[Federal Register Volume 64, Number 243 (Monday, December 20, 1999)]
[Rules and Regulations]
[Pages 71042-71056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32841]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 90

[PR Docket No. 93-144; GN Docket No. 93-252; PP Docket No. 93-253; FCC 
99-270]


Future Development of SMR Systems in the 800 MHz Frequency Band, 
Regulatory Treatment of Mobile Services, and Competitive Bidding

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this Memorandum Opinion and Order on Reconsideration 
(MO&O), the Commission completes the implementation of a new licensing 
framework for the 800 MHz Specialized Mobile Radio service (SMR). 
Specifically, the Commission revises or clarifies its rules concerning: 
the channel plan for General Category channels, the modification of 
incumbent licensee systems, and the mandatory relocation of incumbent 
licensee systems from the upper 200 channels to the lower 230 channels. 
Additionally, the Commission retains its current construction and 
coverage requirements and clarifies its rules concerning co-channel 
interference protection, the definition of incumbent and the 
applicability of its partitioning and disaggregation rules to Private 
Mobile Radio Service (PMRS) licensees in the 800 MHz and 900 MHz SMR 
services. The Commission also reaffirms its conclusion that competitive 
bidding is an appropriate tool to resolve mutually exclusive license 
applications for the General Category and lower 80 channels of the 800 
MHz SMR service. These modifications and clarifications strike an 
equitable balance between the competing interests of 800 MHz SMR 
licensees seeking to provide local service and those desiring to 
provide geographic area service. Further, the Commission's licensing 
framework will enhance the competitive potential of SMR services in the 
Commercial Mobile Radio Service (CMRS) marketplace.

DATES: Effective February 18, 2000.

FOR FURTHER INFORMATION CONTACT: Policy and Rules Branch, Commercial 
Wireless Division, Wireless Telecommunications Bureau: Donald Johnson 
or Scott Mackoul at (202) 418-7240; Auctions and Industry Analysis 
Division, Wireless Telecommunications Bureau: Gary D. Michaels at (202) 
418-0660; Media Contact: Meribeth McCarrick at (202) 418-0654.

SUPPLEMENTARY INFORMATION: This Memorandum Opinion and Order on 
Reconsideration in PR Docket No. 93-144; RM-8117, RM-8030, RM-8029; GN 
Docket No. 93-252; PP Docket No. 93-253 was adopted September 30, 1999 
and released October 8, 1999. The document is available, in its 
entirety, (including the list of petitioners) for inspection and 
copying during normal business hours in the FCC Reference Center, (Room 
CY-A257), 445 12th Street, SW, Washington, D.C. 20554. It may also be 
purchased from the Commission's copy contractor, International 
Transcription Services, Inc. (ITS, Inc.), 1231 20th Street, NW, 
Washington, D.C. 20036, (202) 857-3800. In addition, it is available on 
the Commission's website at http://www.fcc.gov/Bureaus/Wireless/Orders.
SYNOPSIS OF MEMORANDUM OPINION AND ORDER ON RECONSIDERATION

I. Introduction

    1. The major actions adopted in the Memorandum Opinion and Order 
are:

A. Service Rules for the Lower 230 Channels

     Determine to license the 150 General Category channels in 
six contiguous 25-channel blocks, thereby amending the Commission's 
previous decision to license these channels in three contiguous 50-
channel blocks;
     Retain the ``substantial service'' standard as an 
alternative to meeting the applicable construction requirements for EA 
licensees in the lower 230 channels;

B. Rights and Obligations of EA Licensees in the Lower 230 Channels

     Clarify that the grandfathering provisions in Sec. 90.693 
of the Commission's rules, setting forth the parameters within which 
incumbent licensees can modify their systems, apply to both SMR and 
non-SMR licensees that obtained their licenses or filed applications on 
or before December 15, 1995;
     Clarify that an incumbent licensee on the lower 230 
channels seeking to modify its system using its 18 dB 
interference contour may, in the absence of consent from affected 
incumbents, provide a statement from a certified frequency advisory 
committee that a modification will not cause interference to adjacent 
licensees;
     Specify the operating parameters that incumbent licensees 
will use to calculate their service area contours and interference 
contours;
     Conclude that incumbents may not expand their geographic 
licenses beyond the contours of their individual site licenses to 
include areas where the EA licensee is not able to operate;
     Clarify that an incumbent's geographic license area 
includes, in addition to external base stations that are in operation, 
any interior sites that are constructed within the applicable 
construction period;
     Clarify that even when an incumbent licensee has expanded 
its operation throughout its 18 dB contour, its interference 
protection continues to extend only to its 36 dBV/m signal 
strength contour;
     Affirm that the lower 80 SMR channels will not be 
redesignated for non-SMR use;

[[Page 71043]]

     Clarify that the construction requirements in Section 
90.685(b) of the Commission's rules are applicable to all EA licensees 
on the lower 230 channels without distinction between CMRS and PMRS 
licensees;
     Clarify that EA licensees on the lower 80 SMR channels and 
General Category channels may switch between CMRS and PMRS services, 
provided that channels designated exclusively for SMR use continue to 
be used only for SMR service;

C. Relocation of Incumbents from the Upper 200 Channels

     Clarify that, for the purpose of determining what facility 
an EA licensee is responsible for relocating, an incumbent licensee's 
``system'' includes mobile units and a redundant system when necessary 
to effect a transparent relocation;
     Affirm that the Commission's definition of ``system'' does 
not include managed systems that are comprised of individual licenses;
     Determine that an EA licensee that relocates an incumbent 
to a system with a comparable channel capacity, but a different channel 
configuration, is required to reimburse the incumbent for the increased 
cost inherent in operating such a system;
     Retain the five-year cost recovery period for increased 
operating costs caused by incumbent licensee relocation;
     Affirm that reimbursement of relocation costs will not be 
due until the incumbent has been fully relocated and the frequencies 
are free and clear;
     Decline to revise the time period for relocation 
negotiations between EA licensees and incumbent licensees;
     Determine that EA licensees are not required to compensate 
end users for service interruptions caused by realignment and returning 
to new frequencies;

D. Partitioning and Disaggregation for 800 MHz and 900 MHz Licensees

     Clarify that the Commission's geographic partitioning and 
spectrum disaggregation rules apply to PMRS licensees in the 800 MHz 
and 900 MHz SMR services;

E. Competitive Bidding Issues

     Affirm the Commission's previous determination that the 
General Category channels and lower 80 SMR channels of the 800 MHz SMR 
band are auctionable under Section 309(j) of the Communications Act.
     Clarify that the auction exemption for public safety radio 
services in Section 309(j)(2) of the Communications Act does not apply 
to spectrum that has been allocated for SMR use and which the 
Commission has already determined to be auctionable;
     Affirm that licensing in the lower 230 channels will be 
open to all parties;
     Amend the method by which licenses in the lower 230 
channels will be grouped for auction, and direct the Wireless 
Telecommunications Bureau, pursuant to delegated authority, to 
determine what licensing groups, if any, should be established for 
auctioning the lower 230 channels;
     Affirm that a bidder's upfront payment will be based on 
the number of licenses on which a bidder anticipates bidding in any 
round;
     Affirm that the Commission will not offer installment 
payment financing for licenses in the lower 230 channels;
     Affirm that the Commission will not adopt gender-or 
minority-based provisions for auctioning licenses for the lower 230 
channels at this time.

II. Background

    2. The Commission initially established the 800 MHz SMR services to 
license dispatch radio systems on a site-by-site basis in local 
markets. In recent years, however, a number of SMR licensees have 
expanded the geographic scope of their services, aggregated channels, 
and developed digital networks to enable them to provide a type of 
service comparable to that provided by cellular and Personal 
Communications Service (PCS) operators. In response to these 
developments, the Commission has re-evaluated its site-by-site 
licensing procedures, which were cumbersome for systems comprised of 
several hundred sites, because licensees were required to obtain 
Commission approval for each site. This re-examination has stemmed from 
a concern that site-by-site licensing procedures impair an SMR 
licensee's ability to respond to changing market conditions and 
consumer demand.
    3. In the First Report and Order, Eighth Report and Order, and 
Second Further Notice of Proposed Rule Making (800 MHz First Report and 
Order), 61 FR 6212 (February 16, 1996) the Commission restructured the 
licensing framework that governs the 800 MHz SMR service. For the upper 
200 channels, the Commission replaced site-and frequency-specific 
licensing with a geography-based system similar to those used in other 
Commercial Mobile Radio Services (``CMRS''). The Commission designated 
the upper 200 channels of 800 MHz SMR spectrum for geographic 
licensing, and created 120-, 60-and 20-channel blocks within the U.S. 
Department of Commerce Bureau of Economic Analysis Economic Areas 
(``EAs''). The Commission concluded that mutually exclusive 
applications for these licenses would be awarded through competitive 
bidding. Additionally, the Commission granted EA licensees the right to 
relocate incumbent licensees out of the upper 200 channels to 
comparable facilities. Finally, the Commission reallocated the 150 
contiguous 800 MHz General Category channels for exclusive SMR use.
    4. In the 800 MHz Second Report and Order, 62 FR 41190 (July 31, 
1997) the Commission established EAs as the licensing area for the 
lower 230 800 MHz channels, which include the lower 80 SMR channels and 
the 150 General Category channels. The Commission established 
competitive bidding rules for resolving mutually exclusive applications 
for EA licenses in the lower 230 channels, determined that incumbents 
on the lower 230 channels would not be subject to mandatory relocation, 
and defined the rights of incumbent licensees on those channels. The 
Commission also provided further details concerning the mandatory 
relocation rules for the upper 200 channel block and established 
partitioning and disaggregation rules for 800 MHz and 900 MHz SMR 
licensees.
    5. In response to the 800 MHz Second Report and Order, the 
Commission received a number of pleadings requesting reconsideration, 
modification or clarification of its rules relating to mandatory 
relocation, co-channel interference, spectrum block size, geographic 
area licensing, and partitioning and disaggregation.

III. Discussion

A. Service Rules for the Lower 230 Channels

i. Channel Blocks
    6. Background. In the 800 MHz Second Report and Order, the 
Commission adopted channel blocks for licensing the lower 80 SMR 
channels and the 150 General Category channels. Specifically, the 
Commission determined to license the lower 80 SMR channels in sixteen 
non-contiguous 5-channel blocks. The Commission reasoned that the non-
contiguous nature of these channels made it impractical to impose any 
other channel plan. The Commission, further concluded that this 
approach would provide opportunities for incumbents and applicants that 
base their systems on trunking of non-contiguous channels to acquire 
spectrum and was, therefore, consistent with the mandate of Section 
309(j)(4)(C)

[[Page 71044]]

of the Communications Act of 1934 to promote an equitable distribution 
of licenses and provide economic opportunities for a wide variety of 
entities. Finally, the Commission determined that this channel plan was 
the least disruptive geographic licensing method for smaller incumbent 
licensees that had acquired their channels in 5-channel increments.
    7. The Commission decided to license the 150 General Category 
channels in three contiguous 50-channel blocks. Initially, in the 
Second Further Notice, the Commission proposed three alternative block 
sizes for licensing these channels: (a) a 120-channel block, a 20-
channel block, and a 10-channel block; (b) six 25-channel blocks; or 
(c) fifteen 10-channel blocks. In response, commenters suggested 
various other options for channel allotment such as   5-channel blocks 
or licensing all 150 channels individually. While the Commission 
considered all of the proposed plans, the Commission ultimately 
adopted, in part, the Industry Proposal plan for licensing channels in 
three contiguous 50-channel blocks. The Commission rejected that 
portion of the Industry Proposal channel plan that would have permitted 
incumbent licensees to enter into settlement agreements for the 
distribution of unlicensed spectrum on a channel-by-channel basis prior 
to auction. The Commission believed that licensing the General Category 
channels in three contiguous 50-channel blocks, without permitting pre-
auction settlements, struck the appropriate balance between the needs 
of some licensees for large contiguous blocks of spectrum and those of 
other licensees for smaller spectrum blocks.
    8. Discussion. On reconsideration, the Commission concludes that 
auctioning the 150 General Category channels in six contiguous 25-
channel blocks, rather than three contiguous 50-channel blocks, will 
best serve the interests of licensees with different spectrum 
allocation needs. Currently, the General Category frequencies are 
occupied by a wide variety of entities, including public safety, SMR, 
business, and industrial/land transportation users. Each of these 
entities has different spectrum allocation needs based on the services 
they provide and their technological capabilities. While some licensees 
use contiguous spectrum technologies and therefore need large blocks of 
spectrum, other licensees (i.e., small businesses) trunk small numbers 
of non-contiguous channels and thus seek smaller amounts of spectrum. 
The Commission believes that licensing General Category channels in 
blocks of 25 will achieve its goal of providing a wide variety of 
entities a meaningful opportunity to pursue spectrum in this band.
    9. A significant portion of incumbent licensees on the General 
Category frequencies are small businesses and are licensed for only a 
few channels in the band. Auctioning licenses for General Category 
channels in smaller channel blocks will provide these small business 
incumbents with greater opportunities to take advantage of geographic 
area licensing. In addition, it will encourage new entrant 
participation in the provision of 800 MHz services. As the Commission 
explained in the 800 MHz Second Report and Order, auctioning the 
General Category channels in large channel blocks could preclude small 
businesses and new entrants with limited financial resources from 
acquiring licenses because, generally, bigger blocks of spectrum 
require larger bids. Smaller channel blocks, on the other hand, are 
less likely to be cost prohibitive. Changing the block size from 50 
channels to 25 channels will provide small entities with the 
opportunity to acquire smaller amounts of spectrum consistent with 
their financial means and technological needs. By facilitating small 
business and new entrant participation in the provision of 800 MHz 
services, this channel plan fulfills the Commission's statutory mandate 
of promoting economic opportunity for a wide variety of applicants and 
avoiding an excessive concentration of licenses.
    10. The Commission declines to license General Category channels on 
an individual basis. First, auctioning these channels on an individual 
basis would be administratively burdensome given the large number of 
channels involved. Second, this method of licensing is inconsistent 
with the needs of applicants that receive blocks of contiguous 
spectrum. Further, blocks of contiguous spectrum allow for more 
flexibility in terms of technological applications and innovation.
ii. Construction and Coverage Requirements
    11. Background. In the 800 MHz First Report and Order, the 
Commission required EA licensees on the upper 200 channels to construct 
their systems within five years of licensing. The Commission imposed 
interim coverage requirements, requiring EA licensees to provide 
coverage to one-third of the population within the EA within three 
years of initial license grant and to two-thirds of the population by 
the end of the five-year construction period. In addition, the 
Commission required EA licensees to use at least 50 percent of the 
channels in their spectrum blocks in at least one location within the 
EA within three years of the initial license grant.
    12. In the 800 MHz Second Report and Order, the Commission adopted 
construction requirements for the lower 230 channels. Specifically, the 
Commission required that EA licensees in these channel blocks provide 
coverage to one-third of the population within three years of the 
initial license grant and to two-thirds of the population within five 
years of the license grant. Unlike their counterparts in the upper 200 
channels, however, the Commission stated that EA licensees in the lower 
230 channels could, in the alternative, provide ``substantial service'' 
to their geographic license area within five years of license grant. 
The Commission defined ``substantial service'' as ``service that is 
sound, favorable, and substantially above a level of mediocre service, 
which would barely warrant renewal.'' The Commission stated that a 
licensee could satisfy the substantial service requirement by 
demonstrating that it is providing a technologically innovative service 
or that it is providing service to unserved or underserved areas. The 
Commission did not adopt a channel usage requirement for licensees in 
the lower 230, channel block. The Commission made clear that failure to 
meet these construction requirements would result in automatic 
termination of the geographic area license.
    13. Discussion. The substantial service option is necessary to 
provide opportunities for new entrants to compete with incumbents in 
the lower 230-channel block. In some EAs, an incumbent licensee may 
already serve a large portion of the population. A new entrant, 
therefore, may not be able to satisfy the population coverage 
requirement because its service area cannot overlap with that of the 
incumbent's. The option of providing a showing of substantial service 
allows potential EA licensees that cannot meet the three-year and five-
year coverage requirements, because of the existence of incumbent co-
channel licensees, to satisfy a construction requirement. Allowing 
licensees to make substantial service showings also encourages build-
out in rural areas since one of the ways in which a licensee may 
satisfy the substantial service requirement is to demonstrate that it 
is providing service to unserved or underserved areas, which are often 
rural areas.

[[Page 71045]]

B. Rights and Obligations of EA Licensees in the Lower 230 Channels

1. Treatment of Incumbents
a. Definition of Incumbent
    14. Background. In the Commission's 800 MHz SMR Second Report and 
Order the Commission declined to adopt a mandatory, relocation plan for 
incumbents on the lower 230 channels. The Commission concluded that 
incumbent licensees, on these frequencies should be allowed to continue 
to operate under their existing authorizations, and that geographic 
area licensees would be required to provide protection to all co-
channel systems within their licensing areas. The Commission also 
adopted operating parameters for incumbents that would give them a 
reasonable opportunity to expand their systems.
    15. Discussion. Section 90.693 sets forth, specific conditions 
under which ``grandfathered'' licensees can modify their systems. The 
Commission received a request to clarify Sec. 90.393(a) of its rules. 
The term ``incumbent licensees,'' in Sec. 90.693(a) of its rules, 
refers to both SMR and non-SMR licensees that obtained licenses or 
filed applications on or before December 15, 1995.
b. Expansion and Flexibility Rights of Lower Channel Incumbents
    16. Background. In the 800 MHz Second Report and Order, the 
Commission concluded that while geographic licensing is appropriate for 
the lower 230 channels, some additional flexibility is appropriate for 
incumbents on these channels to facilitate modifications and limited 
expansion of their systems. The Commission stated that it would allow 
incumbents on the lower 230 channels to make system modifications 
within their interference contours without prior Commission approval. 
Thus, an incumbent licensee that desires to make modifications to its 
existing system, such as adding new transmitters and altering its 
coverage area, will be able to do so with the concurrence of all 
affected incumbents, so long as such an incumbent does not expand the 
18 dB interference contour of its system. Moreover, licensees 
who do not receive the consent of all incumbent affected licensees, 
will be able to make similar modifications within their 22 dB 
signal strength interference contour and licensees who do not desire to 
make modifications may continue to operate within their existing 
systems. The Commission emphasized that the revised interference 
standard protects incumbents only against EA licensees, not against 
other incumbents. As such, the protection that one incumbent must 
provide to another incumbent continues to be governed by Sec. 90.621(b) 
of the Commission's rules. In the absence of consent of all affected 
incumbent licensees, incumbent licensees must locate their stations at 
least seventy miles from the facilities of any other incumbent or 
comply with the co-channel separation standards established in the 
Commission's short-spacing rules.
    17. Discussion. The Commission concludes that incumbent licensees 
seeking to utilize an 18 dB signal strength interference 
contour shall first seek to obtain the consent of affected co-channel 
incumbents. However, if that consent is withheld, the incumbent 
licensee may provide, in lieu of consent, a statement from a certified 
frequency coordinator that a modification will not cause interference 
to adjacent licensees.
    18. Consistent with Secs. 90.621(b)(4) and 90.621(b)(6) of the 
Commission's rules, it believes that the ``originally-licensed'' 
contour should be calculated using the maximum ERP and the actual HAAT 
along each radial. The short spacing table protects existing licensees 
at maximum power, and actual HAAT in the direction of the co-channel 
station. The Commission believes that these protection criteria will 
provide more flexibility to incumbent licensees and are consistent with 
Sec. 90.693 of its rules.
c. Converting Site-Specific Licenses to Geographic Licenses
    19. Background. In the 800 MHz Second Report and Order, the 
Commission allowed incumbents on the lower 230 channels to combine 
their site-specific licenses into single geographic licenses to provide 
them with the same flexibility and reduced administrative burden that 
geographic licensing affords to EA licensees. Because the Commission 
adopted the 18 dB contour rather than the 22 dB 
contour, where the incumbent licensee has obtained the consent of all 
affected parties, as the benchmark for defining an incumbent licensee's 
protected service area, the Commission used the contiguous and 
overlapping 18 dB contours of the incumbent's previously 
authorized sites to define the scope of the incumbent's geographic 
license. The Commission stated that once the geographic license has 
been issued, incumbents will not be required to obtain prior Commission 
approval or provide subsequent notification to add or modify facilities 
that do not extend the licensee's 18 dB interference contour. 
Additionally, licensees that do not receive the consent of all affected 
parties may follow the same process utilizing their 22 dB 
signal strength contour, rather than the 18 dB contour.
    20. Discussion. Petitioners contend that incumbents' geographic 
licenses should include areas where an incumbent's interference 
contours do not overlap, but where no other licensee could place a 
transmitter because of the Commission's interference protection rules. 
The Commission declines to expand an incumbent's geographic license 
beyond the contours of its individual site licenses. The Commission 
finds that inclusion of areas that are outside of an incumbent's 
interference contours within the incumbent's geographic license would 
be contrary to its objective of prohibiting encroachment by incumbents 
on the geographic area licensee's operations. Additionally, the 
Commission clarifies that in defining the scope of an incumbent's 
geographic license area, the Commission includes external base stations 
that are already constructed and operational and interior sites that 
are constructed within the particular construction period applicable to 
the incumbent. Once the geographic license has been issued, facilities 
that are added within an incumbent's existing footprint and that are 
not subject to prior approval by the Commission will not be subject to 
construction requirements.
2. Co-channel Interference Protection
    21. Background. In the Commission's 800 MHz SMR Second Report and 
Order, the Commission concluded that additional flexibility was needed 
for lower 230 channel incumbent licensees to facilitate modifications 
and limited expansion of their systems. The Commission determined that 
additional flexibility for the lower 230 channel incumbent licensee was 
appropriate because these channels were subject to an application 
freeze and geographic licensing of these channels would not occur until 
after the upper 200 channel auction was completed and upper 200 channel 
incumbent licensees were relocated to the lower channels.
    22. Because the Commission adopted an 18 dBV/m standard, 
which gives incumbent licensees greater flexibility to expand, the 
Commission adopted stricter interference protection criteria to ensure 
that EA licensees do not interfere with incumbents' operations. 
Specifically, the Commission further determined that incumbent 
licensees who currently utilize the 40 dB signal strength 
contour for their service area contour and 22 dB signal 
strength contour for their interference contour will be permitted to 
use their 18 dB

[[Page 71046]]

signal strength contour for their interference contour as long as they 
obtain the consent of all affected parties. In particular, EA licensees 
are required to either: locate their stations at least 173 km (107 
miles) from the licensed coordinates of any incumbent licensee, or 
comply with co-channel separation standards based on a 36/18 
dBV/m standard, rather than the previously applicable 40/22 
dBV/m standard. EA licensees must ensure that the 18 
dBV/m signal strength contour of a proposed station does not 
encroach upon the 36 dBV/m signal strength contour of an 
incumbent licensee's existing stations.
    23. Discussion. The Commission clarifies that incumbent licensees 
on the lower 230 channels will be protected by EA licensees only on the 
basis of the 36/18 dBV/m contour analysis of the incumbent's 
existing station, even if an incumbent licensee has expanded its 
operation throughout its 18 dBV/m contour. An incumbent 
licensee's protection extends only to its 36 dBV/m signal 
strength contour. The Commission further clarifies that where the co-
channel separation requirements in Sec. 90.621(b) of its rules have 
afforded certain licensees greater interference protection, those 
standards will continue to apply.
3. Regulatory Classification of EA Licensees on the Lower 230 Channels
    24. Background. In the 800 MHz Second Report and Order, the 
Commission concluded that the Commission would presumptively classify 
SMR winners of EA licenses on the lower 230 channels as CMRS providers, 
because the Commission anticipates that most applicants for these 
licenses will be SMR applicants who seek to provide interconnected 
service and thus meet the definition of CMRS. However, the Commission 
stated that it would allow SMR applicants and licensees to overcome 
this presumption by demonstrating that their service does not meet the 
CMRS definition. In the 800 MHz Memorandum Opinion and Order, the 
Commission determined that both SMRs and non-SMRs would be eligible to 
obtain licenses for the 150 General Category channels. Thus, where an 
EA license is obtained by a non-SMR operator, the CMRS presumption is 
inapplicable. In the event that EA licenses are awarded to Public 
Safety, Industrial/Land Transportation or Business licensees, for 
example, such licensees will be classified as PMRS providers.
    25. Discussion. The Commission declines to re-designate the lower 
80 channels for non-SMR use, as well as for SMR use. The Commission 
designated the lower 80 SMR channels for use in SMR systems based on a 
significant increase in the number of applicants for 800 MHz trunked 
systems and private users seeking service from SMR operators. The 
Commission anticipates that SMR providers' demand for the lower 80 
channels will be increased by geographic area licensing of the upper 
200 channels and its mandatory relocation policy.
    26. The Commission also clarifies that construction requirements in 
Sec. 90.685(b) are applicable to all EA licensees in the lower 230 
channels without distinction between those classified as CMRS and those 
classified as PMRS. In addition, the Commission clarifies that EA 
licensees in the lower 230 channels are permitted to switch between 
CMRS and PMRS service in these channels.

C. Relocation of Incumbents from the Upper 200 Channels

1. Relocation Negotiations
    27. Background. In the 800 MHz First Report and Order, the 
Commission established procedures for the mandatory relocation of 
incumbent licensees from the upper 200 to the lower 230 channels on the 
800 MHz SMR band. The Commission established a three-phase process for 
the relocation of incumbents. Phase I comprises a one-year voluntary 
negotiation. If no agreement is reached in phase I, the EA licensee may 
initiate Phase II, a one-year mandatory negotiation period during which 
the parties are required to negotiate in ``good faith.'' If the parties 
still fail to reach an agreement, the EA licensee may then initiate 
Phase III, which is an involuntary relocation of the incumbent's 
system. The Commission determined that incumbents on the upper 200 
channels would not be subject to mandatory relocation unless the EA 
licensee provided the incumbent with ``comparable facilities'' without 
any significant disruption in the incumbent's operations.
    28. In the 800 MHz Second Report and Order, the Commission defined 
comparable facilities as facilities that will provide the same level of 
service as the incumbent licensee's existing facilities, from the 
perspective of the end user. The Commission identified four factors 
relevant to this determination: system, capacity, quality of service 
and operating costs.
    29. Discussion. In the 800 MHz Memorandum Opinion and Order on 
Reconsideration, the Commission reduced the original two-year mandatory 
negotiation period to one year, concluding that a one-year voluntary 
and one year mandatory negotiation period would provide parties with 
the flexibility to negotiate voluntarily while ensuring that relocation 
occurs expeditiously. Accordingly, the Commission declines to further 
reduce the negotiation period. In addition, the Commission declines to 
establish a time period after which an incumbent would have the ability 
to terminate the relocation process if it does not reach agreement with 
the EA licensee. Allowing incumbents to terminate the relocation 
process after a certain period of time may encourage some incumbents to 
refrain from negotiating in good faith.
2. Comparable Facilities
a. System
    30. In the 800 MHz Second Report and Order, the Commission defined 
``system'' functionally from the end user's point of view. A system is 
comprised of base station facilities that operate on an integrated 
basis to provide service to a common end user, and all mobile units 
associated with those base stations. A system can include multiple-
licensed facilities that share a common switch or are otherwise 
operated as a unitary system, provided that an end user has the ability 
to access all such facilities. Although the Commission defined 
``system'' broadly to provide incumbent licensees flexibility to 
continue meeting their customers' needs, the Commission specifically 
excluded from its definition facilities that are operationally separate 
and managed systems that are comprised of individual licenses.
    31. Discussion. The Commission agrees with petitioners that its 
definition of ``system'' should include redundant mobile units and a 
redundant backbone, but only to the extent that they are necessary to 
effect a relocation that is transparent to the end user. The Commission 
declines to engage in specific detailed analysis of the various 
individual components that potentially could be included in a system. 
To determine whether a specific component is part of a system, EA 
licensees are required to look to the function of the component and 
consider whether the equipment in question is part of a unitary system 
providing service to the end user.
    32. Furthermore, the Commission declines to expand its definition 
of ``system'' to include commonly managed systems that are comprised of 
individual licenses. To the extent that a manager operates separately 
licensed facilities as a unitary system, that could meet the 
Commission's definition of

[[Page 71047]]

``system,'' such operation would be likely to conflict with the 
licensees' obligation under Section 310(d) of the Communications Act to 
retain exclusive responsibility for the operation and control of 
authorized facilities. To the extent that such facilities are kept 
operationally separate, they are excluded from the Commission's 
definition of ``system.''
b. Capacity
    33. Background. To comply with the Commission's capacity 
requirements, an EA licensee must provide an incumbent licensee with 
equivalent channel capacity. The Commission defined channel capacity as 
the same number of channels with the same bandwidth that is currently 
available to the end user. If a different channel configuration is 
used, it must have the same overall capacity as the original 
configuration. Accordingly, comparable channel capacity requires 
equivalent signaling capability, baud rate and access time.
    34. Discussion. The Commission does not believe that retuning 
requires the exact channel spacing that the incumbent licensee had on 
the upper 200 channels. Because of the large number of incumbent 
licensees presently licensed on the lower 230 channels, the Commission 
believes that some relocated licensees will not receive the exact 
channel spacing that the relocated licensees had on the upper 200 
channels. In these situations the EA licensee must configure the system 
in a way that does not compromise channel capacity and must reimburse 
the incumbent for the increased cost of operating the reconfigured 
system.
c. Operating Costs
i. Increased Operating Costs
    35. Background. In the 800 MHz Second Report and Order, the 
Commission defined operating costs as costs that affect the delivery of 
services to the end user. The Commission stated that if the EA licensee 
provides facilities that entail higher operating costs than the 
operating cost of the incumbent's previous system, and the cost 
increase is a direct result of the relocation of the system, the EA 
licensee must compensate the incumbent licensee for the difference.
    36. Discussion. The Commission disagrees with one petitioner that 
contended that the Commission failed to provide for these increased 
costs. In the 800 MHz Second Report and Order, the Commission explained 
that operating costs associated with the relocation might consist of 
either increased recurring costs associated with the replacement 
facilities or increased maintenance costs. Accordingly, if a higher 
power transmitter or larger antennas are necessitated by relocation, 
the incumbent should be compensated for any additional rental payments, 
increased utility fees, or increased maintenance costs associated with 
the new transmitter or antennas.
ii. Cost Recovery Period
    37. Background. While the Commission concluded in the 800 MHz 
Second Report and Order that EA licensees should be responsible for 
increased operating costs caused by relocation, it noted that 
identifying whether increased costs are attributable to relocation 
becomes more difficult over time. The Commission therefore determined 
not to impose this obligation indefinitely, but stated that the EA 
licensees' obligation to pay increased costs will end five years after 
relocation has occurred. The Commission concluded that a five-year 
payment period appropriately balances the interest of EA licensees and 
relocated incumbents.
    38. Discussion. The Commission declines to lengthen the cost 
recovery period from a five to a ten-year period. A five-year period 
will facilitate the speedy resolution of relocation issues. The 
Commission believes the rationale the Commission provided in the 
Microwave Relocation Cost Sharing First Report and Order, 61 FR 29679 
(June 12, 1996) is equally applicable to the relocation of SMR 
facilities. The five-year cost recovery period is not unfair to 
incumbent licensees because after five years many incumbents would have 
been forced to bear some of these costs themselves, even if they had 
not been relocated by the EA licensee. The Commission also notes that a 
five-year period provides incumbent licensees adequate time to budget, 
plan and allocate resources to meet these expenses upon the expiration 
of the cost recovery period.
    39. In addition, the Commission declines to reduce the cost 
recovery period to three years. The Commission does not believe that 
costs incurred beyond a three-year period would be ``speculative and 
beyond the realm of [the] cost reimbursement parameters.'' The five-
year period is not unfair to EA licensees and thus, the Commission 
declines to reduce the period to three years.
3. Other Payment Issues
a. Timing of Payments to Incumbents
    40. Background. In the 800 MHz Second Report and Order, the 
Commission stated that reimbursement payments for relocation are due 
(a) when the incumbent licensee has been fully relocated, and (b) the 
frequencies are free and clear.
    41. Discussion. The Commission reiterates that payment of 
relocation costs will not be due until the incumbent has been fully 
relocated and the frequencies are free and clear. The Commission 
believes that this approach promotes a more expeditious relocation 
process by establishing a definite time at which reimbursement is due. 
However, the Commission notes that parties are free to negotiate when 
reimbursement of relocation costs will occur, and may agree to 
reimbursement as such expenses are incurred.
b. Compensable Costs
    42. Background. In the 800 MHz Second Report and Order, the 
Commission concluded that reimbursable relocation costs could include 
incumbent transaction expenses such as legal and consulting fees, 
configuration of antennas, increased rental space, and administrative 
costs. However, because the Commission wanted to encourage a fast 
relocation process free of disputes, it determined that the bulk of 
compensable costs should be tied as closely as possible to actual 
equipment costs. Therefore, the Commission required EA licensees to 
reimburse incumbents only for those transaction expenses that are 
directly attributable to the relocation, subject to a cap of two 
percent of the hard costs involved.
    43. The Commission declines to require compensation to end users of 
incumbent licensee systems, because such compensation would be 
inconsistent with the Commission's determination that the bulk of 
compensable costs should be tied as closely as possible to the 
licensee's actual equipment costs.

D. Partitioning and Disaggregation for 800 MHz and 900 MHz Licensees

    44. Background. In the 800 MHz Second Report and Order, the 
Commission adopted flexible partitioning and disaggregation rules for 
all licensees in the 800 MHz and 900 MHz SMR service. Specifically, the 
Commission extended partitioning to all incumbent and EA licensees on 
both the upper 200 and lower 230 channels of the 800 MHz SMR service 
and to all incumbent and Major Trading Area (MTA) licensees on the 200 
channels of the 900 MHz service. Similarly, the Commission concluded 
that all incumbent and EA licensees in the 800 MHz SMR service and all 
incumbent

[[Page 71048]]

and MTA licensees in the 900 MHz SMR service should be allowed to 
disaggregate portions of their spectrum.
    45. Discussion. The Commission clarifies that in the 800 MHz Second 
Report and Order, it determined that its partitioning and 
disaggregation rules should apply to all licensees in all SMR channel 
blocks with no distinction on the basis of licensee's regulatory 
classification as PMRS or CMRS. Application of the partitioning and 
disaggregation rules to PMRS licensees will result in more efficient 
use of the spectrum by allowing licensees to transfer part of their 
spectrum to a party that more highly values it.

E. Competitive Bidding Issues

1. Auctionability
    46. Background. In the 800 MHz Second Report and Order, the 
Commission concluded that competitive bidding is an appropriate 
licensing mechanism for the General Category and lower 80 channels of 
the 800 MHz SMR service. The Commission concluded that the 800 MHz SMR 
service satisfies the criteria set forth by Congress for determining 
when competitive bidding should be used. The Commission noted that 
under its rules a diverse group of applicants, including incumbent 
licensees and potential new providers of this service, will be able to 
participate in the auction process because eligibility for EA licenses 
will not be restricted. Finally, the Commission adopted special 
provisions for small businesses seeking EA licenses.
    47. Discussion. The Commission reaffirms its conclusion that 
competitive bidding is the appropriate tool to resolve mutually 
exclusive license applications for the General Category and lower 80 
channels of the 800 MHz SMR service. The Commission continues to 
believe that competitive bidding furthers the public interest by 
promoting rapid deployment of service, fostering competition, 
recovering a portion of the value of two spectrum for the public, and 
encouraging efficient spectrum use. The Commission has previously 
construed Sec. 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 Sec. 309(j)(3). 
In the course of this proceeding, the Commission has evaluated the 
appropriateness of various licensing mechanisms for the 800 MHz SMR 
service. No new arguments are raised that would persuade the Commission 
to reconsider the adoption of EA licensing for the 800 MHz SMR service. 
The Commission emphasizes that geographic area licensing offers a 
flexible, licensing scheme that eliminates the need for many of the 
complicated and burdensome licensing procedures that hampered SMR 
development in the past. By determining that it would not be in the 
public interest to implement other licensing schemes or processes that 
avoid mutual exclusivity, the Commission has fulfilled its obligation 
under section 309(j)(6)(E).
    48. Congress has exempted certain classes of licensees from the 
competitive bidding process in Sec. 309(j)(2). The Commission 
previously determined that the public safety radio services exemption 
does not entitle individual users to remove licenses from auctions 
licensing simply by claiming a public safety use. Thus, contrary to 
petitioners' contentions, the exemption does not apply to spectrum that 
is allocated for SMR use and which has already been determined to be 
auctionable.
2. Eligibility
    49. Background. In the 800 MHz Second Report and Order and the 800 
MHz Memorandum Opinion and Order the Commission concluded that General 
Category and lower 80 channels would be licensed on a geographic basis 
and subject to competitive bidding to resolve mutually exclusive 
applications. Earlier, in the 800 MHz SMR First Report and Order, the 
Commission concluded based on comments in the proceeding and on its 
licensing records that the primary demand for General Category channels 
came from SMR operators. When the Commission froze General Category 
licensing in 1995, the Commission noted that the number of SMR 
applications for these channels had risen markedly and, as such, the 
Commission believed that such activity is itself an indication that 
demand for the spectrum exists. Moreover, as a result of geographic 
area licensing on the upper 200 channels, there is a substantial demand 
for General Category channels among legitimate small SMR operators, 
including incumbents that relocate from the upper 200 channels.
    50. Discussion. The Commission continues to believe that the lower 
80 and General Category channels of the 800 MHz SMR service should be 
licensed through competitive bidding and open to all parties, as 
opposed to incumbents solely. The Commission has determined that it 
will maintain open eligibility and the requirement that incumbents 
participate in competitive bidding. The Commission believes that open 
eligibility will foster competition and result in a diverse group of 
800 MHz SMR providers, and that the competitive bidding process will 
adequately deter speculation. These rules are consistent with the rules 
for other CMRS services, and encourage the participation of diverse 
provider that are serious enough to meet the requirements of the 
competitive bidding process.
    51. The Commission does not believe that its approach will harm the 
interests of non-commercial licensees by requiring them to compete for 
spectrum with commercial systems. In the 800 MHz Second Report and 
Order, the Commission noted there are several ways in which non-SMRs 
can benefit from its geographic licensing rules. For example, non-
commercial operators may not only apply individually for geographic 
area licenses they may also participate in joint ventures (with other 
non-commercial operators or with commercial service providers) or 
obtain spectrum through partitioning and disaggregation to meet their 
spectrum needs. The Commission also expects that geographic area 
licensing of SMR and General Category spectrum will free up non-SMR 
spectrum in the 800 MHz band, providing more options for non-commercial 
operators where availability of General Category spectrum is limited. 
Finally, the Commission is continuing with its initiatives to provide 
sufficient spectrum for non-commercial operations through its Refarming 
proceeding.
    52. The Commission emphasizes that non-SMR operators are eligible 
to hold licenses in the lower 80 SMR channels, however these channels 
continue to be designated for SMR use only. While the Commission 
concludes that non-SMR are eligible for licensing, it emphasizes that 
this in no way affects its decision to license General Category and 
lower 80 channels geographically, with mutually exclusive applications 
reserved through competitive bidding with open eligibility.
3. Competitive Bidding Design
a. License Grouping
    53. Background. In the 800 MHz Second Report and Order, the 
Commission stated that ``to expedite the process of auctioning the 
lower 80 and General Category EA licenses, it would auction these 
licenses using the five regional groups that were used for the regional 
narrowband Personal Communications Services (PCS) auction: Northeast, 
South, Midwest, Central, and West.''
    54. Discussion. The Commission amends the method by which it will 
group licenses for auction. While the Commission continues to believe 
that licenses should be grouped for

[[Page 71049]]

competitive bidding purposes in a manner that will reduce the 
administrative burden on auction participants, particularly small 
businesses, the Commission will not use the five regional groups based 
on Basic Trading Areas that were used in the regional narrowband PCS 
auction. Instead, the Commission will direct the Bureau to determine, 
pursuant to its delegated authority, what groups, if any should be 
established for auctioning the lower 80 and General Category EA 
licenses. The Balanced Budget Act of 1997 provides that ``before the 
issuance of bidding rules,'' the Commission must provide adequate time 
for parties to comment on proposed auction procedures. It has been the 
Bureau's practice to issue a Public Notice seeking comment on auction-
specific operational issues well in advance of the application deadline 
for each auction. The Commission therefore concludes that the Bureau, 
under its existing delegated authority and in accordance with the 
Balanced Budget Act of 1997, should seek further comment on license 
grouping and auction sequence, prior to the start of the 800 MHz 
auction.
b. Upfront Payments
    55. Background. Currently, applicants have the option to check 
``all markets'' on their short-form applications but submit an upfront 
payment to cover only those licenses on which they actually intend to 
bid in any one round. Permitting the selection of ``all markets'' gives 
bidders the flexibility to pursue back-up strategies in the event they 
are unable to obtain their first choice of licenses.
    56. Discussion. The Commission has expressly rejected arguments 
made by those that oppose the use of an ``all markets'' box. A bidder 
must submit an upfront payment sufficient to meet the eligibility 
requirements for any combination of licenses on which it might wish to 
bid in a round. This rule forces bidders to make a payment that 
reflects their level of interest and protects against speculation. 
Moreover, the Commission continues to believe that bidders should have 
the flexibility to pursue back-up strategies if they are unable to 
obtain their first choice of licenses. As demonstrated by all recent 
auctions, providing bidders flexibility is crucial to an efficient 
auction and optimum license assignment. Therefore, the Commission will 
retain the current rules, which permit use of the ``all markets'' box 
and require an upfront-payment that corresponds to the number of 
licenses on which a bidder anticipates bidding in any one round.
c. Delegated Authority
    57. Background. In the 800 MHz Second Report and Order, the 
Commission delegated to the Bureau the authority to implement many of 
the Commission's rules pertaining to auctions procedures. This included 
the authority to conduct auctions; administer applications, payment, 
licenses, grant, and denial procedures; and determine upfront and down 
payment amounts.
    58. Discussion. The Commission notes that Sec. 0.131 of its rules 
gives delegated authority to the Bureau to implement all of the rules 
pertaining to auction procedures. The Commission concludes that the 
delegation of authority to the Bureau is valid as it concerns 
inherently procedural rather than substantive issues and is, therefore, 
in compliance with its rules. Furthermore, the Commission's delegation 
of authority is in compliance with the APA. Pursuant to 5 U.S.C. 
Section 553(b), an agency may modify procedural rules without notice 
and comment. Because the actions delegated to the Bureau are procedural 
in nature and do not affect the substantive rights of interested 
parties, the Commission's delegation of authority falls within that 
exception.
4. Treatment of Designated Entities
a. Installment Payments
    59. Background. In the 800 MHz Second Report and Order, the 
Commission deferred to its Part 1 proceeding the decision on whether to 
adopt installment payments in the lower 80 and General Category 
channels. The Commission determined in its Part 1 Third Report and 
Order, 63 FR 2315 (January 15, 1998), released in December of 1997, 
that installment payments should not be used in the immediate future as 
a means of financing small-business participation in its auction 
program.
    60. Discussion. In the Part 1 Third Report and Order, the 
Commission considered its use of installment payment plans for future 
auctions. On the basis of the record in that proceeding and the record 
developed on installment payment financing for the broadband PCS C 
block service and on recent decisions eliminating installment payment 
financing for LMDS and 800 MHz SMR (upper 200 channels), the Commission 
concluded that, until further notice, the Commission should no longer 
offer such plans as a means of financing small businesses and other 
designated entities seeking spectrum licenses. The Commission notes 
that this conclusion was subject to its request for comment in the 
Second Further Notice of Proposed Rulemaking portion of the Part 1 
Third Report and Order on installment payment issues and means other 
than bidding credits and installment payments by which the Commission 
might facilitate the participation of small businesses in its spectrum 
auction program.
    61. The Commission believes that the public interest is best served 
by going forward with the auction of the lower 80 and General Category 
channels without extending installment payments to licensees. In place 
of installment payments, the Commission established larger bidding 
credits to provide for the interests of small business bidders. The 
Commission believes that its adoption of the larger bidding credit both 
fulfills the mandate of Section 309(j) to provide small businesses with 
the opportunity to participate in auctions and ensure that new services 
are offered to the public without delay.
b. Designated Entity Provisions
    62. Background. In the 800 MHz Second Report and Order, the 
Commission sought comment on the type of designated entity provisions 
that should be incorporated into its competitive bidding procedures for 
the lower 80 and General Category channels. The Commission requested 
comment on the possibility that, in addition to small business 
provisions, separate provisions for women- and minority-owned entities 
should be adopted for the lower 80 and General Category channels. In 
the 800 MHz Second Report and Order, the Commission determined that it 
had not developed a record sufficient to sustain gender- and minority-
based measures in the lower 80 and General Category licenses based on 
the standard established by the Adarand decision. Additionally, the 
Commission noted the record was insufficient to support any gender-
based provisions under the intermediate scrutiny standard established 
in the VMI decision. Based upon the record in that proceeding, the 
Commission adopted bidding credits solely for applicants qualifying as 
small businesses. The Commission believed these provisions would 
provide small businesses with a meaningful opportunity to obtain 
licenses for the lower 80 and General Category channels. Moreover, many 
women- and minority-owned entities are small businesses and will 
therefore qualify for these provisions. As such, these provisions met 
Congress' goal of promoting wide dissemination of licenses in this 
spectrum.
    63. Discussion. In light of the Supreme Court's recent decisions, 
the

[[Page 71050]]

Commission considered its statutory obligations to (1) award spectrum 
licenses expeditiously and to promote the rapid deployment of new 
services to the public without judicial delays, and (2) disseminate 
licenses among a wide variety of applicants, including designated 
entities. The designated entity bidding credits adopted for the 800 MHz 
service are gender- and minority-neutral but specifically target small 
businesses. Auction results indicate that many of the small businesses 
participating in auctions are also women- and minority-owned, therefore 
effectively furthering Congress' objective of disseminating licenses 
among a wide variety of applicants.

V. Conclusion

    64. The Commission believes that the revisions and clarifications 
of its rules adopted in this Memorandum Opinion and Order on 
Reconsideration are necessary to finalize its implementation of a new 
licensing framework for SMR systems that strikes a fair and equitable 
balance between the competing interests of 800 MHz SMR licensees who 
seek to provide local service and those desiring to provide geographic 
area service. The Commission further believes that the revisions and 
clarifications of its rules will facilitate the rapid implementation of 
wide-area licensing in the SMR service and advance the public interest 
by fostering the economic growth of competitive new services.

VI. Procedural Matters

A. Regulatory Flexibility Act

    65. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared a Supplemental Final Regulatory Flexibility 
Analysis (Supplemental FRFA) of the possible impact on small entities 
of the changes in its rules adopted in this Memorandum Opinion and 
Order on Reconsideration. The Office of Public Affairs, Reference 
Operations Division, will send a copy of the Memorandum Opinion and 
Order on Reconsideration, including the Supplemental FRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration, in 
accordance with the RFA.

B. Paperwork Reduction Act of 1995 Analysis

    66. This Memorandum Opinion and Order on Reconsideration contains a 
modified information collection that the Commission is submitting to 
the Office of Management and Budget requesting clearance under the 
Paperwork Reduction Act of 1995.

VII. Supplemental Final Regulatory Flexibility Analysis

    67. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 
603, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated 
in the Second Further Notice of Proposed Rulemaking (Second Further 
Notice) in this proceeding. The Commission sought written public 
comment on the proposals in the Second Further Notice, including the 
IRFA. A Final Regulatory Flexibility Analysis (FRFA) was incorporated 
in Appendix D of the subsequent Second Report and Order in this 
proceeding. The Commission received eight petitions for reconsideration 
in response to the 800 MHz Second Report and Order. The Memorandum 
Opinion and Order on Reconsideration addresses those reconsideration 
petitions. This associated Supplemental Final Regulatory Flexibility 
Analysis (Supplemental FRFA) reflects revised or additional information 
to that contained in the FRFA. This Supplemental FRFA is thus limited 
to matters raised in response to the 800 MHz Second Report and Order 
and addressed in this Memorandum Opinion and Order on Reconsideration. 
This Supplemental FRFA conforms to the RFA, as amended by the Contract 
with America Advancement Act of 1996.

A. Need for and Purpose of this Action

    68. In the 800 MHz Second Report and Order, the Commission 
established a flexible regulatory scheme for the 800 MHz Specialized 
Mobile Radio (SMR) service to promote efficient licensing and enhance 
the service's competitive potential in the commercial mobile radio 
marketplace. The rules adopted, in the 800 MHz Second Report and Order, 
also implement Congress' goal of regulatory symmetry in the regulation 
of competing commercial mobile radio services (CMRS) as described in 
Sections 3(n) and 332 of the Communications Act of 1934, as amended, 47 
U.S.C. 153(n), 332 (Communications Act), as amended by Title VI of the 
Omnibus Budget Reconciliation Act of 1993. In the Second Report and 
Order, the Commission also adopted rules regarding competitive bidding 
for the remaining 800 MHz SMR spectrum based on Section 309(j) of the 
Communications Act, 47 U.S.C. 309(j), which authorizes the Commission 
to use auctions to select among mutually exclusive initial applications 
in certain services, including the 800 MHz SMR service. The actions 
taken in this Memorandum Opinion and Order on Reconsideration are in 
response to petitions for reconsideration or clarification of the 800 
MHz Second Report and Order. Throughout this proceeding, the Commission 
has sought to promote Congress' goal of regulatory parity for all 
commercial mobile radio services, and to encourage the participation of 
a wide variety of applicants, including small businesses, in the SMR 
industry. In addition, the Commission has sought to establish rules for 
the SMR 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.

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

    69. No reconsideration petitions were submitted in response to the 
FRFA. However, small business-related issues were raised indirectly by 
some parties filing petitions for reconsideration of the 800 MHz Second 
Report and Order. Several petitions concerned the potential impact of 
some of the Commission's proposals on small entities, especially on 
certain incumbent 800 MHz SMR licensees. In Section E, infra, the 
Commission describes its actions taken in response to petitions that 
raised small entity-related issues, as well as significant alternatives 
considered.
    70. In the 800 MHz Second Report and Order, the Commission adopted 
geographic area licensing for the lower 230 800 MHz SMR channels in 
order to facilitate the evolution of larger 800 MHz SMR systems 
covering wider areas and offering commercial services to rival other 
wireless telephony services. Some petitioners that were not SMR 
licensees opposed this plan arguing that it was unsuitable to the needs 
of smaller, private systems, which do not seek to cover large 
geographic areas in the manner of commercial service providers.
    71. In the 800 MHz Second Report and Order, the Commission adopted 
a portion of a proposal set forth by a number of incumbent 800 MHz SMR 
licensees (``Industry Proposal'') and allotted three contiguous 50-
channel blocks from the former General Category block of channels. Some 
petitioners argued that auctioning such large contiguous blocks would 
not suit the needs of smaller SMR and non-SMR systems, which typically 
trunk smaller numbers of non-contiguous channels. These petitioners 
argued that large blocks of contiguous channels could be

[[Page 71051]]

prohibitively expensive to bid for at auction, thereby limiting the 
opportunities for smaller operators to take advantage of geographic 
area licensing. One petitioner argued that the 150 General Category 
Channels should be auctioned on a single-channel basis.
    72. In the 800 MHz Second Report and Order, the Commission adopted 
construction requirements for the lower 230 channels requiring EA 
licensees to provide coverage to one-third of the population within 
three years of initial license grant and to two-thirds of the 
population within five years of license grant. However, as an 
alternative to meeting applicable construction requirements, the 
Commission allowed EA licensees in the lower 230 channels to provide 
``substantial service'' to their geographic license area within five 
years of license grant. The Commission found that more flexible 
construction requirements enhance rapid deployment of new technologies 
and services and will expedite service to rural areas. The Commission 
stated that a licensee could satisfy the substantial service 
requirement by demonstrating that it is providing a technologically 
innovative service or that it is providing service to unserved or 
underserved areas. Two petitioners argued that the Commission should 
eliminate the substantial service test and impose specific channel 
usage requirements.
    73. In the 800 MHz Second Report and Order, the Commission 
concluded that competitive bidding is an appropriate licensing 
mechanism for the Lower 80 channels and the General Category channels. 
Several petitioners request that the Commission use procedures other 
than competitive bidding to license the 800 MHz SMR service. In 
essence, petitioners contend that this band does not fit within the 
Congressional criteria for auctions because the General Category and 
lower 80 channels of the 800 MHz SMR band do not meet the original 
statutory criteria governing auctionability contained in Section 309(j) 
of the Communications Act, or the criteria as amended by the enactment 
of the Balanced Budget Act of 1997. Several petitioners contend that 
Section 309(j)(6)(E) of the Communications Act prohibits the Commission 
from conducting an auction unless it first attempts alternative 
licensing mechanisms to avoid mutual exclusivity.
    74. Several petitioners contend that the Commission should limit 
participation in the 800 MHz SMR auction to SMR and/or non-SMR 
incumbents. PCIA, for example, believes that the Commission should 
limit eligibility for geographic area licenses to those incumbent 
licensees who provide coverage to 70 percent of their market areas. It 
further argues that the rules adopted in the 800 MHz Second Report and 
Order will encourage the filing of applications for anti-competitive or 
speculative purposes, which may result in high license costs and 
degradation of service to the public.
    75. Two petitioners contended that the Commission should retain 
installment payments for the lower 80 and General Category 800 MHz SMR 
licenses on the grounds that installment payments are the most 
significant option for the provision of meaningful small business 
participation in the spectrum auctions as they allow SMR operators to 
pay for the license out of the profits generated through the provision 
of SMR service. In the Part 1 Third Report and Order, released in 
December of 1997, the Commission subsequently determined that 
installment payments should not be used in the immediate future as a 
means of financing small-business participation in the auction program.
    76. Finally, one petitioner argued that, in addition to small 
business provisions, separate bidding credit provisions for women- and 
minority-owned entities should be adopted for the lower 80 and General 
Category channels.

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

    77. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the Commission's rules. The RFA 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. 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 established by the Small Business 
Administration (SBA). A small organization is generally ``any not-for-
profit enterprise which is independently owned and operated and is not 
dominant in its field.'' Nationwide, as of 1992, there were 
approximately 275,801 small organizations. ``Small governmental 
jurisdiction'' generally means ``governments of cities, counties, 
towns, townships, villages, school districts, or special districts, 
with a population of less than 50,000.'' As of 1992, there were 
approximately 85,006 such jurisdictions in the United States. This 
number includes 38,978 counties, cities, and towns; of these, 37,566, 
or 96 percent, have populations of fewer than 50,000. The Census Bureau 
estimates that this ratio is approximately accurate for all 
governmental entities. Thus, of the 85,006 governmental entities, the 
Commission estimate that 81,600 (91 percent) are small entities.
    78. The rules adopted in the Memorandum Opinion and Order on 
Reconsideration will affect all small entities that hold or seek to 
acquire 800 MHz SMR licenses. Under these rules, Economic Area (EA) 
licenses will be granted on a market area basis, instead of site-by-
site and mutually exclusive applications will be resolved through 
competitive bidding procedures. As noted, a FRFA was incorporated into 
the 800 MHz Second Report and Order. In that analysis, the Commission 
described the small entities that might be significantly affected at 
that time by the rules adopted in the 800 MHz Second Report and Order. 
Those entities include existing, 800 MHz SMR operators and new entrants 
into the 800 MHz SMR market. To ensure the more meaningful 
participation of small business entities in the auction for geographic 
area 800 MHz SMR licenses, the Commission, adopted a two-tiered 
definition of small businesses in the 800 MHz Second Report and Order. 
A very small business will be defined as an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
for the three preceding years of not more than $3 million. A small 
business will be defined as an entity that, together with affiliates 
and controlling principals, has average gross revenues for the three 
preceding years of not more than $15 million. The Small Business 
Administration (SBA) has approved these definitions for the lower 80 
SMR channels and General Category channels.
    79. Based on the revised channelization plan adopted in the 
Memorandum Opinion and Order on Reconsideration, the Commission 
anticipates that a total of 3,850 EA licenses will be auctioned in the 
lower 230 channels of the 800 MHz SMR service. This figured is derived 
by multiplying the total number of EAs (175) by the number of channel 
blocks (22) in the lower 230 channels. No party submitting or 
commenting on the petitions for reconsideration giving rise to this 
Memorandum Opinion and Order on Reconsideration commented on the 
potential number of small entities that might participate in the 
auction of the lower 230 channels and no reasonable estimate can be 
made.

[[Page 71052]]

    80. The Commission does not know how many 800 MHz SMR service 
providers have annual revenues of no more than $15 million. One firm 
has over $15 million in revenues. In the auction of the upper 200 
channels of the 800 MHz SMR service, there were 524 licenses won by 
winning bidders, of which 38 licenses were won by small or very small 
businesses. There is no basis to determine, of the 3,850 geographic 
area licenses to be auctioned in the lower 230 channels, the number of 
licenses that will be awarded to small or very small businesses.

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

    81. With one exception, this Memorandum Opinion and Order on 
Reconsideration does not impose any additional recordkeeping or other 
compliance requirements beyond the requirements contained in the 800 
MHz Second Report and Order. Incumbent licensees seeking to utilize an 
18 dB signal strength interference contour and that are 
unsuccessful in obtaining the consent of affected co-channel 
incumbents, may submit to any certified frequency coordinator an 
engineering study showing that interference will not occur, together 
with proof that the incumbent licensee has sought consent.

E. Steps Taken to Minimize Any Significant Economic Burdens on Small 
Entities, and Significant Alternatives Considered

    82. In awarding geographic area 800 MHz licenses in the lower 230 
channels, the Commission is committed to meeting the statutory 
objectives of promoting economic opportunity and competition, of 
avoiding excessive concentration of licenses, and of ensuring access to 
new and innovative technologies by disseminating licenses among a wide 
variety of applicants, including small businesses, rural telephone 
companies, and businesses owned by members of minority groups and 
women. In order to ensure the more meaningful participation of small 
business entities in the 800 MHz auctions, the Commission has adopted a 
two-tier definition of small businesses. This approach will give 
qualifying small businesses bidding flexibility. Small businesses will 
receive a 25 percent bidding credit and very small businesses will 
receive a 35 percent bidding credit.
    83. A number of petitioners requested that the Commission 
reconsider its decision to license the 150 General Category channels in 
three contiguous 50-channel blocks. These petitioners generally 
supported the licensing of smaller channel blocks as a means of 
enabling small businesses and new entrants to acquire spectrum in the 
800 MHz SMR service. Recognizing these concerns, the Commission has 
determined that the General Category channels will be licensed in six 
contiguous 25-channel blocks, rather than three contiguous 50-channel 
blocks. A significant portion of incumbent licensees on the General 
Category frequencies are small businesses and are licensed for only a 
few channels in the band. Auctioning licenses for General Category 
Channels in smaller channel blocks will provide these small business 
incumbents with greater opportunities to take advantage of geographic 
area licensing. In addition, it will encourage new entrant 
participation in the provision of 800 MHz services. Changing the block 
size from 50 channels to 25 channels will provide small entities with 
the opportunity to acquire smaller amounts of spectrum consistent with 
their financial means and technological needs. By further facilitating 
small business and new entrant participation in the provision of 800 
MHz services, this channel plan fulfills the Commission's statutory 
mandate of promoting economic opportunity for a wide variety of 
applicants and avoiding an excessive concentration of licenses. At the 
same time, licensing in 25-channel blocks will allow entities desiring 
large contiguous blocks of spectrum to pursue such spectrum in the 
General Category.
    84. In concluding that licensing the General Category channels in 
blocks of 25 strikes a better balance between the competing needs of 
different licensees, the Commission also rejected one petitioner's 
proposal to license channels on an individual basis. The Commission 
does not believe the public interest would be served by licensing on a 
channel-by-channel basis, because this method of licensing would be 
administratively burdensome given the large number of channels 
involved. Single channel licensing would also be inconsistent with the 
needs of applicants that require blocks of contiguous spectrum and 
would not foster the kind of technological advancements that would 
allow SMR licensees, which typically operate multichannel systems, to 
compete with other CMRS licensees.
    85. In the 800 MHZ Second Report and Order, the Commission adopted 
construction requirements for the lower 230 channels that required EA 
licensees to provide coverage to one-third of the population within 
three years of initial license grant and to two-thirds of the 
population within five years of license grant. However, as an 
alternative to those construction requirements, the Commission stated 
that EA licensees in the lower 230 channels could provide ``substantial 
service'' to their geographic license area within five years of license 
grant. One petitioner asked the Commission to eliminate the substantial 
service test and require that construction standards be met on a ``per 
channel'' basis. The Commission has rejected the petitioner's request 
because the Commission believes that maintaining the substantial 
service option as an alternative to meeting applicable construction 
requirements will facilitate build-out in rural areas, encourage 
licensees to provide new service, 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. Giving licensees 
flexibility to satisfy the ``substantial service'' option in different 
ways should benefit small businesses.
    86. In the Second Report and Order, the Commission concluded that 
incumbent licensees may add or modify sites within their existing 22 
dB interference contours without prior Commission approval, 
and may use their 18 dB interference contour as the basis for 
modifying or expanding their systems provided that they obtain the 
consent of all co-channel incumbents potentially affected by the use of 
this standard. Three petitioners suggested that the Commission clarify 
that an incumbent licensee on the lower 230 channels seeking to modify 
its system using its 18 dB interference contour may, in the 
absence of consent from affected incumbents, provide a statement from a 
certified frequency advisory committee that a modification will not 
cause interference to adjacent licensees. In response to this request 
the Commission clarified that incumbent licensees seeking to utilize an 
18 dB signal strength interference contour and that are 
unsuccessful in obtaining the consent of affected co-channel 
incumbents, may submit to any certified frequency coordinator an 
engineering study showing that interference will not occur together 
with proof that the incumbent licensee has sought consent. Adopting 
this alternative will provide a balance between incumbent licensee 
flexibility and incumbent licensee

[[Page 71053]]

protection, including small business incumbent licensees. This 
alternative reduces unnecessary regulatory burdens on licensees and 
administrative costs on the industry, and thereby benefits consumers.
    87. Two petitioners contended that incumbents' geographic licenses 
should include areas where an incumbent's interference contours do not 
overlap, but where no other licensee could place a transmitter because 
of the Commission's 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 its 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 of geographic area licenses or seek 
partitioning agreements with geographic area licensees.
    88. A number of petitioners have requested that the Commission 
reconsider its decision to grant mutually exclusive applications for 
geographic area licenses in the lower 230 channels through competitive 
bidding. Balancing various interests, the Commission has affirmed the 
use of competitive bidding to grant mutually exclusive 800 MHz SMR 
licenses. The Commission also reaffirms its conclusion in the 800 MHz 
Second Report and Order that mutually exclusive applications for the 
lower 230 channels are auctionable under the Commission's auction 
authority, as amended by the Balanced Budget Act of 1997. Under the 
Commission's rules, incumbent licensees and potential new providers of 
this service, including small businesses, will be able to participate 
in the auction process because the Commission has decided not to 
restrict eligibility for EA licenses.
    89. Some petitioners contend that the administrative procedures 
associated with assigning geographic area licenses through auctions are 
not as efficient as site-specific licensing. The Commission disagrees 
with those petitioners and reiterates the advantages to both the 
Commission and licensees of geographic area licensing. The Commission 
again emphasizes that geographic area licensing offers a flexible, 
licensing scheme that eliminates the need for many of the complicated 
and burdensome licensing procedures that hampered SMR development in 
the past. Small businesses will be among those licensees that will 
benefit from the advantages of a flexible and less burdensome licensing 
scheme.
    90. Several petitioners asked the Commission to limit participation 
in the 800 MHz SMR auction to SMR and/or non-SMR incumbents. The 
Commission specifically considered and rejected a proposal to limit 
eligibility for geographic area licenses to incumbents providing 
coverage to 70 percent or more of their market areas. In rejecting 
these proposals, the Commission concluded that market forces, not 
regulation, should determine participation in competitive bidding for 
geographic area licenses. The Commission concluded that the competitive 
bidding process will adequately deter speculation and that open 
eligibility will foster competition and result in a diverse group of 
800 MHz SMR providers, including small businesses.
    91. In the 800 MHz Second Report and Order, the Commission stated 
that to expedite the auctioning of EA licenses for the lower 230 
channels, the Commission would auction these licenses using the five 
regional groups that were used for the regional narrowband Personal 
Communications Services (PCS) auction. On reconsideration, the 
Commission clarifies the method by which the Commission will group 
licenses for auction. While the Commission continues to believe that 
licenses should be grouped for competitive bidding purposes in a manner 
that will reduce the administrative burden on auction participants, 
particularly small businesses, the Commission will not use the five 
regional groups based on Basic Trading Areas that were used in the 
regional narrowband PCS auction. Instead, the Commission direct the 
Bureau to seek comment on license groupings and determine, pursuant to 
its delegated authority, what groups, if any, should be established for 
auctioning the lower 80 and General Category EA licenses.
    92. The Commission declined to reconsider its decision in the Part 
1 Third Report and Order to suspend the availability of installment 
payment financing for small businesses participating in the auction of 
the lower 230 channels of the 800 MHz SMR service. To balance the 
impact of this decision on small businesses, in the 800 MHz Second 
Report and Order, the Commission established larger bidding credits for 
qualifying entities. The Commission believes that the larger bidding 
credit will provide small businesses with adequate opportunities to 
participate in the 800 MHz SMR auction.
    93. The Commission has also rejected one petitioner's contention 
that the Commission is required to incorporate gender- and minority-
based provisions into its competitive bidding procedures. Recent U.S. 
Supreme Court decisions has created legal uncertainty on whether 
special auction provisions for minorities and women could withstand a 
constitutional challenge. The designated entity bidding credits adopted 
for the 800 MHz service are gender- and minority-neutral but 
specifically target small businesses. Auction results indicate that 
many of the small businesses participating in auctions are also women- 
and minority-owned, therefore effectively furthering Congress' 
objective of disseminating licenses among a wide variety of applicants.

F. Report to Congress

    94. The Commission will send a copy of this Memorandum Opinion and 
Order on Reconsideration, 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 Memorandum Opinion and Order on Reconsideration, including this 
Supplemental FRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration.

VIII. Ordering Clauses

    95. Authority for issuance of this Memorandum Opinion and Order on 
Reconsideration is contained in Sections 4(i), 303(r), and 309(j) of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 
309(j).
    96. Accordingly, it is ordered that the petitions for 
reconsideration or clarification filed by the parties listed in the 
attachment are granted in part to the extent provided herein, and 
otherwise are denied.
    97. It is furthered ordered that the Commission's rules, are 
amended. It is further ordered that the provisions of this Memorandum 
Opinion and Order on Reconsideration and the Commission's rules, as 
amended in the rule changes, shall become effective February 18, 2000.
    98. It is furthered ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Memorandum Opinion and Order on Reconsideration, including the 
Supplemental Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 90

    Administrative practice and procedure, Business and industry,

[[Page 71054]]

Common carriers, Communications equipment, Radio.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Part 90 of Chapter 1 of Title 47 of the Code of Federal Regulations 
is amended as follows:

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

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

    Authority: Secs. 4, 251-2, 303, 309, and 332, 48 Stat. 1066, 
1082, as amended; 47 U.S.C. 154, 251-2, 303, 309 and 332, unless 
otherwise noted.

    2. Section 90.615 is revised to read as follows:


Sec. 90.615  Spectrum blocks available in the General Category for 800 
MHz SMR General Category.

       Table 1.--806-821/851-866 MHz Band Channels (150 Channels)
------------------------------------------------------------------------
              Spectrum block                        Channel Nos.
------------------------------------------------------------------------
D.........................................  1 through 25
D1........................................  26 through 50
E.........................................  51 through 75
E1........................................  76 through 100
F.........................................  101 through 125
F1........................................  126 through 150
------------------------------------------------------------------------

    3. Section 90.619 is amended by revising the ``General Category (12 
Channels)'' entries in Table 4A in paragraph (a)(5), Table 12 in 
paragraph (b)(8), the ``General Category (5 Channels)'' entries in 
Table 16 in paragraph (b)(9), Table 20 in paragraph (b)(10), and the 
``General Category (18 Channels)'' entries in Table 24 in paragraph 
(b)(11) to read as follows:


Sec. 90.619  Frequencies available for use in the U.S./Mexico and U.S/
Canada border areas.

    (a) * * *
    (5) * * *

 Table 4A.--United States-Mexico Border Area, SMR and General Categories
                 806-821/851-866 MHz Band (95 Channels)
                  [EA-Based SMR Category (83 Channels)]
                              *  *  *  *  *
------------------------------------------------------------------------
              Spectrum Block                        Channel Nos.
------------------------------------------------------------------------
                     General Category (12 Channels)
------------------------------------------------------------------------
D.........................................  275-315
D1........................................  355-395
E.........................................  276-316
E1........................................  356-396
F.........................................  277-317
F1........................................  357-397
------------------------------------------------------------------------

    (b) * * *
    (8) * * *

           Table 12.--SMR and General Categories--95 Channels
                          [Regions 1, 4, 5, 6]
------------------------------------------------------------------------
              Spectrum block                        Channel Nos.
------------------------------------------------------------------------
                  EA-Based SMR Category (90 Channels)
------------------------------------------------------------------------
A.........................................  None
B.........................................  463 through 480
C.........................................  493 through 510, 523 through
                                             540, 553 through 570, 583
                                             through 600
G through V...............................  None
------------------------------------------------------------------------
                     General Category (5 Channels)
------------------------------------------------------------------------
D.........................................  None
D1........................................  30
E.........................................  60
E1........................................  90
F.........................................  120
F1........................................  150
------------------------------------------------------------------------

    (9) * * *

           Table 16.--SMR and General Categories--60 Channels
                               [Region 2]
                              *  *  *  *  *
------------------------------------------------------------------------
              Spectrum Block                        Channel Nos.
------------------------------------------------------------------------
                      General Category (5 Channels)
------------------------------------------------------------------------
D.........................................  18
D1........................................  36
E.........................................  54-72
E1........................................  90
F.........................................  None
F1........................................  None
------------------------------------------------------------------------

    (10) * * *

          Table 20.--SMR and General Categories (135 Channels)
                               [Region 3]
------------------------------------------------------------------------
              Spectrum Block                        Channel Nos.
------------------------------------------------------------------------
                       SMR Category (120 Channels)
------------------------------------------------------------------------
A.........................................  417 through 420
B.........................................  421 through 440, 457 through
                                             480
C.........................................  497 through 520, 537 through
                                             560, 577 through 600
G through V...............................  None
------------------------------------------------------------------------
                     General Category (15 Channels)
------------------------------------------------------------------------
D.........................................  38-39-40
D1........................................  158-159
E.........................................  78-79-80
E1........................................  160-198
F.........................................  118-119-120
F1........................................  199-200
------------------------------------------------------------------------

    (11) * * *

   Table 24.--(Regions 7,8) SMR and General Categories--190 Channels
                              *  *  *  *  *
------------------------------------------------------------------------
              Spectrum Block                        Channel Nos.
------------------------------------------------------------------------
                     General Category (18 Channels)
------------------------------------------------------------------------
D.........................................  35 through 37
D1........................................  38 through 40
E.........................................  75 through 77
E1........................................  78 through 80
F.........................................  115 through 117
F1........................................  118 through 120
------------------------------------------------------------------------

* * * * * *
    4. Section 90.621 is amended by revising paragraphs (b) 
introductory text, (b)(1) and (b)(3) introductory text to read as 
follows:


Sec. 90.621  Selection and assignment of frequencies.

* * * * *
    (b) Stations authorized on frequencies listed in this Subpart, 
except for those stations authorized pursuant to paragraph (g) of this 
section and EA-based and MTA-based SMR systems, will be afforded 
protection solely on the basis of fixed distance separation criteria. 
For Channel Blocks A, through V, as set forth in Sec. 90.917(d), the 
separation between co-channel systems will be a minimum of 113 km (70 
mi) with one exception. For incumbent licensees in Channel Blocks D 
through V, that have received the consent of all affected parties or a 
certified frequency coordinator to utilize an 18 dBV/m signal 
strength interference contour (see Sec. 90.693), the separation between 
co-channel systems will be a minimum of 173 km (107 mi). The following 
exceptions to these separations shall apply:
    (1) Except as indicated in paragraph (b)(4) of this section, no 
station in Channel Blocks A through V shall be less than 169 km (105 
mi) distant from a co-channel station that has been

[[Page 71055]]

granted channel exclusivity and authorized 1 kW ERP on any of the 
following mountaintop sites: Santiago Peak, Sierra Peak, Mount Lukens, 
Mount Wilson (California). Except as indicated in paragraph (b)(4) of 
this section, no incumbent licensee in Channel Blocks D through V that 
has received the consent of all affected parties or a certified 
frequency coordinator to utilize an 18 dBV/m signal strength 
interference contour shall be less than 229 km (142 mi) distant from a 
co-channel station that has been granted channel exclusivity and 
authorized 1 kW ERP on any of the following mountaintop sites: Santiago 
Peak, Sierra Peak, Mount Lukens, Mount Wilson (California).
* * * * *
    (3) Except as indicated in paragraph (b)(4) of this section, 
stations in Channel Blocks A through V that have been granted channel 
exclusivity and are located in the State of Washington at the locations 
listed below shall be separated from co-channel stations by a minimum 
of 169 km (105 mi). Except as indicated in paragraph (b)(4) of this 
section, incumbent licensees in Channel Blocks D through V that have 
received the consent of all affected parties or a certified frequency 
coordinator to utilize an 18 dBV/m signal strength 
interference contour, have been granted channel exclusivity and are 
located in the State of Washington at the locations listed below shall 
be separated from co-channel stations by a minimum of 229 km (142 mi). 
Locations within one mile of the geographical coordinates listed in the 
table below will be considered to be at that site.
* * * * *
    5. Section 90.693 is revised to read as follows:


Sec. 90.693  Grandfathering provisions for incumbent licensees.

    (a) General provisions. These provisions apply to ``incumbent 
licensees'', all 800 MHz licensees authorized in the 806-821/851-866 
MHz band who obtained licenses or filed applications on or before 
December 15, 1995.
    (b) Spectrum blocks A through V. An incumbent licensee's service 
area shall be defined by its originally licensed 40 dBV/m 
field strength contour and its interference contour shall be defined as 
its originally-licensed 22 dBV/m field strength contour. The 
``originally-licensed'' contour shall be calculated using the maximum 
ERP and the actual height of the antenna above average terrain (HAAT) 
along each radial. Incumbent licensees are permitted to add, remove or 
modify transmitter sites within their original 22 dBV/m field 
strength contour without prior notification to the Commission so long 
as their original 22 dBV/m field strength contour is not 
expanded and the station complies with the Commission's short-spacing 
criteria in Secs. 90.621(b)(4) through 90.621(b)(6). Incumbent licensee 
protection extends only to its 40 dBV/m signal strength 
contour. Pursuant to the minor modification notification procedure set 
forth in 1.947(b), the incumbent licensee must notify the Commission 
within 30 days of any changes in technical parameters or additional 
stations constructed that fall within the short-spacing criteria. See 
47 CFR 90.621(b).
    (c) Special provisions for spectrum blocks D through V. Incumbent 
licensees that have received the consent of all affected parties or a 
certified frequency coordinator to utilize an 18 dBV/m signal 
strength interference contour shall have their service area defined by 
their originally-licensed 36 dBV/m field strength contour and 
their interference contour shall be defined as their originally-
licensed 18 dBV/m field strength contour. The ``originally-
licensed'' contour shall be calculated using the maximum ERP and the 
actual HAAT along each radial. Incumbent licensees seeking to utilize 
an 18 dBV/m signal strength interference contour shall first 
seek to obtain the consent of affected co-channel incumbents. When the 
consent of a co-channel licensee is withheld, an incumbent licensee may 
submit to any certified frequency coordinator an engineering study 
showing that interference will not occur, together with proof that the 
incumbent licensee has sought consent. Incumbent licensees are 
permitted to add, remove or modify transmitter sites within their 
original 18 dBV/m field strength contour without prior 
notification to the Commission so long as their original 18 
dBV/m field strength contour is not expanded and the station 
complies with the Commission's short-spacing criteria in 
Secs. 90.621(b)(4) through 90.621(b)(6). Incumbent licensee protection 
extends only to its 36 dBV/m signal strength contour. Pursuant 
to the minor modification notification procedure set forth in 1.947(b), 
the incumbent licensee must notify the Commission within 30 days of any 
changes in technical parameters or additional stations constructed that 
fall within the short-spacing criteria. See 47 CFR 90.621(b).
    (d) Consolidated license--(1) Spectrum blocks A through V. 
Incumbent licensees operating at multiple sites may, after grant of EA 
licenses has been completed, exchange multiple site licenses for a 
single license, authorizing operations throughout the contiguous and 
overlapping 40 dBV/m field strength contours of the multiple 
sites. Incumbents exercising this license exchange option must submit 
specific information on Form 601 for each of their external base sites 
after the close of the 800 MHz SMR auction. The incumbent's geographic 
license area is defined by the contiguous and overlapping 22 
dBV/m contours of its constructed and operational external 
base stations and interior sites that are constructed within the 
construction period applicable to the incumbent. Once the geographic 
license is issued, facilities that are added within an incumbent's 
existing footprint and that are not subject to prior approval by the 
Commission will not be subject to construction requirements.
    (2) Special Provisions for Spectrum Blocks D through V. Incumbent 
licensees that have received the consent of all affected parties or a 
certified frequency coordinator to utilize an 18 dBV/m signal 
strength interference contour operating at multiple sites may, after 
grant of EA licenses has been completed, exchange multiple site 
licenses for a single license. This single site license will authorize 
operations throughout the contiguous and overlapping 36 dBV/m 
field strength contours of the multiple sites. Incumbents exercising 
this license exchange option must submit specific information on Form 
601 for each of their external base sites after the close of the 800 
SMR auction. The incumbent's geographic license area is defined by the 
contiguous and overlapping 18 dBV/m contours of its 
constructed and operational external base stations and interior sites 
that are constructed within the construction period applicable to the 
incumbent. Once the geographic license is issued, facilities that are 
added within an incumbent's existing footprint and that are not subject 
to prior approval by the Commission will not be subject to construction 
requirements.
    6. Section 90.903 is amended by revising paragraph (b)(1) to read 
as follows:


Sec. 90.903  Competitive bidding mechanisms.

* * * * *
    (b) Grouping. (1) All EA licenses for Spectrum Blocks A through V 
will be auctioned simultaneously, unless the Wireless 
Telecommunications Bureau announces, by Public Notice prior to the

[[Page 71056]]

auction, an alternative method of grouping these licenses for auction.
* * * * *
[FR Doc. 99-32841 Filed 12-17-99; 8:45 am]
BILLING CODE 6712-01-P