showing of

[[Page 59663]]

``substantial service'' within ten years of the license grant. A 
``substantial service'' assessment will be made at renewal pursuant to 
the provisions and procedures contained in Sec. 1.949 of this chapter.
    (b) Each 218-219 MHz Service licensee must file a report to be 
submitted to inform the Commission of the service status of its system. 
The report must be labeled as an exhibit to the renewal application. At 
minimum, the report must include:
    (1) A description of its current service in terms of geographic 
coverage and population served;
    (2) An explanation of its record of expansion, including a 
timetable of new construction to meet changes in demand for service;
    (3) A description of its investments in its 218-219 MHz Service 
systems;
    (4) A list, including addresses, of all component CTSs constructed; 
and
    (5) Copies of all FCC orders finding the licensee to have violated 
the Communications Act or any FCC rule or policy; and a list of any 
pending proceedings that relate to any matter described in this 
paragraph.
    (c) Failure to demonstrate that substantial service is being 
provided in the service area will result in forfeiture of the license, 
and will result in the licensee's ineligibility to apply for 218-219 
MHz Service licenses for three years from the date the Commission takes 
final action affirming that the 218-219 MHz Service license has been 
canceled pursuant to Sec. 95.813 of this part.
    21. Section 95.853 is revised to read as follows:


Sec. 95.853  Frequency segments.

    There are two frequency segments available for assignment to the 
218-219 MHz Service in each service area. Frequency segment A is 
218.000-218.500 MHz. Frequency segment B is 218.501-219.000 MHz.
    22. Section 95.855 is revised to read as follows:


Sec. 95.855  Transmitter effective radiated power limitation.

    The effective radiated power (ERP) of each CTS and RTU shall be 
limited to the minimum necessary for successful communications. No CTS 
or fixed RTU may transmit with an ERP exceeding 20 watts. No mobile RTU 
may transmit with an ERP exceeding 4 watts.
    23. Section 95.859 is amended by revising paragraph (a) and by 
removing and reserving paragraph (b) to read as follows:


Sec. 95.859  Antennas.

    (a) The overall height from ground to topmost tip of the CTS 
antenna shall not exceed the height necessary to assure adequate 
service. Certain CTS antennas must be individually licensed to the 218-
219 MHz System licensee (see Sec. 95.811(b) of this part) and the 
antenna structures of which they are a part must be registered with the 
Commission (see part 17 of this chapter).
    24. Section 95.861 is revised to read as follows:


Sec. 95.861  Interference.

    (a) When a 218-219 MHz Service system suffers harmful interference 
within its service area or causes harmful interference to another 218-
219 MHz Service system, the licensees of both systems must cooperate 
and resolve the problem by mutually satisfactory arrangements. If the 
licensees are unable to do so, the Commission may impose restrictions 
including, but not limited to, specifying the transmitter power, 
antenna height or area, duty cycle, or hours of operation for the 
stations concerned.
    (b) The use of any frequency segment (or portion thereof) at a 
given geographical location may be denied when, in the judgment of the 
Commission, its use in that location is not in the public interest; the 
use of a frequency segment (or portion thereof) specified for the 218-
219 MHz Service system may be restricted as to specified geographical 
areas, maximum power, or other operating conditions.
    (c) A 218-219 MHz Service licensee must provide a copy of the plan 
required by Sec. 95.815(b) of this part to every TV Channel 13 station 
whose Grade B predicted contour overlaps the licensed service area for 
the 218-219 MHz Service system. The 218-219 MHz Service licensee must 
send the plan to the TV Channel 13 licensee(s) within 10 days from the 
date the 218-219 MHz Service licensee submits the plan to the 
Commission, and the 218-219 MHz Service licensee must send updates to 
this plan to the TV Channel 13 licensee(s) within 10 days from the date 
that such updates are filed with the Commission pursuant to 
Sec. 95.815(b) of this part.
    (d) Each 218-219 MHz Service system licensee must provide upon 
request, and install free of charge, an interference reduction device 
to any household within a TV Channel 13 station Grade B predicted 
contour that experiences interference due to a component CTS or RTU.
    (e) Each 218-219 MHz Service system licensee must investigate and 
eliminate harmful interference to television broadcasting and 
reception, from its component CTSs and RTSs, within 30 days of the time 
it is notified in writing, by either an affected television station, an 
affected viewer, or the Commission, of an interference complaint. 
Should the licensee fail to eliminate the interference within the 30-
day period, the CTS(s) or RTU(s) causing the problem(s) must 
discontinue operation.
    (f) The boundary of the 218-219 MHz Service system, as defined in 
its authorization, is the limit of interference protection for that 
218-219 MHz Service system.


Sec. 95.863  [Removed]

    25. Section 95.863 is removed.

[FR Doc. 99-27874 Filed 11-2-99; 8:45 am]
BILLING CODE 6712-01-P