[Federal Register Volume 65, Number 149 (Wednesday, August 2, 2000)]
[Rules and Regulations]
[Pages 47349-47355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19479]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[FCC 00-209]


Extending Wireless Telecommunications Services to Tribal Lands

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Federal Communications Commission adopts rules and 
policies that provide incentives for wireless telecommunications 
carriers to serve individuals living on tribal lands.

DATES: The rules are effective October 2, 2000.

FOR FURTHER INFORMATION CONTACT: Davida Grant, Commercial Wireless 
Division, Wireless Telecommunications Bureau, Federal Communications 
Commission, 202-418-7050, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: Recognizing the unusually low telephone 
service penetration rates on tribal lands, the Commission released a 
Notice of Proposed Rulemaking on August 18, 1999, 64 FR 49128, seeking 
comment on the potential of various wireless technologies to provide 
service to tribal lands with low penetration rates. Specifically, the 
Notice sought comment on a variety of potential regulatory initiatives 
to encourage existing and new entrants to serve tribal lands, 
including: (1) Relaxing licensing and operational rules; (2) using 
unallocated spectrum to serve tribal residents; (3) awarding bidding 
credits as an incentive; (4) drawing geographic boundaries for spectrum 
licensing that recognize tribal boundaries; and (5) adopting satellite 
licensing policies to facilitate access to telecommunications services.
    The record in this proceeding demonstrates that there is a 
substantial need for specific incentives targeted to the deployment of 
service on tribal lands. By virtually any measure, communities on 
tribal lands have historically had less access to telecommunications 
services than any other segment of the population. According to the 
1990 Census, 23 of the 48 largest tribal reservations (those with 500 
or more households) had telephone penetration rates below 60 percent, 
and 16 of these reservations had a penetration rate below 50 percent. 
Penetration rates at several of the largest reservations are lower 
still: 18.4 percent on the Navajo Reservation and Trust Lands in 
Arizona, New Mexico, and Utah; and 22.2 percent on the Gila River 
Reservation in Arizona. By contrast, the current nationwide telephone 
penetration rate is 94 percent.
    The Report and Order adopts rules and policies that provide 
incentives for wireless telecommunications carriers to serve 
individuals living on tribal lands. Specifically, the Report and Order 
expands the Commission's bidding credit policy to make bidding credits 
available to winning bidders who use their licenses to deploy 
facilities and provide service to federally-recognized tribal lands 
that have a telephone penetration rate equal to or below 70 percent 
(``qualifying tribal land''). Applicants who qualify for the tribal 
lands bidding credit may obtain this credit in addition to any other 
generally available bidding credit for which they are available.
    The credit amount will be based on infrastructure costs and 
geographic area. A winning bidder may receive a $300,000 credit for up 
to the first 200 square miles (518 square kilometers) of qualifying 
tribal land within its license area. In instances where qualifying 
tribal lands within a license area exceed 200 square miles (518 
kilometers), a winning bidder may receive an additional $1500 per 
square mile (2.59 square kilometer), or $300,000 for each additional 
200 square miles (518 square kilometers). All credits will be subject 
to a maximum limit based on the gross bid amount for the license for 
which the credit is sought. Where the gross bid amount is $1 million or 
less, the cap will be 50 percent of the gross bid. Where the gross bid 
amount is greater than $1 million and equal to or less than $2 million, 
the cap will be $500,000. Finally, where the gross bid amount exceeds 
$2 million, the cap will be 25 percent of the gross bid. The credit 
will be subtracted from the applicant's final payment and will not 
impact the amount of the down payment required under Sec. 1.2107 of our 
rules. 47 CFR 1.2107. The Commission will entertain waiver request for 
a higher credit where an applicant demonstrates that its infrastructure 
costs exceed the available credit under the formula. However, we will 
not grant waivers in excess of the applicable percentage caps.
    A winning bidder interested in obtaining the tribal lands bidding 
credit for particular market must indicate on its long form application 
that it intends to serve qualifying tribal lands in that market. To 
receive the credit, an applicant must amend its long-form application 
within 90 days of the filing deadline for long-form applications to 
certify that it will comply with the bidding credit buildout 
requirements adopted in the Report and Order and consult with the 
tribal government(s) regarding the deployment of facilities and service 
on the tribal land. The applicant also must attach a certification from 
the tribal government that its land is a qualifying tribal land, that 
it will not enter into an exclusive agreement with the carrier 
precluding entry by other carriers or unreasonably discriminate against 
any carrier, and that it will consent to allow the applicant to deploy 
facilities on its tribal land. This requirement does not preclude 
tribal governments from

[[Page 47350]]

negotiating additional reasonable terms and conditions with carriers. 
After these certifications are received, the Commission will award the 
bidding credit and the applicant will pay the final net adjusted bid 
amount, which equals the gross high bid less the tribal lands bidding 
credit (for applicants entitled to the small business bidding credit, 
the final net adjusted bid equals the net high bid less the tribal 
lands bidding credit).
    To retain the credit, any recipient of this bidding credit must 
file a notification of construction within 15 days of the third 
anniversary of the initial grant of its license that it has constructed 
and is operating a system capable of serving 75 percent of the 
population of the qualifying tribal land for which the credit was 
awarded. A licensee failing to comply with this condition will be 
required to repay the bidding credit plus interest 30 days after the 
conclusion of the three-year buildout period.
    Licensees granted a higher credit pursuant to a waiver must also 
file a certification that the credit amount was spent on infrastructure 
to provide wireless coverage to qualifying tribal lands. This 
certification should include a final report prepared by an independent 
auditor retained by the licensee verifying that the infrastructure 
costs are reasonable to comply with our buildout requirements. If the 
credit amount obtained by waiver exceeds the infrastructure costs of 
providing service to a qualifying tribal land, the licensee must pay 
the difference between the credit amount and the infrastructure costs.
    In addition, the Report and Order expresses the Commission's 
commitment to work with carriers seeking flexibility under our 
technical and operational rules to promote deployment of wireless 
services on tribal lands. We believe that parties should seek waivers 
of specific rules or file other requests for regulatory in instances 
where greater flexibility than the rules allows would facilitate the 
provision of service to tribal lands.
    In cases where it would facilitate provisions of service to tribal 
lands, we specifically encourage carriers to seek such relief from the 
following rules: (1) Antenna height/power and other operational 
requirements; (2) buildout requirements, (3) private (non-CMRS) service 
policies; and (4) satellite policies. We also encourage applicants 
seeking to expand coverage into adjacent licensing areas to file 
waivers where such relief would facilitate the provision of service to 
tribal lands. Parties seeking a waiver are encouraged to provide 
evidence of an agreement with tribal authorities that includes a 
commitment to serve the tribal lands. Lastly, we commit to considering 
tribal land boundaries in establishing license areas for future 
services to avoid splitting tribal lands into multiple licensing areas.
    Contemporaneous with the Report and Order, the Commission has 
issued a Further Notice of Proposed Rulemaking (published elsewhere in 
this publication) wherein it seeks comment on additional auctions-based 
incentives it could adopt to encourage the deployment of wireless 
telecommunications services to tribal and other underserved areas.

Final Regulatory Flexibility Analysis

    As required by section 603 of the Regulatory Flexibility Act 
(RFA),\1\ an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rulemaking (Notice) in WT Docket 
No. 99-266.\2\ The Commission sought written comment on the policies 
and rules proposed in the Notice, including comment on the IRFA. The 
comment received is discussed below. This Final Regulatory Flexibility 
Analysis (FRFA) for the Report and Order conforms to the RFA.\3\
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    \1\ See 5 U.S.C. 603. The RFA, see 5 USC 601 et seq., has been 
amended by the Contract With America Advancement Act of 1996, Public 
Law No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA 
is the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA).
    \2\ Extending Wireless Telecommunications Services to Tribal 
Lands, Notice of Proposed Rulemaking, WT Docket No. 99-266 (rel. 
Aug. 18, 1999).
    \3\ See 5 U.S.C. 604.
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A. Need for, and Objectives of, the Report and Order

    The record in this proceeding demonstrates that there is a 
substantial need for specific incentives targeted to the deployment of 
service on tribal lands. By virtually any measure, communities on 
tribal lands have historically had less access to telecommunications 
services than any other segment of the population. As set forth in 
Section III.A of the Report and Order, 1990 Census data indicates that 
23 of the 48 largest tribal reservations (those with 500 or more 
households) had telephone penetration rates below 60 percent, and 16 of 
these reservations had a penetration rate below 50 percent. By 
contrast, the current nationwide telephone penetration rate is 94 
percent. We believe telephone service is a necessity in today's world. 
The lack of basic telecommunications services puts affected tribal 
communities at a social and economic disadvantage.
    The Report and Order adopts rules and policies that provide 
incentives for wireless telecommunications carriers to serve 
individuals living on tribal lands. We make bidding credits available 
in future auctions to winning bidders who commit to deploy facilities 
to tribal areas that have a telephone service penetration rate at or 
below 70 percent. We also express our commitment to work with carriers 
seeking flexibility under our technical and operational rules to 
promote deployment of wireless services on tribal lands.

B. Summary of Significant Issues Raised by Public Comment in Response 
to the IRFA

    The U.S. Small Business Administration, Office of Advocacy (SBA), 
submitted a response to the IRFA. SBA argues that the Commission's IRFA 
was insufficient because it did not assess the significant economic 
impact certain proposals may have on small businesses nor did it 
propose alternatives that might minimize any impact.\4\ SBA also argues 
more specifically that the Commission's proposal to lift designated 
entity (DE) transfer restrictions may disadvantage small businesses.\5\ 
Further, SBA claims that the proposal to award bidding credits to any 
entity, regardless of size, that commits to serve tribal lands may 
provide big businesses an unfair advantage.\6\
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    \4\ SBA Comments at 7-8.
    \5\ Id. at 7.
    \6\ Id. at 2, 3-6.
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    We disagree with SBA's argument that we did not consider 
alternatives to minimize any significant economic impact on small 
entities. We discussed in the IRFA the alternative of using unallocated 
or unlicensed spectrum by telecommunications providers, including small 
entities, to serve the needs of tribal lands. Similarly, we discussed 
the use of channels within licensed spectrum to achieve a similar 
result, and sought comment on these alternatives. SBA also argues 
against lifting the DE transfer restrictions, which was an alternative 
we set forth in the Notice. This argument is moot, however, because we 
do not adopt this proposal in the Report and Order. Last, SBA states 
that we proposed to ``offer bidding credits in future auctions 
regardless of business size.'' \7\ However, in this proceeding we have 
not changed the generally available bidding credit that is offered to 
small businesses, and our new tribal lands bidding credit is offered in 
addition to the small business bidding credit. This additional, 
targeted

[[Page 47351]]

incentive for tribal areas does not detract from our separate effort to 
assist small businesses through the small business bidding credit. For 
small businesses, the two credits may be combined.\8\
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    \7\ SBA Comments at 7.
    \8\ See Report and Order para. 30.
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C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    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 proposed rules, if adopted.\9\ The RFA generally 
defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' \10\ In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.\11\ A small business concern is one that: 
(1) Is independently owned and operated; (2) is not dominant in its 
field of operation; and (3) satisfies any additional criteria 
established by the SBA.\12\ A small organization is generally ``any 
not-for-profit enterprise which is independently owned and operated and 
is not dominant in its field.'' \13\ Nationwide, as of 1992, there were 
approximately 275,801 small organizations.\14\ And finally, ``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.'' \15\ As of 1992, 
there were approximately 85,006 such jurisdictions in the United 
States.\16\ This number includes 38,978 counties, cities, and towns; of 
these, 37,566, or 96 percent, have populations of fewer than 
50,000.\17\ The Census Bureau estimates that this ratio is 
approximately accurate for all governmental entities. Thus, of the 
85,006 governmental entities, we estimate that 81,600 (91 percent) are 
small entities.
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    \9\ 5 U.S.C. 603(b)(3).
    \10\ Id. at 601(6).
    \11\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small business concern'' in 15 U.S.C. 632). Pursuant to the 
RFA, the statutory definition of a small business applies ``unless 
an agency, after consultation with the Office of Advocacy of the 
Small Business Administration and after opportunity for public 
comment, establishes one or more definitions of such term which are 
appropriate to the activities of the agency and publishes such 
definition(s) in the Federal Register.'' 5 U.S.C. 601(3).
    \12\ Small Business Act, 15 U.S.C. 632.
    \13\ 5 U.S.C. 601(4).
    \14\ 1992 Economic Census, U.S. Bureau of the Census, Table 6 
(special tabulation of data under contract to Office of Advocacy of 
the U.S. Small Business Administration).
    \15\ 5 U.S.C. 601(5).
    \16\ U.S. Dept. of Commerce, Bureau of the Census, ``1992 Census 
of Governments.''
    \17\ Id.
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    SBA has developed a definition of small entities for radiotelephone 
(wireless) companies. The Census Bureau reports that there were 1,176 
such companies in operation for at least one year at the end of 
1992.\18\ According to SBA's definition, a small business 
radiotelephone company is one employing no more than 1,500 persons.\19\ 
The Census Bureau also reported that 1,164 of those radiotelephone 
companies had fewer than 1,000 employees. Thus, even if all of the 
remaining 12 companies had more than 1,500 employees, there would still 
be 1,164 radiotelephone companies that might qualify as small entities 
if they are independently owned and operated.
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    \18\ United States Department of Commerce, Bureau of the Census, 
1992 Census of Transportation, Communications, and Utilities: 
Establishment and Firm Size, at Firm Size 1-123 (1995) (``1992 
Census'').
    \19\ 13 CFR 121.201, SIC Code 4812.
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    Although it seems certain that some of these carriers are not 
independently owned and operated, we are unable at this time to 
estimate with greater precision the number of radiotelephone carriers 
and service providers that would qualify as small business concerns 
under SBA's definition. Consequently, we estimate that there are fewer 
than 1,164 small entity radiotelephone companies that may be affected 
by the policies and rules adopted in the Report and Order.
    Below, we further describe and estimate the number of wireless 
small business concerns that may be affected by the rules we adopt in 
the Report and Order.
    Cellular Providers. Neither the Commission nor the SBA has 
developed a definition of small entities applicable to cellular 
licensees. Therefore, the applicable definition of small entity is the 
definition under the SBA rules applicable to radiotelephone (wireless) 
companies. This provides that a small entity is a radiotelephone 
company employing no more than 1,500 persons.\20\ According to the 
Bureau of the Census, only twelve radiotelephone firms from a total of 
1,178 such firms which operated during 1992 had 1,000 or more 
employees.\21\ Therefore, even if all twelve of these firms were 
cellular telephone companies, nearly all cellular carriers were small 
businesses under the SBA's definition. In addition, we note that there 
are 1,758 cellular licenses; however, a cellular licensee may own 
several licenses. In addition, according to the most recent 
Telecommunications Industry Revenue data, 808 carriers reported that 
they were engaged in the provision of either cellular service or 
Personal Communications Service (PCS) services, which are placed 
together in the data.\22\ We do not have data specifying the number of 
these carriers that are not independently owned and operated or have 
more than 1,500 employees, and thus are unable at this time to estimate 
with greater precision the number of cellular service carriers that 
would qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are fewer than 808 small cellular 
service carriers that may be affected by the rules adopted herein.
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    \20\ 13 CFR 121.201, SIC code 4812.
    \21\ 1992 Census, Series UC92-S-1, at Table 5, SIC code 4812.
    \22\ Trends in Telephone Service, Table 19.3 (March 2000).
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    Broadband PCS Licensees. The broadband PCS spectrum is divided into 
six frequency blocks designated A through F, and the Commission has 
held auctions for each block. The Commission defined ``small entity'' 
for Blocks C and F as an entity that has average gross revenues of less 
than $40 million in the three previous calendar years.\23\ For Block F, 
an additional classification for ``very small business'' was added and 
is defined as an entity that, together with their affiliates, has 
average gross revenues of not more than $15 million for the preceding 
three calendar years.\24\ These regulations defining ``small entity'' 
in the context of broadband PCS auctions have been approved by the 
SBA.\25\ No small businesses within the SBA-approved definition bid 
successfully for licenses in Blocks A and B. There were 90 winning 
bidders that qualified as small entities in the Block C auctions. A 
total of 93 small and very small business bidders won approximately 40% 
of the 1,479 licenses for Blocks D, E, and F.\26\ Based on this 
information, we conclude that the number of small broadband PCS

[[Page 47352]]

licensees will include the 90 winning C Block bidders and the 93 
qualifying bidders in the D, E, and F blocks, for a total of 183 small 
entity PCS providers as defined by the SBA and the Commission's auction 
rules.
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    \23\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap, Report and Order, FCC 96-278, WT Docket 
No. 96-59, paras. 57-60 (released Jun. 24, 1996), 61 FR 33859 (Jul. 
1, 1996); see also 47 CFR 24.720(b).
    \24\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap, Report and Order, FCC 96-278, WT Docket 
No. 96-59, para. 60 (1996), 61 FR 33859 (Jul. 1, 1996).
    \25\ See, e.g., Implementation of Section 309(j) of the 
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth 
Report and Order, 9 FCC Rcd 5532, 5581-84 (1994).
    \26\ FCC News, Broadband PCS, D, E and F Block Auction Closes, 
No. 71744 (released Jan. 14, 1997).
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    SMR Licensees. The Commission awards bidding credits in auctions 
for geographic area 800 MHz and 900 MHz SMR licenses to firms that had 
revenues of no more than $15 million in each of the three previous 
calendar years.\27\ In the context of 900 MHz SMR, this regulation 
defining ``small entity'' has been approved by the SBA; approval 
concerning 800 MHz SMR is being sought. We do not know how many firms 
provide 800 MHz or 900 MHz geographic area SMR service pursuant to 
extended implementation authorizations, nor how many of these providers 
have annual revenues of no more than $15 million. One firm has over $15 
million in revenues. We assume, for purposes of this FRFA, that all of 
the remaining existing extended implementation authorizations are held 
by small entities, as that term is defined by the SBA. For geographic 
area licenses in the 900 MHz SMR band, there are 60 who qualified as 
small entities. For the 800 MHz SMR's, 38 are small or very small 
entities.
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    \27\ 47 CFR 90.814(b)(1).
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    220 MHz Radio Service--Phase I Licensees. The 220 MHz service has 
both Phase I and Phase II licenses. Phase I licensing was conducted by 
lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
definition of small entities specifically applicable to such incumbent 
220 MHz Phase I licensees. To estimate the number of such licensees 
that are small businesses, we apply the definition under the SBA rules 
applicable to Radiotelephone Communications companies. This definition 
provides that a small entity is a radiotelephone company employing no 
more than 1,500 persons.\28\ According to the Bureau of the Census, 
only 12 radiotelephone firms out of a total of 1,178 such firms which 
operated during 1992 had 1,000 or more employees.\29\ Therefore, if 
this general ratio continues in 2000 in the context of Phase I 220 MHz 
licensees, we estimate that nearly all such licensees are small 
businesses under the SBA's definition.
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    \28\ 13 CFR 121.201, Standard Industrial Classification (SIC) 
code 4812.
    \29\ U.S. Bureau of the Census, U.S. Department of Commerce, 
1992 Census of Transportation, Communications, and Utilities, UC92-
S-1, Subject Series, Establishment and Firm Size, Table 5, 
Employment Size of Firms; 1992, SIC code 4812 (issued May 1995).
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    220 MHz Radio Service--Phase II Licensees. The Phase II 220 MHz 
service is a new service, and is subject to spectrum auctions. In the 
220 MHz Third Report and Order, we adopted criteria for defining small 
businesses and very small businesses for purposes of determining their 
eligibility for special provisions such as bidding credits and 
installment payments.\30\ We have defined a small business as an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $15 million for the preceding 
three years. Additionally, a very small business is defined as an 
entity that, together with its affiliates and controlling principals, 
has average gross revenues that are not more than $3 million for the 
preceding three years.\31\ The SBA has approved these definitions.\32\ 
An auction of Phase II licenses commenced on September 15, 1998, and 
closed on October 22, 1998.\33\ Nine hundred and eight (908) licenses 
were auctioned in 3 different-sized geographic areas: three nationwide 
licenses, 30 Regional Economic Area Group Licenses, and 875 Economic 
Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold. 
Companies claiming small business status won: one of the Nationwide 
licenses, 67% of the Regional licenses, and 54% of the EA licenses. As 
of January 22, 1999, the Commission announced that it was prepared to 
grant 654 of the Phase II licenses won at auction.\34\
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    \30\ 220 MHz Third Report and Order, 12 FCC Rcd 10943, 11068-70, 
at paras. 291-295 (1997).
    \31\ 220 MHz Third Report and Order, 12 FCC Rcd at 11068-69, 
para. 291.
    \32\ See Letter from A. Alvarez, Administrator, SBA, to D. 
Phythyon, Chief, Wireless Telecommunications Bureau, FCC (Jan. 6, 
1998).
    \33\ See generally Public Notice, ``220 MHz Service Auction 
Closes,'' Report No. WT 98-36 (Wireless Telecom. Bur. Oct. 23, 
1998).
    \34\ Public Notice, ``FCC Announces It is Prepared to Grant 654 
Phase II 220 MHz Licenses After Final Payment is Made,'' Report No. 
AUC-18-H, DA No. 99-229 (Wireless Telecom. Bur. Jan. 22, 1999).
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    Paging Licensees. The Commission has adopted a two-tier definition 
of small businesses in the context of auctioning licenses in the Common 
Carrier Paging and exclusive Private Carrier Paging services. A small 
business will be defined as either: (1) 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; or (2) an 
entity that, together with affiliates and controlling principals, has 
average gross revenues for the three preceding calendar years of not 
more than $15 million. Because the SBA has not yet approved this 
definition for paging services, we will utilize the SBA's definition 
applicable to radiotelephone companies, i.e., an entity employing no 
more than 1,500 persons.\35\ At present, there are approximately 24,000 
Private Paging licenses and 74,000 Common Carrier Paging licenses. 
According to the most recent Telecommunications Industry Revenue data, 
172 carriers reported that they were engaged in the provision of either 
paging or ``other mobile'' services, which are placed together in the 
data.\36\ We do not have data specifying the number of these carriers 
that are not independently owned and operated or have more than 1,500 
employees, and thus are unable at this time to estimate with greater 
precision the number of paging carriers that would qualify as small 
business concerns under the SBA's definition. Consequently, we estimate 
that there are fewer than 172 small paging carriers that may be 
affected by the proposed rules, herein adopted. We estimate that the 
majority of private and common carrier paging providers would qualify 
as small entities under the SBA definition.
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    \35\ 13 CFR 121.201, SIC code 4812.
    \36\ Trends in Telephone Service, Table 19.3 (February 19, 
1999).s
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    Narrowband PCS Licensees. The Commission has auctioned nationwide 
and regional licenses for narrowband PCS. There are 11 nationwide and 
30 regional licensees for narrowband PCS. The Commission does not have 
sufficient information to determine whether any of these licensees are 
small businesses within the SBA-approved definition for radiotelephone 
companies. Given that nearly all radiotelephone companies have no more 
than 1,500 employees and that no reliable estimate of the number of 
prospective narrowband licensees can be made, we assume, for purposes 
of this FRFA, that all of the licenses will be awarded to small 
entities, as that term is defined by the SBA.
    Rural Radiotelephone Service. The Commission has not adopted a 
definition of small entity specific to the Rural Radiotelephone 
Service.\37\ A significant subset of the Rural Radiotelephone Service 
is the Basic Exchange Telephone Radio Systems (BETRS).\38\ We will use 
the SBA's definition applicable to radiotelephone companies, i.e., an 
entity employing no more than 1,500 persons.\39\ There are

[[Page 47353]]

approximately 1,000 licensees in the Rural Radiotelephone Service, and 
we estimate that almost all of them qualify as small entities under the 
SBA's definition.
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    \37\ The service is defined in section 22.99 of the Commission's 
Rules, 47 CFR 22.99.
    \38\ BETRS is defined in sections 22.757 and 22.759 of the 
Commission's Rules, 47 CFR 22.757 and 22.759.
    \39\ 13 CFR 121.201, SIC code 4812.
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    Air-Ground Radiotelephone Service. The Commission has not adopted a 
definition of small entity specific to the Air-Ground Radiotelephone 
Service.\40\ Accordingly, we will use the SBA's definition applicable 
to radiotelephone companies, i.e., an entity employing no more than 
1,500 persons.\41\ There are approximately 100 licensees in the Air-
Ground Radiotelephone Service, and we estimate that almost all of them 
qualify as small under the SBA definition.
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    \40\ The service is defined in section 22.99 of the Commission's 
Rules, 47 CFR 22.99.
    \41\ 13 CFR 121.201, SIC code 4812.
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    Fixed Microwave Services. Microwave services include common 
carrier,\42\ private-operational fixed,\43\ and broadcast auxiliary 
radio services.\44\ At present, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not yet defined a small business with respect to 
microwave services. For purposes of this IRFA, we will utilize the 
SBA's definition applicable to radiotelephone companies--i.e., an 
entity with no more than 1,500 persons.\45\ We estimate, for this 
purpose, that all of the Fixed Microwave licensees (excluding broadcast 
auxiliary licensees) would qualify as small entities under the SBA 
definition for radiotelephone companies.
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    \42\ CFR 101 et seq. (formerly, part 21 of the Commission's 
Rules).
    \43\ Persons eligible under parts 80 and 90 of the Commission's 
rules can use Private Operational-Fixed Microwave services. See 47 
CFR parts 80 and 90. Stations in this service are called 
operational-fixed to distinguish them from common carrier and public 
fixed stations. Only the licensee may use the operational-fixed 
station, and only for communications related to the licensee's 
commercial, industrial, or safety operations.
    \44\ Auxiliary Microwave Service is governed by part 74 of Title 
47 of the Commission's Rules. See 47 CFR 74 et seq. Available to 
licensees of broadcast stations and to broadcast and cable network 
entities, broadcast auxiliary microwave stations are used for 
relaying broadcast television signals from the studio to the 
transmitter, or between two points such as a main studio and an 
auxiliary studio. The service also includes mobile TV pickups, which 
relay signals from a remote location back to the studio.
    \45\ 13 CFR 121.201, SIC 4812.
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    Offshore Radiotelephone Service. This service operates on several 
UHF TV broadcast channels that are not used for TV broadcasting in the 
coastal area of the states bordering the Gulf of Mexico.\46\ At 
present, there are approximately 55 licensees in this service. We are 
unable at this time to estimate the number of licensees that would 
qualify as small under the SBA's definition for radiotelephone 
communications.
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    \46\ This service is governed by subpart I of part 22 of the 
Commission's Rules. See 47 CFR 22.1001 through 22.1037.
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    Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The Commission auctioned 
geographic area licenses in the WCS service. In the auction, there were 
seven winning bidders that qualified as very small business entities, 
and one that qualified as a small business entity. We conclude that the 
number of geographic area WCS licensees affected includes these eight 
entities.
    Multipoint Distribution Systems (MDS). This service involves a 
variety of transmitters, which are used to relay programming to the 
home or office, similar to that provided by cable television 
systems.\47\ In connection with the 1996 MDS auction, the Commission 
defined small businesses as entities that had annual average gross 
revenues for the three preceding years not in excess of $40 
million.\48\ This definition of a small entity in the context of MDS 
auctions has been approved by the SBA.\49\ These stations were licensed 
prior to implementation of Section 309(j) of the Communications Act of 
1934, as amended.\50\ Licenses for new MDS facilities are now awarded 
to auction winners in Basic Trading Areas (BTAs) and BTA-like areas. 
\51\ The MDS auctions resulted in 67 successful bidders obtaining 
licensing opportunities for 493 BTAs. Of the 67 auction winners, 61 
meet the definition of a small business. There are 2,050 MDS stations 
currently licensed. Thus, we conclude that there are 1,634 MDS 
providers that are small businesses as deemed by the SBA and the 
Commission's auction rules.
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    \47\ For purposes of this item, MDS includes both the single 
channel Multipoint Distribution Service (MDS) and the Multichannel 
Multipoint Distribution Service (MMDS).
    \48\ 47 CFR 1.2110 (a)(1).
    \49\ Amendment of Parts 21 and 74 of the Commission's Rules with 
Regard to Filing Procedures in the Multipoint Distribution Service 
and in the Instructional Television Fixed Service and Implementation 
of Section 309(j) of the Communications Act--Competitive Bidding, 10 
FCC Rcd 9589 (1995), 60 FR 36524 (Jul. 17, 1995).
    \50\ 47 USC 309(j).
    \51\ Id. A Basic Trading Area (BTA) is the geographic area by 
which the Multipoint Distribution Service is licensed. See Rand 
McNally 1992 Commercial Atlas and Marketing Guide, 123rd Edition, 
pp. 36-39.
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D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    This Report and Order requires entities taking advantage of the 
tribal lands bidding credit to satisfy several reporting and compliance 
requirements. Section III.B.5 requires an applicant to indicate on its 
long-form application that it intends to serve qualifying tribal lands 
in its license area(s). Also, the applicant will have 90 days after 
filing the long-form application to obtain a certification by the 
affected tribal government providing: (a) Its consent to allow the 
bidder to deploy facilities on its tribal land(s), in accordance with 
our rules; (b) a statement that the tribal government has not and will 
not enter into an exclusive contract with the applicant precluding 
entry by other carriers and will not unreasonably discriminate against 
any carrier; and (c) confirmation that the tribal lands are qualifying 
tribal lands as defined in our rules.
    In addition, an applicant must certify that it will comply with 
certain coverage requirements and consult with the tribal government 
regarding the siting of facilities and deployment of service on the 
tribal land. Further, at the end of the three-year build-out period, 
licensees that receive the tribal lands bidding credit must file a 
certification that they have satisfied the build-out requirements. To 
the extent that licensees choose to take advantage of any additional 
flexibility that we adopt, they may be required to comply with other 
reporting requirements.
    The rules we adopt allow entities 90 days from the filing deadline 
of the long-form application to obtain the consent of a tribal 
government to serve its tribal land. Negotiation periods will vary 
tremendously within this timeframe. We anticipate that some entities 
will employ an attorney (average of $200.00 per hour) to assist with 
negotiations. It is difficult to approximate how long it may take to 
obtain the consent of a tribal government, nevertheless, we estimate 
that the cost of obtaining tribal consent should not exceed $50,000.
    Preparation of the requisite certifications should be relatively 
straightforward, particularly since technical analyses are not 
required. We

[[Page 47354]]

estimate that it will take two (2) hours to prepare the certifications 
and that entities will use in-house staff (average $50.00 per hour), 
which should minimize costs. Since long-form applications are already 
required, we conclude that it should not take additional time to 
indicate an intention to take advantage of the tribal lands bidding 
credit.

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

    SBA claims that we did not sufficiently assess in the IRFA how 
small businesses could be affected by our decisions to seek comment on 
eliminating designated entity (``DE'') transfer restrictions and 
awarding bidding credits in future auctions to entities that commit to 
deploy facilities to tribal lands. We disagree. The Notice sought 
comment on an array of alternatives, including the aforementioned, that 
the Commission could adopt to encourage the provision of wireless 
services to tribal areas. The RFA requires that the Commission ensure 
that regulations we adopt do not inhibit the ability of small entities 
to compete. The Notice did not propose to eliminate DE transfer 
restrictions, but rather sought comment on this alternative. In any 
event, the Report and Order does not address DE transfer restrictions.
    Likewise, we sought comment on whether to award bidding credits in 
future auctions to any entity, regardless of size, that commits to 
serve tribal lands. SBA claims that such a proposal would unfairly 
advantage large businesses. We disagree. The Notice sought comment on 
whether to combine any credit for serving tribal lands with the small 
business credits available under our rules. Thus, small entities could 
potentially receive two credits for a license area. We did not propose 
a specific implementation program, but rather sought comment from the 
industry as to how to structure the program, including whether to limit 
the credit to designated entities, the appropriate credit amount, and 
any necessary safeguards. In addition, we sought comment on how to 
minimize any economic impact on small entities.
    The Report and Order expands our bidding credit policy to 
facilitate the provision of wireless telecommunications services to 
tribal lands. Entities taking advantage of the credit must comply with 
certain reporting and compliance requirements. Expected costs include: 
(1) Negotiating with and obtaining consent from tribal governments; (2) 
preparing the requisite certifications, and (3) deploying facilities to 
tribal areas. We conclude that obtaining tribal consent and deploying 
facilities to tribal areas may have a significant economic impact on 
small entities. Below, we discuss our efforts to minimize the economic 
impact on small entities in both of these areas.
Obtaining Tribal Consent
    As discussed in Section III.B.1 of the Report and Order, we find 
that tribal governments are uniquely situated to ensure that carriers 
who obtain credits will meet their commitments to deploy facilities to 
the tribal areas with the greatest need. Therefore, tribal consent is 
key to meeting the objectives of our bidding credit initiative. We 
recognize that negotiations with a tribal government could prove 
lengthy and costly, particularly where an entity seeks the consent of 
multiple tribal governments. To minimize the economic impact on 
successful bidders, we rejected our proposal to require entities taking 
advantage of the credit to file an executed agreement with tribal 
governments setting forth all the terms and conditions for deploying 
facilities and initiating service on tribal lands. We concluded that 
this approach would expand the negotiations process and prove overly 
burdensome. Instead, entities need only obtain the consent of the 
tribal authority and file two certifications, as set forth in Section 
III.B.5 of the Report and Order.
Deployment of Facilities
    Compliance with the coverage requirements may have a significant 
economic impact on small entities, particularly in instances where 
infrastructure costs for serving tribal lands exceed the available 
credit. The rules we adopt, however, should minimize the infrastructure 
costs for serving tribal areas. As set forth in Section III.B.4 of the 
Report and Order, we adopt several caps for the tribal lands bidding 
credit, depending on the gross bid amount of a license, which takes 
into account the potential recovery level for infrastructure costs. For 
example, for licenses with a gross bid amount up to $1 million, 
carriers may receive a bidding credit up to 50 percent of the value of 
the license.\52\ Further, in instances where a carrier's infrastructure 
costs exceed the available credit, the carrier may seek a waiver to 
obtain additional credit, subject to the applicable caps. This should 
allow for substantial recovery of infrastructure costs, thus minimizing 
the economic impact on small entities.
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    \52\ The total size of the qualifying tribal lands, however, is 
a significant factor in determining the amount of the availabale 
credit. See Section III.B.4.
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    The Commission will send a copy of the Report and Order, including 
this FRFA, in a report to be sent to Congress pursuant to SBREFA, see 5 
U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of 
the Report and Order, including FRFA, to the Chief Counsel for Advocacy 
of the SBA. A copy of the Report and Order and FRFA (or summaries 
thereof) also will be published in the Federal Register. See 5 U.S.C. 
604(b).

Ordering Clauses

    Accordingly, pursuant to Sections 1, 4(i), 303(r), and 309(j) of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 
303(r), and 309(j), the Report and Order is hereby Adopted.

    The Commission's rules are amended as set forth in Appendix B. The 
provisions of the Report and Order and the Commission's rules, as 
amended in Appendix B, shall become effective October 2, 2000.
    The Commission's Consumer Information Bureau, Reference Information 
Center, Shall Send a copy of this Report and Order to the Chief Counsel 
for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 1

    Telecommunications, Penalties.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    For the reasons stated in the preamble, the Federal Communications 
Commission amends 47 CFR part 1 as follows:
    1. The authority citation for part 1 continues to read as follows:

    Authority: 47 U.S.C. 325(e).

    2. Section 1.2107 is amended by redesignating paragraph (e) as (f), 
and by adding a new paragraph (e) to read as follows:


Sec. 1.2107  Submission of down payment and filing of long-form 
applications.

* * * * *
    (e) A winning bidder that seeks a bidding credit to serve a 
qualifying tribal land, as defined in Sec. 1.2110(e)(3)(1), within a 
particular market must indicate on the long-form application (FCC Form 
601) that it intends to serve a qualifying tribal land within that 
market.
* * * * *

[[Page 47355]]


    3. Section 1.2110(e) is amended by adding paragraph (e)(3) to read 
as follows:


Sec. 1.2110  Designated entities

* * * * *
    (e) * * *
    (3) Bidding credit for serving qualifying tribal land. A winning 
bidder for a market will be eligible to receive a bidding credit for 
serving a qualifying tribal land within that market, provided that it 
complies with Sec. 1.2107(e). The following definition, terms, and 
conditions shall apply for the purposes of this section and 
Sec. 1.2107(e):
    (i) Qualifying tribal land ``means any federally recognized Indian 
tribe's reservation, Pueblo, or Colony, including former reservations 
in Oklahoma, Alaska Native regions established pursuant to the Alaska 
Native Claims Settlement Act (85 Stat. 688), and Indian allotments,'' 
(see 25 CFR 20.1(v)), that has a wireline telephone subscription rate 
equal to or less than seventy (70) percent based on the most recently 
available U.S. Census Data.
    (ii)(A) Certification. Within ninety (90) days after the filing 
deadline for long-form applications, the winning bidder must amend its 
long-form application and attach a certification from the tribal 
government stating the following:
    (1) The tribal government authorizes the winning bidder to site 
facilities and provide service on its tribal land;
    (2) The tribal area to be served by the winning bidder constitutes 
qualifying tribal land; and
    (3) The tribal government has not and will not enter into an 
exclusive contract with the applicant precluding entry by other 
carriers, and will not unreasonably discriminate among wireless 
carriers seeking to provide service on the qualifying tribal land.
    (B) In addition, within ninety (90) days after the filing deadline 
for long-form applications, the winning bidder must amend its long-form 
application and file a certification that it will comply with the 
buildout requirements set forth in Sec. 1.2110(e)(vi) and consult with 
the tribal government regarding the siting of facilities and deployment 
of service on the tribal land.
    (iii) Bidding credit formula. Subject to the applicable bidding 
credit limit set forth in Sec. 1.2110(e)(3)(iv), the bidding credit 
shall equal three hundred thousand (300,000) dollars for the first 
twohundred (200) square miles (518 square kilometers) of qualifying 
tribal land, and fifteen hundred (1500) dollars for each additional 
square mile (2.590 square kilometer) of qualifying tribal land above 
two hundred (200) square miles (518 square kilometers).
    (iv) Bidding credit limit. If the high bid is equal to or less than 
one million (1,000,000) dollars, the maximum bidding credit calculated 
pursuant to Sec. 1.2110(e)(3)(iii) shall not exceed fifty (50) percent 
of the high bid. If the high bid is greater than one million 
(1,000,000) dollars, but equal to or less than two million (2,000,000) 
dollars, the maximum bidding credit calculated pursuant to 
Sec. 1.2110(e)(3)(iii) shall not exceed five hundred thousand (500,000) 
dollars. If the high bid is greater than two million (2,000,000) 
dollars, the maximum bidding credit calculated pursuant to 
Sec. 1.2110(e)(3)(iii) shall not exceed twenty five (25) percent of the 
high bid.
    (v) Application of credit. The bidding credit amount, if approved 
by the Commission, will be subtracted from the final net bid amount. 
The bidding credit will not affect calculation of the down payment.
    (vi) Post-construction certification. Within fifteen (15) days of 
the third anniversary of the initial grant of its license, a recipient 
of a bidding credit under this section shall file a certification that 
the recipient has constructed and is operating a system capable of 
serving seventy-five (75) percent of the population of the qualifying 
tribal land for which the credit was awarded.
    (vii) Performance penalties. If a recipient of a bidding credit 
under this section fails to provide the post-construction certification 
required by Sec. 1.2110(e)(3)(vi), then it shall repay the bidding 
credit amount in its entirety, plus interest. The interest will be 
based on the rate for ten year U.S. Treasury obligations applicable on 
the date the license is granted. Such payment shall be made within 
thirty (30) days of the third anniversary of the initial grant of its 
license.
[FR Doc. 00-19479 Filed 8-1-00; 8:45 am]
BILLING CODE 6712-01-U