[Federal Register Volume 66, Number 1 (Tuesday, January 2, 2001)]
[Rules and Regulations]
[Pages 33-55]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-40]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 90

[WT Docket No. 99-87; RM-9332; RM-9405; RM-9705; FCC 00-403]


Revised Competitive Bidding Authority

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document adopts rules and policies to implement changes 
to its statutory auction authority. This revision of the Commission's 
auction authority affects its determinations of which wireless 
telecommunications services licenses are potentially auctionable and 
its determinations of the appropriate licensing scheme for new and 
existing services.

DATES: Effective March 2, 2001, except Sec. 90.621 which contains 
information collection requirement that has not been approved by the 
Office of Management and Budget. The FCC will publish a document in the 
Federal Register announcing the effective date for this section.

FOR FURTHER INFORMATION CONTACT: Leora Hochstein or William Huber, 
Attorneys, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau, at (202) 418-0660. For additional 
information concerning the information collection contained in this 
document, contact Judy Boley at 202-418-0214, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This a summary of a Report and Order in WT 
Docket No. 99-87, adopted on November 9, 2000, and released on November 
20, 2000. The complete text of the Report and Order is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room CY-A257), 445 12th Street, SW, Washington, DC. 
It may also be purchased from the Commission's copy contractor, 
International Transcription Services, Inc. (ITS, Inc.), 445 12th 
Street, SW, Room CY-B400, Washington, DC 20554, (202) 314-3070. The 
Report and Order is also available on the Internet at the Commission's 
web site: http://www.fcc.gov/wtb/documents.html.

Synopsis of the Report and Order

I. Introduction and Executive Summary

    1. In the Report and Order, we adopt rules and policies to 
implement sections 309(j) and 337 of the Communications Act of 1934 
(``Communications Act''), as amended by the Balanced Budget Act of 1997 
(``Balanced Budget Act''), which was signed into law on August 5, 1997. 
The Balanced Budget Act significantly revised section 309(j) of the 
Communications Act, which is the principal statutory provision that 
governs the Commission's auction authority for the licensing of radio 
services. With the Notice of Proposed Rule Making in this docket No. 
99-87, we initiated this proceeding and requested comment on changes to 
the Commission's rules and policies to

[[Page 34]]

implement our revised auction authority. See Implementation of Sections 
309(j) and 337 of the Communications Act of 1934 as Amended; Promotion 
of Spectrum Efficient Technologies on Certain 90 Frequencies; 
Establishment of Public Service Radio Pool in the Private Mobile 
Frequencies Below 800 MHz, WT Docket No. 99-87, RM-9332, RM-9405, 
Notice of Proposed Rule Making, (NPRM), 64 FR 23571 (May 3, 1999).
    2. Specifically, the Report and Order sets out the general 
framework for exercise of the Commission's auction authority in light 
of the Balanced Budget Act's revisions to section 309(j) of the 
Communications Act. First, we examine how the Balanced Budget Act 
revised the statutory language of section 309(j). In particular, we 
consider amended section 309(j)(1)'s directive to use competitive 
bidding to resolve mutually exclusive license applications for those 
radio services that do not fall within one of section 309(j)(2)'s 
auction exemptions. These statutory changes are considered in light of 
our continuing obligation under section 309(j)(6)(E) to avoid mutual 
exclusivity and to fulfill the public interest objectives enumerated in 
section 309(j)(3).
    3. In the Report and Order, we conclude that in non-exempt 
services, the Commission's authority under the Balanced Budget Act 
continues to permit it to adopt licensing processes that result in the 
filing of mutually exclusive applications where the Commission 
determines that such an approach would serve the public interest. We do 
not, however, make any changes to license assignment procedures in 
existing services that preclude or limit the likelihood of mutually 
exclusive applications, nor do we make any specific determination about 
what licensing procedures to adopt for future services. Rather, we will 
reserve for future service-specific rulemaking proceedings the question 
of what type of licensing mechanism to use in each case, e.g., 
geographic area licensing, site-by-site licensing, or any other 
licensing process. Moreover, any consideration of whether we should use 
licensing procedures in a particular service that increase the 
likelihood of mutually exclusive applications will be based on careful 
analysis of the public interest considerations of section 309(j)(3) as 
they apply to the specific characteristics, uses, and demands of the 
service.
    4. We also conclude that in addition to other licensing mechanisms 
we have used previously, we should consider the use of band manager 
licensing as a future option for private as well as commercial 
services. We used the band manager concept for the first time in the 
700 MHz guard bands, and believe that it has the potential in other new 
spectrum allocations to provide private users with greater flexibility 
to access spectrum in amounts of bandwidth, periods of time, and 
geographic areas that best suit their needs. See Service Rules for the 
746-764 and 776-794 MHz Bands, and Revisions to 27 of the Commission's 
Rules, WT Docket No. 99-168, Second Report and Order, (``700 MHz Second 
Report and Order'') 65 FR 17594 (April 4, 2000). For example, we have 
recently initiated a proceeding to reallocate 27 MHz of spectrum in 
bands below 3 GHz from Federal Government to non-government use, and 
have sought comment on whether this spectrum could address demand in 
the congested private radio bands. See, Reallocation of 27 Megahertz of 
Spectrum Transferred from Government Use, ET Docket No. 00-221, RM-
9267, RM-9692, RM-9797, RM-9854, Notice of Proposed Rule Making, FCC 
00-395, (November 20, 2000) (``27 MHz Reallocation Order''). In that 
proceeding, we seek comment on the possibility of using band managers 
for some of those bands, as well as other licensing options.
    5. We also define the scope of the Balanced Budget Act's exemption 
from auctions for licenses and permits issued for ``public safety radio 
services.'' We conclude that this ``public safety'' exemption from 
auctions was intended to apply not only to traditional public safety 
services such as police, fire, and emergency medical services, but also 
to spectrum usage by entities such as utilities, railroads, transit 
systems, and others that provide essential services to the public at 
large and that need reliable communications in order to prevent or 
respond to disasters or crises affecting their service to the public. 
We also conclude, however, that the public safety exemption applies 
only to services in which these public safety uses, i.e., protection of 
safety of life, health, and property within the meaning of section 
309(j)(2)(A), comprise the dominant use of the spectrum. Thus, services 
in which such uses are not dominant (and in which mutual exclusivity 
occurs) will not be exempt from auctions, even if some individual 
licensees in the service use the spectrum for public safety purposes as 
defined by the statute.
    6. The Report and Order also addresses a number of proposals to 
amend our licensing and eligibility rules for existing private 
services. In general, we conclude that the existing rules should be 
retained. Specifically, we decline a request to establish geographic 
area licensing and competitive bidding rules in the 450-470 MHz band. 
We also decline the request to create a separate radio pool of private 
land mobile frequencies for entities that do not qualify for the 
existing Public Safety Radio Pool spectrum, but that fall within the 
broader ``public safety'' exemption established by section 
309(j)(2)(A).
    7. We do make a limited change, however, to our use restrictions 
affecting 800 MHz Business and Industrial/Land Transportation (``BI/
LT'') channels, which currently prohibit commercial use by licensees. 
We conclude that subject to certain safeguards, BI/LT licensees should 
be allowed to modify their licenses to permit commercial use, or to 
assign or transfer their licenses to CMRS operators for commercial use. 
To prevent trafficking, we will not allow such modifications, 
assignments, or transfers until five years after the initial grant date 
of the license, and we will prohibit a licensee who modifies or 
transfers a license under this provision from obtaining new BI/LT 
spectrum in the same location for one year.
    8. In addition, we address issues relating to the awarding of 
licenses under section 337 of the Communications Act, which allows 
public safety entities (defined more narrowly than in section 
309(j)(2)(A)) to apply for ``unassigned'' spectrum not otherwise 
allocated for public safety use. We conclude that where the Commission 
has proposed rules for the licensing of particular spectrum by auction, 
requests for licensing under section 337 should not be deemed in the 
public interest once the competitive bidding process has begun except 
under extraordinary circumstances. Moreover, we conclude that section 
337 relief should only be available if the applicant demonstrates that 
there is no available public safety spectrum in any band in the 
geographic area where the public safety use is proposed.
    9. Finally, in the Further Notice of Proposed Rule Making, we seek 
comment on a petition for rulemaking filed by AMTA proposing that 
certain part 90 licensees be required to employ new spectrum-efficient 
technologies. In particular, we seek further comment on the 
effectiveness of the part 90 rules that have been adopted in the course 
of the Commission's Refarming proceeding, PR Docket No. 92-235, See 
Replacement of Part 90 by Part 88 to Revise the Private Land Mobile 
Radio Services and Modify the Policies Governing Them, PR Docket No. 
92-235, Report and Order and Further Notice of Proposed

[[Page 35]]

Rule Making, (``Refarming Report and Order and Further Notice''), 60 FR 
43720 (August 23, 1995) and 60 FR 37148 (July 19, 1995); Memorandum 
Opinion and Order, 62 FR 6027 (January 15, 1997); Second Report and 
Order, 62 FR 18834 (April 17, 1997); Second Memorandum Opinion and 
Order, 64 FR 36258 (July 6, 1999); Third Memorandum Opinion and Order, 
64 FR 50257 (September 16, 1999); and Report and Order and Further 
Notice of Proposed Rule Making, 15 FCC Rcd 16,673 (2000) (collectively, 
the ``Refarming Proceeding'') the current pace of migration to 
narrowband technology, and on whether enough time has elapsed to allow 
us to evaluate the effectiveness of our current rules. We also seek 
comment on whether to permit 900 MHz BI/LT licensees to modify their 
licenses to permit CMRS use.

II. Background

A. Commission Implementation of the 1993 Auction Standard

    10. The Omnibus Budget Reconciliation Act of 1993 (``1993 Budget 
Act'') added section 309(j) to the Communications Act, authorizing the 
Commission to award licenses for use of the electromagnetic spectrum 
through competitive bidding where mutually exclusive applications are 
filed. The 1993 Budget Act expressly authorized, but did not require, 
the Commission to use competitive bidding to choose among mutually 
exclusive applications for initial licenses or construction permits. As 
we described in detail in the NPRM, the Commission in a series of 
rulemaking proceedings adopted rules and policies to implement section 
309(j). See Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding, PP Docket No. 93-253, Second Report and 
Order, (``Competitive Bidding Second Report and Order''), 59 FR 22980 
(May 4, 1994); Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding, PP Docket No. 93-253, Second Memorandum 
Opinion and Order, (``Competitive Bidding Second M O & O''), 59 FR 
44272 (August 26, 1994).
    11. Pursuant to the 1993 Budget Act, section 309(j)(1), ``General 
Authority,'' only permitted the Commission to use competitive bidding 
for subscriber-based services if mutual exclusivity existed among 
initial license applications. Section 309(j)(6)(E) also made clear that 
the Commission was not relieved of its obligation in the public 
interest to continue to use engineering solutions, negotiation, 
threshold qualifications, service regulations and other means to avoid 
mutual exclusivity. The Commission has determined that applications are 
``mutually exclusive'' if the grant of one application would 
effectively preclude the grant of one or more of the other 
applications. Where the Commission receives only one application that 
is acceptable for filing for a particular license that is otherwise 
auctionable, there is no mutual exclusivity, and thus no auction. 
Therefore, mutual exclusivity is established when competing 
applications for a license are filed.
    12. Section 309(j)(1) also restricted the use of competitive 
bidding to applications for ``initial'' licenses or permits. In 
addition, section 309(j)(2) set forth conditions beyond mutual 
exclusivity that had to be satisfied in order for spectrum to be 
auctionable. Generally speaking, these conditions subjected to auction 
those services in which the licensee was to receive compensation from 
subscribers for the use of the spectrum. Former section 309(j)(2) 
further directed the Commission, in evaluating the ``uses to which 
bidding may apply,'' to determine whether ``a system of competitive 
bidding will promote the [public interest] objectives described in 
[section 309(j)(3)].'' Employing these criteria, the Commission 
identified a number of services and classes of services that were 
auctionable and not auctionable under the 1993 Budget Act, provided 
mutually exclusive applications were filed. As we explained in the 
NPRM, the services deemed nonauctionable under the 1993 Budget Act were 
non-subscriber based, private and noncommercial offerings operating on 
a variety of frequency bands.

B. The Balanced Budget Act of 1997

    13. In 1997, Congress revised the Commission's auction authority. 
Specifically, the Balanced Budget Act of 1997 amended section 309(j)(1) 
to require the Commission to award mutually exclusive applications for 
initial licenses or permits using competitive bidding procedures, 
except as provided in section 309(j)(2). Sections 309(j)(1) and 
309(j)(2) now state:
    (1) General Authority.--If, consistent with the obligations 
described in paragraph (6)(E), mutually exclusive applications are 
accepted for any initial license or construction permit, then, except 
as provided in paragraph (2), the Commission shall grant the license or 
permit to a qualified applicant through a system of competitive bidding 
that meets the requirements of this subsection.
    (2) Exemptions.--The competitive bidding authority granted by this 
subsection shall not apply to licenses or construction permits issued 
by the Commission--
    (A) For public safety radio services, including private internal 
radio services used by State and local governments and non-government 
entities and including emergency road services provided by not-for-
profit organizations, that--
    (i) Are used to protect the safety of life, health, or property; 
and
    (ii) Are not made commercially available to the public;
    (B) For initial licenses or construction permits for digital 
television service given to existing terrestrial broadcast licensees to 
replace their analog television service licenses; or
    (C) For stations described in section 397(6) of this title.

Prior to the Balanced Budget Act of 1997, sections 309(j)(1) and 
309(j)(2) granted the Commission the authority to use competitive 
bidding to resolve mutually exclusive applications for initial licenses 
or permits if the principal use of the spectrum was for subscription-
based services and competitive bidding would promote the objectives 
described in section 309(j)(3). As amended by the Balanced Budget Act 
of 1997, section 309(j)(1) states that the Commission shall use 
competitive bidding to resolve mutually exclusive initial license or 
permit applications, unless one of the three exemptions provided in the 
statute applies.
    14. The Balanced Budget Act of 1997 left unchanged the restriction 
that competitive bidding may only be used to resolve mutually exclusive 
applications. Moreover, the general auction authority provision of 
section 309(j)(1) now references the obligation under section 
309(j)(6)(E) to use engineering solutions, negotiation, threshold 
qualifications, service regulations, or other means to avoid mutual 
exclusivity where it is in the public interest to do so. In addition, 
the portion of the Conference Report that accompanies this section of 
the legislation emphasizes that notwithstanding the Commission's 
expanded auction authority, its determinations regarding mutual 
exclusivity must still be consistent with and not minimize its 
obligations under section 309(j)(6)(E).
    15. Section 309(j)(2), as amended by the Balanced Budget Act of 
1997, exempts from auctions licenses and construction permits for 
public safety

[[Page 36]]

radio services, digital television service licenses and permits given 
to existing terrestrial broadcast licensees to replace their analog 
television service licenses, and licenses and construction permits for 
noncommercial educational broadcast stations and public broadcast 
stations. The Commission has found that the list of exemptions from our 
general auction authority set forth in section 309(j)(2) is exhaustive, 
rather than merely illustrative, of the types of licenses or permits 
that may not be awarded through a system of competitive bidding. See 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding for Commercial Broadcast and Instructional Television Fixed 
Service Licenses, MM Docket No. 97-234, First Report and Order, 
(``Commercial Broadcast Competitive Bidding First Report & Order''), 63 
FR 48615 (September 11, 1998). Left unchanged by the Balanced Budget 
Act of 1997 is section 309(j)(3)'s directive to consider the public 
interest objectives in identifying classes of licenses and permits to 
be issued by competitive bidding.
    16. The Conference Report for section 3002(a) of the Balanced 
Budget Act of 1997 states that the exemption for public safety radio 
services includes ``private internal radio services'' used by 
utilities, railroads, metropolitan transit systems, pipelines, private 
ambulances, volunteer fire departments, and not-for-profit 
organizations that offer emergency road services, such as the American 
Automobile Association (``AAA''). The Conference Report also notes that 
the exemption is ``much broader than the explicit definition for 
`public safety services'' included in section 337(f)(1) of the 
Communications Act, for the purpose of determining eligibility for 
licensing in the 24 MHz of spectrum reallocated for public safety 
services.
    5. The statutory changes to the Commission's auction authority 
brought about by Balanced Budget Act primarily affect those classes of 
radio service that are referred to generically as ``private services.'' 
Our use of the term ``private services'' in the context of the 1993 
Budget Act's auction exemption referred to those radio services ``that 
did not involve the payment of compensation to the licensee by 
subscribers, i.e., that were for internal use.'' See Competitive 
Bidding Second Report and Order. Generally, the private radio services 
are used by government or business entities to meet their own internal 
communications needs or by individuals for personal communications, 
rather than to provide communications services to others. In the Report 
and Order, we use the term ``private services'' broadly to refer to the 
family of non-broadcast, non-subscriber based fixed or mobile radio 
services (i.e., radio services that are for internal uses). Broadly 
speaking, the category of ``private services'' includes the Private 
Land Mobile Radio Services; parts of the Maritime and Aviation 
Services; the Private Operational Fixed Service; Amateur and Personal 
Radio Services. When used in this general sense, ``private services'' 
also includes the public safety radio services (which fall within the 
three aforementioned service classifications) as well as frequencies 
allocated to the Public Safety Radio Pool The Report and Order does not 
revisit any determinations made pursuant to the 1993 Budget Act of 
those radio services subject to competitive bidding. Rather, here we 
establish a framework for our future determinations of which radio 
services may be subject to competitive bidding. For example, we intend 
to use this framework to guide our decisions in regard to the spectrum 
bands that are the subject of a separate Notice of Proposed Rule Making 
in which we are proposing to reallocate 27 MHz of spectrum in bands 
below 3 GHz from Federal Government to non-government use.

C. Framework for Determining Whether Licenses Are Subject to Auction

    18. In the Report and Order, we evaluate the scope of our spectrum 
auction authority under section 309(j) and establish a framework for 
determining whether licenses are subject to auction. First, we consider 
how the Balanced Budget Act's revision of our auction authority under 
section 309(j) of the Communications Act affects future determinations 
of which services may be subject to auction. In particular, this 
analysis focuses on the application of the public interest factors 
enumerated in section 309(j)(3) and the Commission's section 
309(j)(6)(E) obligation in the public interest to avoid mutual 
exclusivity in application and licensing proceedings for those radio 
services that are not specifically exempt from auction under section 
309(j)(2). We also recognize the potential for band manager licensing 
of auctionable private radio services where that licensing mechanism is 
likely to serve the public interest and otherwise satisfy the 
Commission's overall spectrum management responsibilities and 
obligations under the Communications Act.
i. Obligation to Avoid Mutual Exclusivity
    19. Background. In the NPRM, the Commission sought comment broadly 
on how the Balanced Budget Act's amendments to section 309(j) affect 
its determinations of which services may be subject to auction. In 
particular, we asked whether the express reference in section 309(j)(1) 
to the Commission's obligation to avoid mutual exclusivity under 
section 309(j)(6)(E) changes the scope or content of that obligation. 
We also asked how we should apply the public interest factors in 
section 309(j)(3) in establishing licensing schemes or methodologies 
under the Balanced Budget Act for both new and existing, commercial and 
private services. We inquired whether the Commission's previous 
analysis of its obligation under section 309(j)(6)(E) is still 
appropriate in view of the revisions to section 309(j)(1) and 
309(j)(2), i.e., whether we should continue to evaluate our obligation 
to avoid mutual exclusivity by weighing the public interest objectives 
of section 309(j)(3). With respect to services currently using 
licensing schemes in which mutually exclusive applications are not 
filed, we asked whether Congress, in emphasizing our obligation to 
avoid mutual exclusivity, intended that we give greater weight to that 
obligation and less to other public interest objectives.
    20. Discussion. Private radio service interests generally argue 
that the Balanced Budget Act has not expanded the Commission's auction 
authority, particularly as it applies to private wireless services. 
They argue that the added reference in section 309(j)(1) to the 
Commission's obligation under section 309(j)(6)(E) to consider 
alternatives to mutual exclusivity requires the Commission to give 
greater weight to the goal of avoiding mutual exclusivity and less to 
other public interest objectives in determining which wireless services 
are potentially auctionable. Under these commenters' proposed 
interpretation, the Commission's first objective in establishing a 
licensing mechanism for any non-auction exempt service must be to seek 
a method that avoids mutual exclusivity. In the view of these 
commenters, only if the Commission determines that mutual exclusivity 
cannot be avoided, i.e., that the service can only be licensed through 
processes that result in the filing of mutually exclusive applications, 
can it consider the public interest factors set forth in section 
309(j)(3) for purposes of determining the appropriate

[[Page 37]]

methodology to award licenses through competitive bidding.
    21. We disagree with the interpretation of amended section 
309(j)(1) advanced by these commenters. The obligation to consider 
alternatives to mutual exclusivity set forth in section 309(j)(6)(E) 
has existed since the Commission was first authorized to conduct 
auctions of spectrum licenses by the 1993 Budget Act. The Commission 
has consistently interpreted this provision to mean that it has an 
obligation to attempt to avoid mutual exclusivity by the methods 
prescribed therein only when doing so would further the public interest 
goals of section 309(j)(3). See, e.g., Amendment of the Commission's 
Rules Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket 
No. 95-183, Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding, 37.0-38.6 GHz and 38.6-40.0 GHz Bands, PR 
Docket No. 93-253, Memorandum Opinion and Order, 64 FR 45891 (August 
23, 1999); Revision of Part 22 and Part 90 of the Commission's Rules to 
Facilitate Future Development of Paging Systems, WT Docket No. 96-18; 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding, PR Docket No. 93-253, Memorandum Opinion and Order on 
Reconsideration and Third Report and Order, 64 FR 33762 (June 24, 
1999); Amendment of Part 90 of the Commission's Rules to Facilitate 
Future Development of SMR Systems in the 800 MHz Frequency Band, PR 
Docket No. 93-144, Second Report and Order, 62 FR 41190 (July 31, 
1997); Amendment of Part 90 of the Commission's Rules to Facilitate 
Future Development of SMR Systems in the 800 MHz Frequency Band, 
Memorandum Opinion and Order on Reconsideration, 62 FR 41225 (July 31, 
1997). We conclude that the amendment of section 309(j)(1) by the 
Balanced Budget Act to add a cross-reference to section 309(j)(6)(E) 
serves to underscore the Commission's pre-existing obligation, but did 
not change its fundamental scope or content. More specifically, we 
conclude that the Balanced Budget Act amendments to section 309(j) do 
not preclude the Commission from using licensing mechanisms for private 
services that permit the filing of mutually exclusive license 
applications if the Commission determines that it is in the public 
interest to do so.
    22. We base our conclusion on several factors. First, nothing in 
the statutory language suggests that Congress intended to narrow the 
Commission's discretion to use licensing mechanisms based on mutual 
exclusivity. The addition of a cross-reference to section 309(j)(6)(E) 
does not turn avoidance of mutual exclusivity into the paramount goal 
of the statute, but simply underscores that the Commission should 
continue to consider alternatives to mutual exclusivity as it did prior 
to the Balanced Budget Act, i.e., based on whether such alternatives 
would promote the public interest objectives in section 309(j)(3). 
Moreover, Congress did not change the language of section 309(j)(6)(E) 
itself, indicating that it did not intend to change the scope of the 
Commission's obligation under that provision. Indeed, section 
309(j)(6)(E) itself continues to state--as it did prior to the Balanced 
Budget Act--that the Commission has the ``obligation in the public 
interest * * * to avoid mutual exclusivity, which underscores that the 
Commission is required to avoid mutual exclusivity only if it is in the 
public interest to do so.
    23. Finally, the plain language of section 309(j)(3) negates the 
contention that Congress intended that section to be subordinate to 
section 309(j)(6)(E). Specifically, section 309(j)(3) directs the 
Commission to consider the public interest objectives specified therein 
in ``identifying classes of licenses and permits to be issued by 
competitive bidding, in specifying the eligibility and other 
characteristics of such licenses and permits, and in designing 
methodologies for use under this subsection.'' This language makes 
clear that the public interest objectives of section 309(j)(3) apply 
broadly to the threshold issue of which licenses should be subject to 
auction, which necessarily requires consideration in each case of 
whether to adopt a licensing mechanism based on mutual exclusivity.
    24. Our interpretation of section 309(j) is also supported by the 
legislative history of the Balanced Budget Act. In the Conference 
Report, Congress explicitly stated that the Balanced Budget Act 
expanded the scope of the auction authority previously conferred by the 
1993 Budget Act. However, Congress also expressed concern that the 
Commission not interpret its expanded auction authority in a way that 
would reduce its section 309(j)(6)(E) obligations. This language from 
the Conference Report makes clear that Congress sought continuity 
rather than change in the Commission's application of section 
309(j)(6)(E). Contrary to the assertions of some private services 
commenters, Congress did not intend to create a new and greater 
obligation to avoid mutual exclusivity, but rather sought to ensure 
that in exercising its expanded auction authority, the Commission would 
continue to give section 309(j)(6)(E) the same weight it had prior to 
the Balanced Budget Act.
    25. We also conclude that this interpretation of the Balanced 
Budget Act is consistent with the Commission's spectrum management 
responsibilities. Section 309(j)(3)(D) requires the Commission to 
promote efficient use of the spectrum, which is a valuable and finite 
public resource. To accomplish these objectives, the Commission must 
have the freedom to consider all available spectrum management tools 
and the discretion to evaluate which licensing mechanism is most 
appropriate for the services being offered. See Amendment of the 
Commission's Rules Regarding Multiple Address Systems, WT Docket No. 
97-81, Report and Order, (``MAS Report and Order''), 65 FR 17445 (April 
3, 2000). Thus, as the D.C. Circuit has recognized, the Commission is 
not required to adopt a licensing process that avoids mutual 
exclusivity but undermines the public interest goals embodied in the 
statute. Subsequent to the adoption of the Balanced Budget Act, the 
D.C. Circuit concluded that the section 309(j)(6)(E) obligation does 
not foreclose new licensing schemes that are likely to result in mutual 
exclusivity. If the Commission finds such schemes to be in the public 
interest, the court states, it may implement them ``without regard to 
[S]ection 309(j)(6)(E) which imposes an obligation only to minimize 
mutual exclusivity `in the public interest' and `within the framework 
of existing policies.' '' We conclude that the Balanced Budget Act did 
not change the nature of the public interest analysis required of the 
Commission when deciding the licensing process for a particular 
service. Therefore, in establishing processes for assigning initial 
licenses, the Commission will continue to fulfill its obligation under 
section 309(j)(6)(E) and consider the public interest goals of section 
309(j)(3).
    26. We emphasize that our conclusion applies to decisions regarding 
the licensing of existing services as well as future services. We 
recognize that many private wireless licensees contend that we should 
avoid auctioning private wireless spectrum that is currently licensed 
through processes that avoid mutual exclusivity. These commenters 
assert that where the Commission has used licensing methods in the 
private services that avoid the filing of mutually exclusive 
applications (e.g., first-come, first-served licensing, shared use, 
frequency coordination), the Balanced Budget Act requires us to 
continue

[[Page 38]]

using these methods and prohibits us from converting to licensing 
methods that would result in mutual exclusivity.
    27. We reject this interpretation of the statute. Prohibiting the 
Commission from considering changes to licensing methodologies 
applicable to existing services would contravene the intent of the 
Balanced Budget Act and restrict the Commission's ability to act in the 
public interest. Thus, we believe it remains fully within the 
Commission's authority to convert from a licensing method that avoids 
mutual exclusivity to one that is based on mutual exclusivity and 
auctions, as we have done in the case of certain services in the past. 
See Second Report and Order, and Amendment of the Commission's Rules 
Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket No. 95-
183, Report and Order and Second Notice of Further Rule Making, (``39 
GHz Report and Order''), 63 FR 6079 (February 2, 1998) and 63 FR 3075 
(January 21, 1998). At the same time, we believe that in order for this 
option to be considered in any service, the Commission, as part of its 
public interest analysis, should give significant consideration to the 
effectiveness of existing licensing mechanisms that avoid mutual 
exclusivity, and should weigh the potential costs of changing such 
mechanisms against the potential benefits.
ii. License Scope
    28. Background. In the NPRM, the Commission sought comment on 
whether the use of geographic area licensing for non-exempt private 
radio services would further the public interest goals of section 
309(j)(3). We solicited comment on the costs and benefits of 
implementing geographic area licensing in the private radio frequency 
bands and asked whether licensing schemes other than geographic area 
licensing would better serve the public interest. In deciding if 
geographic area licensing would be appropriate for a given radio 
service or class of frequencies, we asked whether we should consider 
the actual purpose for which the spectrum is used or proposed to be 
used, as well as the purpose for which the spectrum is currently 
allocated. We inquired whether the use of geographic area licensing 
would speed the assignment of new channels and facilitate further 
build-out of wide-area systems. We also suggested that the shared 
private service bands may be so heavily used that adopting a geographic 
area licensing scheme may not serve any purpose because so little 
``white space'' would be available to geographic area licensees that 
there would be no interest in applying for the geographic area 
licenses. The Commission further sought comment on the likely effects 
of geographic area licensing on incumbent systems and potential new 
entrants for private radio services.
    29. Discussion. The Commission has previously concluded with 
respect to many commercial services that geographic area licensing is a 
highly efficient licensing scheme. See, e.g., Revision of Part 22 and 
Part 90 of the Commission's Rules to Facilitate Future Development of 
Paging Systems, WT Docket No. 96-18, Second Report and Order and 
Further Notice of Proposed Rulemaking, 62 FR 11616 and 62 FR 11638 
(March 12, 1997). In addition, in the rule making proceeding 
implementing competitive bidding to award licenses in the 39 GHz band, 
the Commission concluded that predetermined service areas provide a 
more orderly structure for the licensing process and foster efficient 
utilization of the spectrum in an expeditious manner. See 39 GHz Report 
and Order. See also 800 MHz Second Report and Order, 62 FR 41190 (July 
31, 1997). Among other benefits, it facilitates aggregation by 
licensees of smaller service areas into seamless regional and national 
service areas, allows development of strategic and regional business 
plans, provides licensees with greater build-out flexibility and is 
efficient for the Commission to administer. Our decisions to establish 
geographic area licensing in commercial services have been based on our 
commitment to serve the public interest as required by section 
309(j)(3).
    30. As discussed earlier, we have concluded that section 
309(j)(6)(E) does not prevent the Commission from adopting licensing 
processes, such as geographic area licensing, that serve the public 
interest but happen to result in the filing of mutually exclusive 
license applications. Furthermore, even where we decide in a specific 
service that it is in the public interest to continue site-by-site 
licensing, such a decision does not necessarily preclude the use of 
auctions where competing applicants seek to operate at the same site on 
the same frequency. See Commercial Broadcast Competitive Bidding First 
Report and Order. We have also rejected commenters' arguments that the 
Commission is required by the Balanced Budget Act to retain current 
site-based licensing schemes in existing private services. Nonetheless, 
we recognize, as many commenters have pointed out, that the decision to 
convert from current site-based licensing methods to geographic 
licensing should not be made unless it is clear that the benefits of 
making the change outweigh the costs. Based on the record in this 
proceeding, we see no reason to make such an across-the-board change to 
existing licensing processes in private services. Therefore, we will 
not adopt geographic area licensing rules for existing private services 
in this rulemaking. Instead, with respect to private services, the 
Commission will continue to make determinations on a service-by-service 
basis of whether to adopt geographic area licensing, site-by-site 
licensing, or any other licensing scheme based on its obligation under 
section 309(j)(6)(E) and the public interest considerations of section 
309(j)(3).
iii. Band Manager Licenses
    31. Background. In the NPRM, we sought comment on whether to 
establish a new class of licensee called a ``band manager'' in the 
private radio services. We described band managers in the NPRM as a 
class of Commission licensee that engages in the business of making its 
spectrum available for use by others through private, written 
contracts. We solicited comment on a broad range of issues relating to 
how band manager licenses should be defined, and whether the public 
interest would be served by using band manager licensing to address 
current and projected needs for private internal radio services. We 
inquired whether the concept of a band manager fits within the 
Commission's overall spectrum management responsibilities and 
obligations under the Communications Act. We also asked a number of 
questions about whether and when a band manager licensing approach may 
be more effective relative to alternative methods of licensing private 
internal communications services. Finally, we sought comment on a full 
range of license implementation issues, including whether it would be 
necessary to have more than one band manager in each geographic license 
area and what types of ownership and control requirements might be 
appropriate for band managers in the private services.
    32. Discussion. As discussed in the following paragraphs, we 
believe that band manager licensing is a viable mechanism that should 
be considered for licensing in spectrum allocated for the private 
services. We also regard band manager licensing as an option to be 
considered in spectrum in which commercial services are authorized, as 
evidenced by our recent decision to license band managers in the 700 
MHz guard bands. (The lessees of 700 MHz guard band spectrum may be 
either commercial service providers or private

[[Page 39]]

users.) In addition, we have sought comment on whether band managers 
licensing would be appropriate in the 3650-3700 MHz band (and in the 
4.9 GHz band should we find that the public interest supports the 
pairing of these bands). See Amendment of the Commission's Rules With 
Regard to the 3650-3700 MHz Government Transfer Band, ET Docket No. 98-
237; 4.9 GHz Band Transferred from Federal Government Use, WT Docket 
No. 00-32, First Report and Order and Second Notice of Proposed Rule 
Making, 65 FR 69451 and 65 FR 69612 (November 17, 2000). However, 
because licensees in commercial services typically operate with fewer 
restrictions and in a more market-driven environment than private 
licensees, there may be less need in some commercial services to 
designate band managers as a specific ``class'' of licensees. Instead, 
a potential issue is the degree to which all commercial licensees 
should have the option to use some or all of their spectrum in the same 
manner as a band manager, i.e., to make spectrum available to third 
party users without the need for prior Commission approval, while 
retaining primary responsibility for compliance with the Commission's 
rules. We plan to address this issue more broadly in our upcoming 
secondary markets proceeding, which will address issues related to 
spectrum leasing in wireless services generally. See Promoting 
Efficient Use of Spectrum Through Elimination of Barriers to the 
Development of Secondary Markets, WT Docket No. 00-230, Notice of 
Proposed Rule Making, FCC 00-402 (adopted Nov. 9, 2000) (``Secondary 
Markets Notice'') (Commission initiative to develop rules and policies 
to promote secondary markets in radio spectrum). Therefore, we defer 
further discussion of band managers in the commercial services context 
to that proceeding. The Report and Order sets forth a framework to 
guide our determination in future proceedings concerning private 
services as to the circumstances under which we might use band manager 
licensing as an alternative or an addition to other licensing methods. 
We also review some of the considerations that we might take into 
account in defining a band manager's rights and responsibilities in the 
context of particular services. We emphasize that the Report and Order 
does not adopt band manager licensing in any existing private service, 
nor do we make any specific decision to do so in any future service. 
Rather, we reserve for future service-specific rulemaking proceedings 
the question of whether to use band manager licensing in each case. 
Such determinations will be based on careful analysis of the public 
interest considerations of section 309(j) of the Communications Act as 
they apply to the specific characteristics, uses, and demands of the 
service.
    33. Since the NPRM was adopted, we have implemented a form of band 
manager licensing for the first time in the 700 MHz Second Report and 
Order. In that proceeding, we concluded that band manager licensing 
would be an effective and efficient way to manage the 700 MHz Guard 
Band spectrum while minimizing the potential for harmful interference 
to public safety operations in adjacent bands. We also found that band 
manager licensing in the 700 MHz guard bands would enable parties to 
more readily acquire spectrum with a minimum of Commission involvement. 
We adopted licensing rules for Guard Band Managers that were based on 
specific policy objectives that we considered relevant to those bands. 
To ensure that Guard Band Managers would make their spectrum available 
to third parties, we required that Guard Band Managers act solely as 
spectrum brokers, prohibited them from using spectrum for their own 
private internal communications or to provide telecommunications 
services, and limited the amount of spectrum that they may lease to 
affiliated entities. To further our objective of making the 700 MHz 
guard band spectrum available to a wide range of users, we adopted 
certain requirements to ensure fair and nondiscriminatory access to the 
spectrum by potential users.
    34. Our recent adoption of Guard Band Manager licensing in the 700 
MHz proceeding should help guide us in evaluating whether to adopt band 
manager licensing in future proceedings. There may be instances where 
we determine that band manager licensing is not appropriate, and where 
band manager licensing is adopted, we may adopt rules governing band 
manager activity that differ from those applicable to Guard Band 
Managers. However, we reject the view that band managers are 
inappropriate for private services generally.
    35. A principal argument advanced by opponents of band manager 
licensing in private services is that in comparison to other licensing 
methods, band manager licensing will necessarily make it more difficult 
and costly for private spectrum users to obtain spectrum. We do not 
agree. Band manager licensing is a potential response to the underlying 
scarcity of spectrum for private radio services. Repeatedly, we have 
recognized this problem and have attempted to address it through 
regulatory initiatives aimed at increasing spectral and economic 
efficiencies in the use of private radio spectrum. In the absence of 
market-based mechanisms to promote efficient spectrum use, however, 
private radio spectrum has become congested and ``users have little 
incentive to use that resource more efficiently because any privately 
initiated attempt to improve efficiency would confer benefits on all 
users of the shared spectrum, with only a fraction of these benefits 
accruing to the party undertaking the effort.'' By contrast, band 
manager licensing is a market-based mechanism that can create 
incentives for efficient spectrum use. Because band managers would be 
able to charge private users for spectrum use, users would likely be 
discouraged from engaging in spectrally inefficient and low value uses. 
In addition, band managers may realize greater economies of scale than 
existing private radio licensees. Finally, as in the case of the 700 
MHz guard bands, we have the option of licensing more than one band 
manager in each license area, if we think it important to ensure that 
potential spectrum users have a choice of band managers. These factors 
will help ensure that efficiencies and cost savings associated with 
band manager licensing are passed on to private spectrum users.
    36. We also disagree with the view that band manager licensing 
inevitably results in a concentration of private spectrum in the hands 
of a few licensees while depleting the spectrum available to others. To 
the contrary, we believe that band manager licensing can increase the 
diversity of users of private spectrum. With a band manager, different 
types of spectrum users would have broad flexibility to satisfy their 
particular spectrum needs with fewer transactional costs and regulatory 
burdens than are associated with acquiring a full-term license under 
the Commission's existing license assignment and partial assignment 
procedures. Because band manager licensing may result in different 
types of users being able to access the same spectrum, we believe that 
this mechanism is consistent with the congressional intent underlying 
section 309(j)'s directive to encourage diversity in licensing.
    37. In addition to allowing for wider variety of users, band 
manager licensing is intended to facilitate apportionment of spectrum 
in a more dynamic fashion than existing licensing procedures permit, 
thus making spectrum more responsive to market demands and 
technological changes. We note that the marketplace is increasingly 
responding

[[Page 40]]

to such demands, with system operators increasingly offering services 
that have historically been provided only over private radio 
frequencies. Band manager licensing is likely to accelerate this trend 
toward more efficient use of private radio spectrum. Rather than 
deplete spectrum, band manager licensing approaches will be developed 
with the objective of affording spectrum users additional options to 
access spectrum to meet their particularized needs.
    38. Some commenters argue that band manager licensing is an 
improper delegation of the Commission's spectrum management and 
licensing authority under the Communications Act. We previously 
concluded in the 700 MHz guard band proceeding that band manager 
licensing is fully consistent with our statutory spectrum management 
obligations. For a number of reasons, we continue to believe that 
conclusion is correct, and we reiterate it today. First, because band 
managers are to be licensed and regulated by the Commission, the 
Commission fulfills its statutory obligation under section 309(a) to 
determine whether licensing of spectrum will serve the public interest, 
convenience, and necessity. Second, we do not regard the creation of 
band managers as an improper delegation of our regulatory authority 
over the use of spectrum. Band managers must operate and make spectrum 
available subject to the Commission's rules and oversight. Allowing 
band managers to make frequencies available to end users is analogous 
to the present frequency coordination process that requires applicants 
in some private services to use a frequency coordinator to select a 
frequency that will most effectively meet the applicant's needs while 
minimizing interference to licensees already using a given frequency 
band. We view band managers as engaging in activities similar to those 
of a coordinator, though with greater rights and responsibilities to 
manage the spectrum covered by its license, consistent with technical 
limitations and other regulations for the licensed radio bands.
    39. We also reject the view that band manager licensing is 
inherently inconsistent with the requirements of section 310(d) of the 
Communications Act. Section 310(d) prohibits the transfer of a radio 
license or any rights thereunder without Commission approval. Generally 
speaking, one of the Commission's primary concerns in any analysis 
under section 310(d) is to determine what party or parties may be held 
accountable for activities undertaken pursuant to a Commission license. 
For example, in the case of broadcast auxiliary facilities, the 
Commission has emphasized that it would hold the broadcast licensee 
responsible for any interference or misuse of the facilities that 
occurs during operation by the non-licensed user. See Amendment of Part 
74, Subpart F of the Commission's Rules to Permit Shared Use of 
Broadcast Auxiliary Facilities with Other Broadcast and Non-broadcast 
Entities and to Establish New Licensing Policies for Television 
Broadcast Auxiliary Stations, BC Docket No. 81-794, Report and Order, 
48 FR 17081 (April 21, 1983). The principle of licensee responsibility 
may be found throughout the Commission's rules. See, e.g., 
Implementation of Section 3(n) of the Communications Act--Regulatory 
Treatment of Mobile Services, GN Docket No. 93-252, Second Report and 
Order, 59 FR 18493 (April 19, 1994); 47 CFR 90.179(b) (licensee of 
shared radio station is responsible for assuring that facility is used 
in compliance with Commission rules); 21.13(f) (licensee must retain 
effective control where day-to-day management and operation of 
facilities are carried out by manager). We emphasize, however, that any 
analysis of de facto control over a band manager license must be 
considered in the context of this unique licensing scheme, and our 
express authorization of these activities pursuant to a band manager 
license application. In the 700 MHz Second Report and Order, we 
concluded that our Guard Band Manager rules allowing licensees to lease 
spectrum to third parties were consistent with the requirement that 
licensees retain ultimate control of their licenses. For example, we 
provided Guard Band Managers with full authority and the duty to take 
whatever actions are necessary to ensure third-party compliance with 
the Act and our rules. We also stated that a Guard Band Manager has the 
right to suspend or terminate its lessee's operations if the lessee's 
system is causing harmful interference or otherwise violating 
Commission rules. We believe that the approach taken in the 700 MHz 
Guard Band proceeding demonstrates that band manager licensing can be 
implemented consistently with the requirements of section 310(d). To 
the extent that we adopt alternative models for band manager licensing 
in future service-specific proceedings, we believe that issues relating 
to the statutory framework for such models can and should be addressed 
in those proceedings.
    40. While we conclude that band manager licensing should be 
considered as an option in the licensing of private services, we 
recognize that there are also arguments in favor of retaining the 
current site-by-site licensing approach in existing private radio 
services, as many commenters advocate. Commenters raise legitimate 
concerns about the costs to spectrum users, both in terms of financial 
costs and delays in making spectrum accessible, that may be associated 
with changing a licensing scheme in an existing service. In light of 
these considerations, we have no plans at this time to implement band 
manager licensing in existing private radio bands that are licensed on 
a site-by-site basis. We will continue to evaluate this issue on an 
ongoing basis. As many of the commenters who oppose band manager 
licensing acknowledge, demand for private radio spectrum is increasing 
and available spectrum is scarce. Compared with transactional costs and 
time periods associated with acquiring a full-term license under the 
Commission's existing licensing regimes, band manager licensing may 
have advantages because band managers may be able to complete frequency 
coordination and authorize wireless operations with significantly lower 
transactional costs and in less time. We believe that band manager 
licensing is another method that under some circumstances can help us 
progress towards greater efficiency in the use of private radio bands.
    41. While we are hopeful that band manager licensing can yield 
efficiencies in existing spectrum use, we also agree with private radio 
users that this is a complement to rather than a substitute for 
pursuing new spectrum allocations. We therefore intend to continue to 
explore the need for new spectrum allocations to address the needs of 
private and public safety users. We also believe that band manager 
licensing should be carefully considered as a licensing option for 
newly-allocated spectrum. For example, we have recently initiated a 
proceeding to reallocate 27 MHz of spectrum in bands below 3 GHz from 
Federal Government to non-government use, and have sought comment on 
proposals for band manager licensing in portions of that spectrum.
    42. We also believe that band manager licensing can be structured 
to prevent the types of problems that some commenters contend will 
occur, including problems of interference, loss of spectrum efficiency, 
and inadequacy of user access and service. Although the rights and 
obligations of band managers may vary somewhat from service to service, 
we anticipate that band

[[Page 41]]

managers will generally have economic incentives to eliminate 
interference so as to ensure that end users receive quality service. 
Band managers will also be required to coordinate the use of 
frequencies among end user clients to minimize interference, and will 
be obligated to ensure that their lessees satisfy the interference 
protection requirements set forth in the Commission's rules both as to 
incumbent private radio licensees and licensees in adjacent frequency 
bands. Band managers will also be responsible for resolving 
interference conflicts among their customers and, in the first 
instance, among their customers and neighboring users of spectrum 
licensed to other band managers or other licensees. We have recognized 
that one way to allow greater flexibility in the use of spectrum is to 
permit licensees to negotiate arrangements among themselves to control 
interference rather than rely on mandatory technical rules. See 
Spectrum Policy Statement.
    43. Band managers also have the potential to promote more efficient 
use of their licensed spectrum due to their financial incentive to 
maximize spectral efficiency and use. This incentive is likely to 
encourage band managers to reach private commercial agreements with 
incumbents, other band managers and adjacent licensees on effective 
spectrum management. The band manager will be responsible for managing 
a significant portion of spectrum and will attempt to maximize its use 
by finding additional third party users. In this way, band manager 
licensing may achieve greater efficiencies than existing licensing 
schemes in appropriate circumstances. Similarly, we find little merit 
in assertions that band managers will engage in unfair or 
discriminatory behavior and warehouse spectrum. We are confident that 
band managers will have incentives to open the use of the spectrum for 
all eligible users. Nonetheless, we will consider whether it is 
appropriate for band managers in other bands to be subject to the same 
types of rules as 700 MHz Guard Band Managers regarding fair and 
nondiscriminatory access to the band manager's spectrum, and limits on 
the type of restrictions that band managers may impose on their 
customers' use of the spectrum. If circumstances warrant, moreover, the 
Commission might consider imposing reasonable access standards or other 
requirements to forestall anticompetitive behavior.
    44. In assessing whether a band manager licensing mechanism may be 
appropriate for a specific private services band, we intend to look at 
a number of factors. For example, we might consider whether there are 
entities who can effectively perform the functions of a band manager, 
and whether other licensing options may be overly cumbersome or 
inefficient. Our decisions on whether and how to license band managers 
in other bands may also be guided by our experience with the 700 MHz 
Guard Bands. However, the band manager rules we adopt in other bands 
may differ in some or all respects from our Guard Band Manager rules. 
As an initial matter, if we decide to license band managers in other 
bands, we will determine whether the spectrum should be licensed 
exclusively to band managers or to band managers along with other types 
of licensees. In considering band manager licensing, we will decide 
whether the band manager may be solely a broker of spectrum or may also 
use its licensed spectrum for its own internal communications or to 
provide telecommunications services.
    45. If we permit band managers to use their spectrum in addition to 
leasing it, we will also consider whether rules are needed to ensure 
that band managers continue to perform their core spectrum management 
functions. Thus, if we determine that a band manager will not be 
limited to acting as a spectrum broker, we will also consider whether 
it is appropriate to limit the amount of spectrum that a band manager 
may retain for its own use. In addition, we will consider whether to 
adopt rules concerning the types of entities that may lease spectrum 
from a band manager. For example, if we decide to limit the amount of 
spectrum that a band manager may employ for its own communications 
needs or service offerings, we might advance that regulatory objective 
by limiting the amount of spectrum that a band manager leases to 
affiliated entities. We may provide the band manager in a given band 
flexibility to lease its spectrum for a wide range of uses, including 
fixed or mobile, private or commercial radio services. Alternatively, 
we could adopt eligibility restrictions for the band managers similar 
to those we have historically adopted for licensees in existing private 
radio services. See, e.g., 47 CFR 90.35(a) (eligibility for part 90 
licenses on Industrial/Business Pool frequencies).
    46. We believe that the framework outlined presents a workable set 
of guidelines in our future considerations of whether and how to 
license band managers in private radio services, and how to advance the 
policy objectives we establish for the bands under consideration. We 
emphasize that, where we find band manager licensing to be appropriate, 
we intend to seek input on how band manager licenses can be most 
appropriately defined for the service in a manner that affords users 
the broad flexibility to access spectrum, maximizes efficient use of 
the spectrum, and yields greater benefits than site-by-site or other 
traditional licensing techniques.

D. Auction Design for Private Radio Spectrum Deemed Subject to Auction

    47. We next discuss issues of auction design and implementation for 
those services that were not subject to auction under the 1993 Budget 
Act but may be determined to be subject to auction under our revised 
auction authority. The services that may be determined to be subject to 
auction under our expanded auction authority are, by and large, private 
radio services which are presently licensed under procedures that 
generally do not result in the filing of mutually exclusive 
applications. Thus, we next consider issues of auction design and 
implementation for those services that may be subject to auction in the 
future.
i. Competitive Bidding Methodology and Design
    48. Background. We have concluded that section 309(j), as amended 
by the Balanced Budget Act, gives the Commission authority to conduct 
auctions in the private services if, subject to its obligation to avoid 
mutual exclusivity, the Commission determines that the use of 
competitive bidding would serve the public interest. In the event that 
the Commission adopts a licensing scheme that results in mutual 
exclusivity, the Commission seeks to develop a competitive bidding 
process that is tailored to the specific characteristics of the private 
radio services, the various purposes for which spectrum in those 
services is used, and the needs of the various types of entities 
holding licenses in those services. In the NPRM, we stated that 
Sec. 1.2103(a) of our rules sets forth the various types of auction 
designs from which we may choose to award licenses for services or 
classes of services subject to competitive bidding. We also pointed out 
that under section 309(j) the Commission has authority to design and 
test other auction methodologies. In light of these options, we sought 
comment generally on the types of competitive bidding designs and 
methodologies to be considered for any private radio services that may 
be determined to be auctionable as a result of the Balanced Budget Act. 
We also asked about the frequency with which we should

[[Page 42]]

conduct auctions of private radio services spectrum that we determine 
is auctionable, and whether we should conduct auctions at regularly 
scheduled intervals. In addition, we asked whether certain procedures 
such as bidding credits and spectrum caps would be appropriate in the 
private radio services.
    49. Discussion. Although we received little public comment on these 
issues, we believe that the specialized nature of private radio 
services merits consideration of changes to our general auction design 
and procedures. We intend to consider proposals to amend our 
competitive bidding methodology for specific private radio services on 
a service-by-service basis. We may, for instance, decide to implement 
procedures such as bidding credits, spectrum caps, and auctions at 
regularly scheduled intervals. We have provided bidding credits to 
eligible applicants in many of our previous auctions and believe that 
applicants for licenses in the auctionable private radio services 
should also be eligible to receive such financial benefits provided 
they meet the necessary criteria. See, e.g., Amendment of Part 1 of the 
Commission's Rules--Competitive Bidding Procedures, WT Docket No. 97-
82, Allocation of Spectrum Below 5 GHz Transferred from Federal 
Government Use, ET Docket No. 94-32, Third Report and Order and Second 
Further Notice of Proposed Rule Making (``Part 1 Third Report and 
Order), 63 FR 2315 (January 15, 1998) and 63 FR 770 (January 7, 1998) 
(modified by Erratum, DA 98-419 (rel. Mar. 2, 1998)) (adopting small 
business bidding credits). See also 47 CFR 1.2110 (definition of small 
business designated entities for purposes of FCC's competitive bidding 
processes). We further believe that scheduling auctions for licenses in 
the private services at regular intervals would be particularly 
beneficial to the private wireless industry because private internal 
radio service licensees may not be able to wait a significant amount of 
time to obtain authorizations for the frequencies they need to conduct 
their businesses. In addition, we confirm our determination made in the 
Part I Third Report and Order to continue to define small businesses 
for purpose of private wireless auction rules based on the 
characteristics and capital requirements of the specific service.
ii. Eligibility Requirements
    50. Background. The NPRM solicited comment on a broad range of 
questions relating to eligibility for participation in spectrum 
auctions for private radio services. In particular, we sought comment 
on whether to restrict eligibility to participate in auctions for 
private wireless services so that we might be able to tailor a 
competitive bidding system to afford private wireless users reasonable 
opportunities to obtain sufficient spectrum to meet the needs of their 
day-to-day business operations. We requested comment on whether 
participation in private wireless spectrum auctions should be limited 
to certain types of entities, such as small businesses, non-commercial 
entities or public safety organizations, and whether to afford certain 
classes of applicants priority status in an auction.
    51. Discussion. With respect to services that are currently 
restricted to private radio eligibles, we have no plans to change 
existing eligibility and use rules. Our decision of whether to use 
competitive bidding to assign licenses is independent of any 
determination relating to licensee eligibility.
    52. As to newly allocated spectrum, we will make decisions on 
eligibility at the time we promulgate specific service rules for those 
bands. In recent years, the Commission has generally favored open 
eligibility rather than eligibility restricted to particular types of 
entities. We have taken this approach based on the finding that open 
eligibility generally promotes efficiency in spectrum markets and 
results in the award of licenses to those who value them most highly. 
Nevertheless, we recognize that this general approach may not be 
appropriate in all cases and we may decide to restrict eligibility in 
particular cases if such restrictions are consistent with our spectrum 
management responsibilities under section 309(j).
iii. Processing of New Applications
    53. Background. In the NPRM, we posed a number of questions 
concerning the implementation of competitive bidding for services in 
which licenses will be assigned by auction for the first time. In 
particular, we requested comment on measures that might be necessary to 
prevent applicants from using the current application and licensing 
processes to engage in speculative activity prior to our adoption of 
auction rules, such as temporary application freezes or interim rules 
imposing shorter time periods for construction or build-out.
    54. Discussion. In the event we decide to adopt competitive bidding 
for a private radio service, we will continue to make service-by-
service determinations as to whether to temporarily suspend acceptance 
of applications for new licenses, amendments, or major modifications, 
or adopt interim rules imposing shorter time periods for construction 
or build-out. Commenters uniformly oppose the use of application 
freezes, noting that they can be disruptive to existing operations and 
can often last longer than initially anticipated. We are mindful that 
even short-term freezes have the potential to harm incumbents as well 
as potential new entrants and, by extension, the public.
    55. We observe that the Commission has delegated authority to 
impose application filing freezes in the private wireless services to 
the Chief of the Wireless Telecommunications Bureau. See 47 CFR 0.131; 
0.331. While we defer to the Bureau's expertise and experience in 
making such determinations, we believe that the Bureau should be guided 
by a principle of using the least restrictive means available to deter 
speculative applications. Generally, the Bureau has carefully balanced 
the benefits and costs to incumbent users, new entrants and the public 
of applying such measures.

E. Exemption from Competitive Bidding for Public Safety Radio Services

    56. The following discussion focuses on the scope of section 
309(j)(2)(A)'s exemption for ``public safety radio services,'' and 
mechanisms that may be used in the event we receive mutually exclusive 
applications for public safety radio services.
i. Scope of Public Safety Radio Services Exemption
    57. Background. Section 309(j)(2)(A), as amended by the Balanced 
Budget Act, states that the Commission's auction authority does not 
extend to licenses and permits issued
    (A) For public safety radio services, including private internal 
radio services used by State and local governments and non-government 
entities and including emergency road services provided by not-for-
profit organizations, that--

used to protect the safety of life, health, or property; and
(ii) are not made commercially available to the public;

As we stated in the NPRM, this exemption from the Commission's auction 
authority is of particular importance to determining the auctionability 
of wireless spectrum. In the NPRM, we sought comment on the various 
elements of the statutory exemption.
    58. Discussion. As discussed in greater detail in the following 
paragraphs, we conclude that the statutory exemption for public safety 
services applies not only to traditional

[[Page 43]]

public safety services such as police, fire, and emergency medical 
services, but also to services designated for non-commercial use by 
entities such as utilities, railroads, transit systems, and others that 
provide essential services to the public at large and that need 
reliable internal communications in order to prevent or respond to 
disasters or crises affecting their service to the public. We also 
conclude that the public safety exemption applies only to services in 
which these public safety uses comprise the dominant use of the 
spectrum. Thus, services in which such uses are not dominant (and in 
which mutual exclusivity occurs) are not statutorily exempt from 
auctions, even if some individual licensees in the service may choose 
to use the spectrum for public safety purposes as defined by the 
statute.
    59. In applying this analysis to existing private services, we 
conclude that spectrum currently allocated to the Public Safety Radio 
Pool, to the extent it is licensed on an exclusive basis, is within the 
scope of the statutory exemption. We also conclude that the exemption 
does not apply to exclusively licensed spectrum in the 220, 800, and 
900 MHz bands allocated to Industrial/Land Transportation and Business 
Radio use, nor does it apply to exclusive private land mobile radio 
frequencies in the 470-512 MHz band, because the dominant use of these 
bands is not ``public safety'' use as defined by section 309(j)(2)(A). 
See 47 CFR 90.311(a)(1) (permitting a wide variety of users in the 470-
512 MHz band, including Business Radio Service eligibles). With respect 
to other private services that are not exclusively licensed, we do not 
need to determine the applicability of the public safety exemption at 
this time because mutual exclusivity does not occur in these services.
    60. We do provide, however, the following guidance regarding our 
interpretation of the public safety exemption, and discuss the factors 
we will consider in assessing its applicability to future situations. 
As a threshold matter, we find that the exemption should be evaluated 
in terms of its application to particular services rather than to 
particular classes or groups of licensees within a service. The 
statutory language provides that the exemption applies to ``public 
safety radio services.'' While the legislative history of the Balanced 
Budget Act refers to particular ``users'' as being exempt, we believe 
that this language is best interpreted as illustrating the types of 
services that fall within the new statutory term, i.e., services like 
those used by the entities referenced in the legislative history. 
Because the applicability of the exemption to any service must be 
decided before the service is licensed, our analysis in each case must 
be based on the use and eligibility rules that we establish for the 
service. We therefore agree with the majority of commenters that 
delineating the scope of the exemption is a matter of determining 
whether the rules for a particular service cause it to fall within the 
definition of a ``public safety radio service,'' rather than attempting 
to predict the uses of spectrum that will develop after licensing 
occurs. We therefore conclude that the exemption can apply only to 
spectrum that the Commission specifically allocates for the particular 
uses that Congress intended to benefit. We note that the public safety 
radio services exemption does not preclude the Commission from 
allocating additional spectrum only for traditional public safety 
services as defined by part 90 of the Commission's Rules. We discuss 
each of the elements of the statutory exemption in turn.
    61. Private Internal Radio Services. The statutory public safety 
exemption includes ``private internal radio services'' used for public 
safety purposes. In the NPRM, we proposed to define ``private internal 
radio services'' by adapting the part 90 definition of ``internal 
system'' to also include fixed services (which are governed by part 
101). The commenters broadly support adopting the part 90 definition 
for purposes of determining this element of the statutory exemption. We 
therefore adopt this definition, i.e., we define a ``private internal 
radio service'' as a service in which the licensee does not make a 
profit, and all messages are transmitted between fixed operating 
positions located on premises controlled by the licensee and the 
associated fixed or mobile stations or other transmitting or receiving 
devices of the licensee, or between mobile stations or other 
transmitting or receiving devices of the licensee.
    62. We also requested comment on whether the ``private internal'' 
use definition should include services in which licensees operate 
systems on a not-for-profit basis and under a cost-sharing agreement, 
on a cooperative basis, or as a multiple-licensed system for internal 
communications to support their own operations. Consistent with most of 
the comments addressing this issue, we now decide that once we deem a 
particular service to be a public safety radio service, the spectrum 
will be auction-exempt even if some of the users operate their systems 
under some type of cost-sharing arrangement or through multiple 
licensing. We note, however, that the services on which such use is 
permitted currently (e.g., Private Land Mobile Radio Services) are 
licensed in a manner that does not give rise to mutual exclusivity, so 
that it is not necessary at this time to consider the applicability of 
the exemption to these services.
    63. State and Local Governments. The exemption includes ``private 
internal radio services'' used by both public and private entities, 
i.e., ``state and local governments and non-government entities.'' In 
the NPRM, we requested comment on our tentative conclusion that we 
should presume that all state and local government entities are 
eligible for licensing in the public safety radio services without any 
further showing as to eligibility, rather than require all state and 
local government entities to demonstrate their eligibility for 
licensing in the public safety radio services. In establishing 
eligibility for licensing in the public safety spectrum in the 700 MHz 
band, the Commission concluded that all state and local government 
entities would be presumed eligible without further showing as to 
eligibility. See The Development of Operational, Technical and Spectrum 
Requirements For Meeting Federal, State and Local Public Safety Agency 
Communication Requirements through the Year 2010, WT Docket No. 96-86, 
First Report and Order and Third Notice of Proposed Rule Making, 63 FR 
58645 and 63 FR 58685 (November 2, 1998). The Conference Report 
accompanying the Balanced Budget Act makes clear that Congress intended 
the public safety radio services exemption to be broader than the 
definition of ``public safety services'' eligible for licensing in the 
700 MHz band, i.e., to include a larger universe of services. 
Commenters addressing this issue agree that the Commission should 
presume eligibility for state and local government entities. 
Consequently, we conclude that all state and local government entities 
are eligible for licensing in the public safety radio services without 
any further showing as to eligibility, subject to the statutory 
requirements for spectrum to be deemed auction-exempt.
    64. Non-government Entities. In the NPRM, we requested comment on 
whether we should establish any eligibility criteria for non-government 
entities (NGOs) to ensure that public safety radio services spectrum 
licensed to these entities is used to protect the safety of life, 
health, or property and is not made commercially available to the 
public. Most commenters addressing this issue oppose the imposition of 
eligibility restrictions, such as

[[Page 44]]

governmental approval requirements. We agree. A statutory analysis 
supports this conclusion. The definition for ``public safety services'' 
in section 337(f) of the Communications Act requires NGOs to be 
authorized by a governmental entity in order to be eligible for public 
safety spectrum in the 764-776/794-806 MHz (700 MHz) band, but the 
public safety radio services exemption in section 309(j)(2) contains no 
such condition. This distinction indicates that Congress did not intend 
to subject NGOs to such requirements in order to be eligible for public 
safety radio service spectrum. Accordingly, we conclude that we shall 
not establish any eligibility criteria for NGOs separate and apart from 
the eligibility requirements for each public safety radio service.
    65. Section 309(j)(2)(A) also provides that the exemption includes 
services used by not-for-profit organizations providing emergency road 
services. The legislative history to the Balanced Budget Act reflects 
that this service exemption includes ``radio services used by not-for-
profit organizations that offer emergency road services, such as the 
American Automobile Association,'' and explains that the Senate 
``included this particular exemption in recognition of the valuable 
public safety service provided by emergency road services.'' The 
Conference Report specifies that this exemption was not meant to 
include ``internal radio services used by automobile manufacturers and 
oil companies to support emergency road services provided by those 
parties as part of the competitive marketing of their products.'' The 
statute makes a specific distinction between for-profit and not-for-
profit entities in this context. The statute does not make this 
distinction in any other context with respect to the exemptions from 
competitive bidding. We conclude that a radio service used by for-
profit entities providing emergency road services is not auction-
exempt. The for-profit nature of such entities takes them outside the 
scope of the emergency road services exemption, even if they arguably 
otherwise meet the statutory criteria.
    66. Protection of Life, Health, or Property. Congress requires that 
the exemption apply to private internal services used by state and 
local governments and non-government entities to protect life, health, 
or property. Thus, the most prominent issue in delineating the scope of 
the exemption is to determine which services are ``used to protect the 
safety of life, health, or property'' within the meaning of the 
statute.
    67. As a threshold question, we must determine what proportion of 
users in a given service must be the type of user that Congress 
intended to be able to make use of exempt spectrum, in order for the 
service to be deemed a public safety radio service. For example, is a 
service auction-exempt so long as any of the users within that service 
are qualified to obtain such spectrum? Or must all, or the majority, of 
the entities within the service, be qualified to obtain such spectrum? 
In the Multiple Address System proceeding, we looked to the 
``dominant'' or ``primary'' use of each band to determine whether to 
assign it by competitive bidding. In other words, we examined whether 
the majority of users within a given band are qualified to obtain 
auction-exempt spectrum, in order to determine whether that band should 
be designated as auction-exempt. We will use the same approach here.
    68. In order to determine whether a given service is primarily 
utilized by the type of user Congress intended to exempt from 
competitive bidding, we must determine what users Congress intended to 
include within the exemption. In the NPRM, we tentatively concluded 
that Congress intended to include those users of spectrum currently 
allocated for traditional public safety uses. Specifically, we proposed 
to designate the following spectrum as exempt from assignment by 
competitive bidding procedures:
    a. Private Land Mobile Radio Services currently assigned to the 
Public Safety Radio Pool. This pool is comprised of those services 
formerly housed in the Public Safety Radio Services and the Special 
Emergency Radio Services. See 47 CFR 90.16. The Public Safety Radio 
Services included the Local Government, Police, Fire, Highway 
Maintenance, Forestry-Conservation, and Emergency Medical Radio 
Services. See 47 CFR part 90, subpart B, Note, former Sec. 90.15 
(1997). See 47 CFR 90.16. The Special Emergency Radio Service covered 
the licensing of radio communications of hospitals and clinics, 
ambulance and rescue services, veterinarians, persons with 
disabilities, disaster relief organizations, school buses, beach 
patrols, persons or organizations in isolated areas, and emergency 
standby and repair facilities for telephone and telegraph systems. See 
47 CFR part 90, subpart C, Note, former Sec. 90.33 (1997).
    b. Public safety spectrum in the 700 MHz band.
    c. The ten 220 MHz band non-nationwide channel pairs allocated for 
the exclusive use of Public Safety eligibles.
    d. The two contiguous channel pairs in each of the thirty-three 
inland VHF Public Coast areas set aside for public safety users. See, 
Amendment of the Commission's Rules Concerning Maritime Communications, 
Third Report and Order and Memorandum Opinion and Order, PR Docket No. 
92-257, 63 FR 40059 (July 27, 1998).
    We now conclude that the portions of spectrum listed are public 
safety radio services for purposes of eligibility for the exemption. We 
also find that the five channel pairs in the 932/941 MHz Multiple 
Address Systems bands designated for Federal Government and/or public 
safety use as defined by part 90 of the Commission's rules fall within 
the exemption.
    69. As stated earlier, we believe that Congress intended for the 
exemption to include a larger universe of uses than traditional public 
safety and the legislative history of the Balanced Budget Act provides 
guidance regarding the intended further scope of the exemption. 
Specifically, the Conference Report states that the exemption for 
public safety radio services includes the private internal radio 
services used by ``utilities, railroads, metropolitan transit systems, 
pipelines, private ambulances, and volunteer fire departments.'' The 
inclusion of private ambulances and volunteer fire departments is due 
to the fact that the services they perform supplement or, in some 
areas, replace traditional public safety functions ordinarily provided 
by local governments. Accordingly, we conclude that spectrum bands, the 
dominant use of which are by entities that use their communications 
systems to perform such public safety services, should be exempt from 
auction.
    70. However, the other entities identified in the Conference 
Report--utilities, pipelines, metropolitan transit systems and 
railroads--do not have, as their primary missions, traditional public 
safety functions. Utilities and pipelines exist to bring, among other 
things, gas, water and electricity to consumers; transit systems and 
railroads exist to transport people and goods. In determining what 
common characteristics they do have, and thus what other entities 
Congress intended the exemption to encompass, we find helpful the Final 
Report of the Public Safety Wireless Advisory Committee (PSWAC), which 
the Commission, jointly with the National Telecommunications and 
Information Administration, chartered to provide advice and 
recommendations on the current and future requirements for public 
safety communications. PSWAC recommended a definition of ``Public

[[Page 45]]

Services'' as services ``that furnish, maintain, and protect the 
nation's basic infrastructures which are required to promote the 
public's safety and welfare.'' It stated, ``Public service providers, 
such as transportation companies and utilities[,] rely extensively on 
radio communications in their day-to-day operations, which involve 
safeguarding safety and preventing accidents from occurring.'' The 
Commission relied on a similar concept when it established special 
frequency coordination requirements for spectrum formerly used 
exclusively by the power, petroleum, and railroad industries because, 
in these industries, radio is used as a critical tool for responding to 
emergencies that could impact hundreds or thousands of people. Although 
the primary functions of these organizations is not necessarily to 
provide safety services, the nature of their day-to-day operations 
provides little or no margin for error and in emergencies they can take 
on an almost quasi-public safety function. Any failure in their ability 
to communicate by radio could have severe consequences on the public 
welfare. For example, the failure or inability of trains to communicate 
with each other or a central dispatcher could result in unsafe 
conditions and an increased risk of derailment. Also, utility companies 
need to possess the ability to coordinate critical activities during or 
following storms or other natural disasters that disrupt the delivery 
of vital services to the public such as provision of electric, gas, and 
water supplies. Subsequently in this proceeding, the Commission amended 
the rules to require that frequencies formerly allocated to the power, 
petroleum, and railroad industries on either an exclusive or shared 
basis be coordinated only by the frequency coordinator of the relevant 
service, or, at the relevant frequency coordinator's discretion, with 
its written concurrence. Replacement of Part 90 by Part 88 to Revise 
the Private Land Mobile Radio Services and Modify the Policies 
Governing Them, PR Docket No. 92-235, Second Memorandum Opinion and 
Order, (``Refarming Second MO&O'') 64 FR 36258 (July 6, 1999). The 
Refarming Second MO&O is currently on reconsideration, and has been 
stayed with respect to frequencies formerly allocated on a shared basis 
to these industries. Replacement of Part 90 by Part 88 to Revise the 
Private Land Mobile Radio Services and Modify the Policies Governing 
Them, Fourth Memorandum Opinion and Order, 64 FR 50466 (September 17, 
1999), (``Refarming Fourth MO&O'').
    71. Against this background, we observe that the entities 
identified in the Conference Report which do not use their 
communications principally for the protection of life, health or 
property--utilities, railroads, metropolitan transit systems and 
pipelines--have two characteristics in common. First, these entities 
have an infrastructure that they use primarily for the purpose of 
providing essential public services to the population at large. In this 
context, an infrastructure can be described as fixed physical 
facilities that extend beyond the licensee's place of business to areas 
where the public at large live and work and are therefore exposed to 
adverse results stemming from a breakdown in the licensee's 
infrastructure. The second common characteristic is that the 
reliability and availability of the communications systems for these 
entities is necessary for them, as part of their regular mission, to 
prevent or respond to a disaster or crisis affecting the public at 
large. Specifically, the public depends on these services, which affect 
the daily lives of members of the public and interruption in the 
service may have dangerous consequences. Accordingly, we conclude that 
a radio service not allocated for traditional public safety uses will 
be deemed to protect the safety of life, health or property within the 
meaning of section 309(j)(2)(A)(i) if the dominant use of the service 
is by entities that (1) have an infrastructure that they use primarily 
for the purpose of providing essential public services to the public at 
large; and (2) need, as part of their regular mission, reliable and 
available communications in order to prevent or respond to a disaster 
or crisis affecting the public at large.
    72. For instance, an electric utility meets both prongs of the two-
part standard. Power lines extend far beyond the utility's power plant 
and into areas where members of the public live and work. A breakdown 
in the electric utility's infrastructure or fixed physical facilities 
(e.g., a live wire) creates a dangerous condition for members of the 
public. Additionally, a dependable communications system is necessary 
for an electric utility to respond to an interruption in service that 
may hinder the delivery of vital services (e.g., without power, a home 
may lack heat in the winter or air conditioning in the summer). 
Similarly, a metropolitan transit system meets both parts of the 
standard. A metropolitan transit system has an infrastructure or fixed 
physical facilities (e.g., railroad tracks) where a breakdown in the 
system (e.g., derailment) creates a dangerous condition that would 
adversely affect the public at large. Moreover, a reliable 
communications system is essential for a metropolitan transit system to 
enable quick response to any disruption in service as an interruption 
can create a dangerous condition and would impede the delivery of vital 
transportation services to the public.
    73. Some commenters argue that all private wireless communications, 
in some respect, protect the safety of life, health, and property of 
the public, and therefore all private wireless services should be 
auction-exempt. They note that individuals in virtually every industry 
rely upon their private wireless radio systems to ensure the safety of 
their employees and enhance their productivity and operations and 
contribute to the continued growth and vibrancy of the economy. As a 
general matter, we agree with these characterizations. We conclude, 
however, that extending the exemption to all private wireless services 
would go beyond the legislative intent. As noted earlier, section 
309(j) formerly applied only to subscriber-based services, and thus 
exempted the private wireless services because these services were 
generally not subscriber-based. The Balanced Budget Act amended the 
statute to direct the Commission to use auctions to resolve mutually 
exclusive applications for all radio services, unless they fall within 
a specific exemption. To interpret the exemption for public safety 
radio services in section 309(j)(2)(A) in a manner that effectively 
negates the changes to section 309(j)(1) would not be reasonable.
    74. It is apparent that Congress deemed utilities, railroads, 
metropolitan transit systems and pipelines to be entities that protect 
the safety of life, health, or property for purposes of public safety 
radio services. We agree with the commenters, however, that the list in 
the Conference Report was presented for illustrative purposes and not 
as an exhaustive listing. Nonetheless, we believe that only spectrum 
used for the provision of services similar to those listed in the 
Conference Report should be included in the exemption, and that only 
similar entities can satisfy the aforementioned two-part standard. For 
instance, telephone maintenance, although not specifically mentioned in 
the Conference Report, meets the two-part standard. In applying the 
standard, providers of such services have an infrastructure that serves 
the public where a breakdown in the system (e.g., cut wire) impedes the 
ability to

[[Page 46]]

communicate by telephone, which is a vital service in today's society. 
In addition, a reliable communications system is necessary for 
telephone maintenance to enable quick response to an interruption in 
the delivery of telephone service in an emergency situation. On the 
other hand, for example, taxi cabs do not meet both prongs of the two-
part standard and are therefore unlike those entities listed in the 
Conference Report. Although taxi cabs arguably provide essential 
services to the public, the providers of this service do not have an 
infrastructure or fixed physical facility where a breakdown in its 
system (e.g., a disabled taxi cab) adversely affects the public at 
large.
    75. While we will not at this time attempt to provide an extensive 
list of exempt public safety radio services, we do conclude that the 
Industrial/Land Transportation and Business Radio categories within the 
800 MHz band and 900 MHz band, and the private land mobile radio 
frequencies in the 470-512 MHz band, shall not be exempt from auction 
under the public safety radio service exemption. The dominant use of 
these frequencies is by persons primarily engaged in the operation of a 
commercial activity, to support day-to-day business operations (such as 
dispatching and diverting personnel or work vehicles, coordinating the 
activities of workers and machines on location, or remotely monitoring 
and controlling equipment). The dominant use is not by entities with an 
infrastructure that they use primarily for the purpose of providing 
essential public services to the public at large, and that need, as 
part of their regular mission, such spectrum to prevent or respond to a 
disaster or crisis affecting the public at large. Accordingly, we 
conclude that the 470-512, 800, 900 MHz bands shall be subject to 
auction to the extent that mutually exclusive applications are filed. 
However, we emphasize that we will continue to utilize existing 
licensing approaches for these bands, which tend to avoid mutual 
exclusivity, thereby minimizing the possibility of competitive bidding.
    76. Noncommercial Proviso. The public safety radio services 
exemption requires that the radio services not be made commercially 
available to the public. We sought comment on how the term ``not made 
commercially available to the public'' should be defined. The 
Commission has interpreted similar language in implementing the 
congressional definition of ``commercial mobile service.'' In that 
context, the Commission interpreted the term ``for profit,'' which we 
believe is inherent to ``commercial'' use, as including any service 
that is provided with the intent of receiving monetary gain. In the 
Matter of Implementation of sections 3(n) and 332 of the Communications 
Act, Regulatory Treatment of Mobile Services, GN Docket No. 93-252, 
Second Report and Order, (CMRS Second R &O) 59 FR 18493 (April 19, 
1994). The Commission also found that a service is available ``to the 
public'' if it is offered to the public without restriction as to who 
can receive it. Because the purpose of that proceeding was to determine 
the meaning of commercial mobile service, as defined in section 332(d) 
of the Communications Act, the Commission was required to include in 
its definition those services ``effectively available to a substantial 
portion of the public.'' The Commission concluded that if service is 
provided exclusively for internal use or is offered only to a 
significantly restricted class of eligible users, it is made available 
only to insubstantial portions of the public, and cited as an example 
of this, the Public Safety Radio Services. See CMRS Second R&O. While 
we have held that provision of service to eligibles in the Business 
Radio Service category is essentially service to the public, this is 
because the class of eligibles in this pool is extremely broad. 
Specifically, this pool encompasses users engaged in commercial 
activities and clergy activities, as well as, those that operate 
educational, philanthropic, or ecclesiastical institutions, hospitals, 
clinics and medical associations. See 47 CFR 90.31. We shall apply a 
definition of ``commercially available to the public'' that is 
consistent with these definitions. Accordingly, for the purposes of the 
auction exemption under section 309(j) of the Communications Act, we 
find that ``not made commercially available to the public'' means that 
the service is not provided with the intent of receiving compensation, 
and is not available to a substantial portion of the public.
    77. In the NPRM, we also asked whether commercial service providers 
intending to provide telecommunications services to public safety 
entities should be able to apply for auction-exempt spectrum. We agree 
with the commenters who argue that commercial service providers and 
public safety agencies have very different goals and incentives 
regarding spectrum use, and caution that if licenses for scarce public 
safety radio spectrum are assigned to commercial providers, public 
safety entities may find it virtually impossible to secure sufficient 
spectrum for their own internal needs. Also, if we expand eligibility 
to commercial providers declaring an intent to serve public safety 
entities, it would be difficult to ensure that the dominant use of this 
spectrum would be by entities that protect the safety of life, health, 
or property. In addition, we conclude that permitting such use of 
public safety radio service spectrum would be contrary to Congress's 
intent. We believe that Congress created the exemption to give entities 
that protect the safety of life, health, or property, at a minimum, an 
opportunity to secure access to spectrum without having to pay for it. 
Assigning public safety radio service spectrum to commercial providers 
could conflict with this intention by compelling public safety radio 
service eligibles to pay for access to auction-exempt spectrum. We 
agree with commenters that including commercial third-party providers 
within the exemption would enlarge it beyond all limits of 
reasonableness. Thus, we believe that creating an opportunity for 
commercial operators to obtain public safety radio service spectrum 
would contravene congressional intent.
    78. Restrictions on Use. Another important issue is the scope of 
permissible uses for public safety radio services spectrum, and more 
specifically, whether such licensees are required to use their auction-
exempt frequencies exclusively for safety-related purposes. Section 
337(f)(1) of the Communications Act defines a ``public safety service'' 
for determining eligibility for licensing in the 24 MHz of spectrum 
reallocated for public safety services, as a service the ``sole or 
principal purpose'' of which is to protect the safety of life, health 
or property. By contrast, the auction exemption under section 309(j)(2) 
contains no such restriction.
    79. We conclude that because utilities, pipelines and railroads do 
not use their frequencies exclusively for safety-related purposes, 
Congress could not have intended that entities using exempt spectrum 
use that spectrum exclusively for such purposes. Furthermore, it would 
be overly burdensome to require licensees to differentiate between, and 
use different frequencies for, pure public safety communications and 
business communications, which may also serve a safety-related purpose. 
Accordingly, we agree that we should not, at this time, impose an 
additional restriction upon licensees in auction-exempt services to 
limit their use of their assigned frequencies to be exclusively for 
safety-related purposes. We do, however, expect that licensees making

[[Page 47]]

use of auction-exempt spectrum will be using that spectrum primarily to 
protect the safety of life, health or property. We also expect users of 
auction-exempt spectrum to make efficient use of that spectrum for 
safety-related purposes, and to use other available spectrum, or 
commercial providers, for more general business-related purposes that 
are not primarily safety-related.
    80. Eligibility Requirements. In the NPRM, we noted that applicants 
seeking spectrum for public safety radio services without bidding 
competitively are able to apply for such designated spectrum or, if 
they meet the requirements of section 337(f), file a waiver request for 
unassigned spectrum pursuant to section 337(c). In this connection, we 
sought comment on whether entities eligible for licenses in the public 
safety radio services should also be eligible to bid competitively for 
spectrum that has been designated for private or commercial radio use.
    81. We do not believe that it was Congress's intent to forbid 
entities eligible to be licensed on public safety radio services from 
voluntarily participating in auctions for spectrum that is not exempted 
from our competitive bidding authority. Hence, we conclude that 
entities eligible for licenses in the public safety radio services are 
eligible to participate in auctions of other spectrum. We note that the 
licensing mechanisms adopted in the Report and Order would not enable 
entities eligible for public safety radio services to select 
auctionable spectrum and exercise an exemption privilege. Therefore, 
those entities eligible for licenses in the public safety radio 
services that desire to participate in the auction of other spectrum 
will be required to comply with the same regulations, including filing 
and payment requirements, to which every other bidder is subject. 
Accordingly, the Commission will not make any special provisions for 
entities eligible for the public safety radio services that choose to 
competitively bid for auctionable spectrum. Further, if a public safety 
radio service eligible voluntarily chooses to seek licenses in 
auctionable spectrum, the spectrum will not thereby become auction-
exempt.
ii. Resolution of Mutually Exclusive Applications for Services Exempt 
From Competitive Bidding
    82. Background. In the NPRM, we requested comment on how to resolve 
mutual exclusivity between applications for spectrum exempt from 
competitive bidding. We noted that the Balanced Budget Act terminated 
the Commission's authority to use lotteries to choose among mutually 
exclusive applications and concluded that we are precluded from using 
random selection procedures to resolve mutually exclusive applications 
for auction-exempt public safety radio services. Thus, we specifically 
sought comment on whether engineering solutions, negotiation, threshold 
qualifications, service regulations, or other means, such as 
comparative hearings and first-come, first-served licensing, should be 
used to resolve mutual exclusivity in cases where frequency 
coordination is unsuccessful in avoiding mutual exclusivity.
    83. Discussion. We are aware that there may be instances where 
frequency coordination and/or first-come, first-served licensing will 
be inadequate and the Commission will receive mutually exclusive 
applications for licenses in the public safety radio services. However, 
we believe that such instances will be rare and conclude that the 
Commission should continue to rely on the regulatory tools already 
available to it to resolve mutually exclusive applications that may not 
be resolved by competitive bidding. In addition to commenters' 
suggestion that we provide a time period during which mutually 
exclusive applicants may negotiate a mutually agreeable solution, the 
Commission can also work with the relevant frequency coordinators to 
find alternative spectrum, develop engineering solutions, dismiss the 
applications with or without prejudice, or refer the matter to a 
comparative hearing. These tools have been sufficient heretofore to 
resolve mutually exclusive applications for non-auctionable spectrum, 
and, particularly given the expectation that such situations will 
continue to be rare, there does not appear to be sufficient grounds to 
implement a new procedural framework.

F. Proposals Regarding Private Land Mobile Radio Services

    84. A number of issues have been raised regarding our auction 
authority in the context of licensing in the private radio services. 
First, we consider whether geographic licensing and competitive bidding 
should be employed on the PLMR frequencies below 470 MHz that are 
currently licensed under a scheme developed in our ``refarming'' 
docket. Next, we consider a proposal advanced by a coalition of private 
radio users to create a third radio pool to accommodate the needs of 
``critical infrastructure industries.'' We also rule on a proposal 
advanced by the American Mobile Telecommunications Association, Inc. 
(``AMTA'') to restructure the licensing framework for the 450-470 MHz 
band. The Report and Order also analyzes a proposal to permit the 
incorporation of PLMR spectrum in the 800 MHz band into commercial 
mobile radio services (``CMRS'') systems. Finally, we address the issue 
of whether the part 90 multiple licensing rules should be changed in 
light of our revised auction authority.
i. Licensing of ``Refarming'' Bands
    85. Background. In the NPRM, we sought comment on whether the 
public interest would best be served by retaining our current licensing 
scheme, rather than adopting geographic licensing and competitive 
bidding, for the PLMR frequencies below 470 MHz. We noted that the 
current licensing scheme for these frequencies came out of the lengthy 
``Refarming'' proceeding, in which the Commission, inter alia, 
consolidated the twenty PLMR services into two broad frequency pools, 
and implemented procedures that will result in the transition to more 
spectrally efficient, narrowband technologies by requiring that future 
equipment meet increasingly efficient standards.
    86. Discussion. The commenters were nearly uniform in their 
opposition to the introduction of geographic area licensing in the 
Refarming bands. We agree. Moreover, we believe that there simply has 
not been enough time since the adoption of the Refarming provisions to 
reap the full benefit of the revised procedures. We note that the 
refarmed bands below 470 MHz are currently licensed on a shared, rather 
than exclusive, basis. See 47 CFR 90.173(a). Many licensees operate on 
the same channels in most geographic areas. These channels are heavily 
congested in most major urban areas, so the number of incumbents, 
particularly in the areas where geographic overlay licenses would be 
most desirable, would create nearly impossible due diligence 
requirements and would make the spectrum, at best, only marginally 
useful to a geographic area licensee. We believe that this militates 
against geographic overlay licensing of this spectrum.
    87. Thus, we conclude that the public interest would best be served 
by retaining our current licensing scheme. Accordingly, we shall not, 
at this time, reexamine the licensing scheme for the PLMR frequencies 
below 470 MHz. We emphasize, however, that this decision applies only 
to the existing allocation and not to any spectrum that might 
subsequently be allocated for PLMR services. In addition, we would not 
be precluded from revisiting the licensing

[[Page 48]]

scheme for the Refarming bands at some later date and adopting a new 
approach, such as the use of band managers.
ii. UTC Proposal To Establish a New Public Safety Radio Pool in the 
Private Mobile Bands Below 470 MHz
    88. Background. In the NPRM, we requested comment on a rulemaking 
petition submitted by UTC, The Telecommunications Association 
(``UTC''), the American Petroleum Institute (``API''), and the 
Association of American Railroads (``AAR'') (jointly referred to as the 
``Critical Infrastructure Industries'' or ``CII''). UTC represents 
electric, gas, water, and steam utilities, and natural gas pipelines. 
API represents companies in all phases of the petroleum and natural gas 
industries. AAR represents railroads operating in the United States, 
Canada, and Mexico. The petition proposes to create a third radio pool, 
in addition to the Public Safety and Industrial/Business (I/B) Radio 
Pools already used for private radio frequencies below 470 MHz. We also 
sought comment on whether this approach would be feasible for other 
frequency bands. For the reasons set forth in the following paragraphs, 
we find that a third pool is not called for at this time, and we deny 
the petition for rule making.
    89. Discussion. The petition urges the Commission to create a 
Public Service Radio Pool in the PLMR bands below 800 MHz open to 
entities that do not qualify for Public Safety Radio Pool spectrum, but 
are eligible to use the public safety radio service spectrum exempted 
from the Commission's auction authority under the Balanced Budget Act. 
The CII propose to form the proposed Public Service Pool from all of 
the channels formerly allocated exclusively to the Power, Petroleum and 
Railroad Radio Services before those services (and others) were 
consolidated into the I/B Pool in the Refarming Second Report and 
Order. The CII also propose moving a portion of the channels formerly 
shared by these services with one or more of the other services now in 
the I/B Pool. The CII further state that the Public Service Pool should 
also include frequencies formerly allocated to services used by any 
other industries that we conclude are eligible for auction-exempt 
public safety radio service spectrum. The CII recommend that the 
Commission should examine claims of eligibility for any new Public 
Service Pool closely.
    90. The CII argue that a pool to accommodate the needs of critical 
infrastructure industries is needed to protect the availability of 
spectrum for qualified entities, because of the public safety 
components of their requirements. While critical infrastructure 
industries have legitimate spectrum needs, we do not believe these 
needs warrant removing frequencies from the I/B Pool. The I/B Pool was 
created to address the scarcity of PLMR spectrum, by consolidating 
spectrum to make fallow frequencies available to parties in need. We 
are not persuaded that creating a third pool would not exacerbate the 
shortage of PLMR spectrum, overall, for the entire set of eligibles for 
the I/B Pool.
    91. The CII also argue that a third pool is needed because the 
power, petroleum and railroad industries' radio operations need greater 
protection from interference caused by other users than the Commission 
has provided. Critics of the petition argue that there is insufficient 
evidence of widespread interference problems to justify the creation of 
a third pool, and that isolated incidences of interference do not 
create a justification. We agree that the number of instances of actual 
electrical interference do not appear so large as to justify the 
inefficiencies that could arise from creating a third pool.
    92. Furthermore, several commenters contend that the exclusive 
coordination prerogative granted to the CII creates a de facto separate 
pool for these entities, and that therefore a separate pool for the CII 
is not necessary. We also note that the question of whether that 
exclusive coordination prerogative should be expanded to include 
frequencies formerly allocated to the Power, Petroleum, and Railroad 
Radio Services on a shared basis is pending in the Refarming 
proceeding. We believe that the issue of how to protect these services 
from interference is more appropriately addressed there.
    93. Finally, the CII contend that because Congress specifically 
intended to include within the exemption to competitive bidding the 
private internal radio services used by utilities, pipelines and 
railroads, the creation of a Public Service Radio Pool for the CII 
would effectuate Congressional intent by protecting those services from 
encroachment by non-essential services. The purpose of the exemption 
from our competitive bidding authority for public safety radio services 
is to relieve entities that protect the safety of life, health, and 
property from having to purchase spectrum at auction. There is no basis 
upon which to infer other or additional congressional intent with 
respect to this provision. Finally, the CII's argument that we should 
create a third pool in order to avoid complications due to the 
potential introduction of auctions in the I/B Pool is not persuasive. 
Because PLMR frequencies below 470 MHz currently are licensed in a 
manner that tends to avoid mutually exclusive applications, such 
complications generally do not arise.
    94. Accordingly, for all the reasons stated, we deny the petition. 
We note, however, that our decision not to create a third pool below 
470 MHz does not preclude us from using other mechanisms (e.g., Bands 
Managers or a change of licensing schemes) in these or other bands, in 
order to appropriately respond to the concerns set forth by the CII.
iii. AMTA Proposal To Restructure Licensing Framework for PLMR Services 
in the 450-470 MHz Band
    95. Background. On July 30, 1999, after we released the NPRM, AMTA, 
a trade association representing the specialized wireless 
communications industry, filed a petition for rule making proposing to 
fundamentally restructure the licensing framework for PLMR frequencies 
in the 450-470 MHz band. Currently, this band is licensed by 6.25 
kilohertz frequency pairs assigned on a site-by-site basis. The 
frequencies are licensed on a shared basis, and frequency coordination 
is required. See 47 CFR 90.173(a), 90.175. The frequencies are divided 
between the Public Safety Radio Pool (8 MHz) and the Industrial/
Business (I/B) Radio Pool (12 MHz). See 47 CFR 90.20(c)(3), 
90.35(b)(3).
    96. AMTA proposes that we divide the 450-470 MHz band I/B Radio 
Pool so that 2 megahertz would be available for site-based licensing on 
a shared basis, and 10 megahertz would be licensed by geographic area 
in .5 megahertz paired blocks (creating twenty licenses per market). 
Five of the twenty licenses would be set aside for private, internal 
systems, leaving the remaining fifteen available for either internal or 
commercial systems. In addition, any incumbent that is not a winning 
bidder for its frequency and area would be required either to move to 
the shared channels or elect to receive service from a commercial 
geographic licensee. The petition was placed on Public Notice on August 
24, 1999. We believe that it is appropriate to consider these proposals 
as part of the instant proceeding.
    97. Discussion. Although we believe that geographic licensing is 
generally a highly efficient means of assigning spectrum, in this 
instance we agree with the commenters that do not believe such an 
approach is warranted in the 450-470 MHz band. First, as we stated in 
our discussion of the Refarming bands (which include the 450-470 MHz 
band),

[[Page 49]]

the benefits of geographic overlay licensing of this spectrum may be 
limited because these channels are heavily congested in most urban 
areas. In addition, we note that many commenters were concerned by the 
AMTA proposal's effect on incumbent operations. We conclude that it is 
not advisable to revisit the licensing scheme for the 450-470 MHz band 
at this time. Moreover, we believe that not enough time has elapsed in 
order to reap the benefits of the licensing reforms that were adopted 
as part of the Refarming proceeding. We therefore deny AMTA's petition. 
This decision does not, however, preclude us from deciding in the 
future that some alternative approach is warranted.
iv. Licensing of PLMR Channels in the 800 MHz Band for Use in 
Commercial SMR Systems
    98. Background. In the NPRM, we noted that some spectrum currently 
allocated for private internal use is also used to provide subscriber-
based services, pursuant to intercategory sharing or rule waiver. We 
referred to a request by Nextel Communications, Inc. (Nextel) for 
waivers to permit it to acquire by assignment part 90 PLMR services 
frequencies, and utilize those frequencies for CMRS operation in its 
800 MHz SMR systems. Subsequently, the Wireless Telecommunications 
Bureau (Bureau) granted Nextel's request in part and denied in part. 
Specifically, the Bureau granted those waivers and assignments where 
Nextel would use the spectrum for relocation of incumbent licensees on 
the upper 200 channels of the 800 MHz band. The Bureau also permitted 
Nextel to use PLMR frequencies in its SMR network, but only on the 
condition that at least seventy-five percent of the channels involved 
in the waiver requests would be used to relocate upper 200 channel 
incumbents. The Bureau declined to address broader issues raised by 
Nextel's request to acquire channels without relocating an upper 200 
incumbent, and determined that incorporation into the instant 
proceeding would be the more appropriate avenue to resolve such a 
proposal. Consequently, the Bureau released a Public Notice 
incorporating the record of the Nextel matter into the instant 
proceeding and seeking comment on whether the Commission's licensing 
rules for PLMR channels in the 800 MHz band should be amended to allow 
their use in CMRS systems.
    99. Discussion. We first address whether our Rules should be 
amended to allow PLMR licensees to assign or transfer spectrum to CMRS 
licensees for use in CMRS operations. Commenters were split on this 
issue. Commenters supporting such a change argue that licensees should 
be permitted to enter into voluntary assignment agreements that alter 
the use of the spectrum because such voluntary transactions, wherein 
the licensee is willing to forgo use of the spectrum for the 
consideration offered by the other party, result in the most 
economically efficient use of the spectrum. That is, they contend that 
if a PLMR licensee finds advantageous the terms of commercial service, 
including the assignment of its frequency(ies) to the CMRS operator, 
then we should allow such transactions because the CMRS operator values 
the frequency(ies) more highly than the PLMR licensee. We note that the 
800 MHz band is particularly suited to such flexibility because 800 MHz 
PLMR and CMRS channels are interleaved, rather than grouped into 
separate subbands. See 47 CFR 90.617. In addition, a review of our 
licensing database indicates a greater presence in the 800 MHz Business 
and I/LT channels of licenses on which CMRS operations are permitted, 
through rule waivers or inter-category sharing, than in other PLMR 
bands. We therefore find that permitting such transactions would create 
additional flexibility for both PLMR licensees seeking to fill their 
communications needs and for CMRS licensees seeking additional 
spectrum.
    100. Consequently, we will amend our Rules to allow 800 MHz 
Business and I/LT licensees to assign or transfer their spectrum to 
CMRS licensees for use in CMRS operations. Moreover, unlike the 
Bureau's decision in the Nextel Order, we will not require that any 
portion of the channels transferred or assigned to CMRS licensees be 
used to relocate upper 200 channel incumbents. We are not persuaded 
that we should require the relocation of upper 200 channel incumbents 
as a condition of approving the transaction. That the spectrum at issue 
would be used predominantly for relocation purposes was important to 
the Bureau's public interest analysis of Nextel's waiver request. In 
this broader proceeding, however, we conclude that permitting such 
assignments and transfers will be beneficial for other reasons. We are 
convinced that alienability of PLMR licenses will enhance spectral use 
and efficiency. Limiting the flexibility of spectrum use to relocating 
upper 200 channel incumbents does not serve the public interest, and 
would merely erect another barrier to achieving maximum spectral 
efficiency.
    101. Similarly, we also will permit these PLMR licensees to modify 
their PMRS licenses to allow CMRS use in their own systems. Just as 
with assignments and transfers, spectral efficiencies and technological 
developments will be aided by providing PLMR licensees with this same 
flexibility. Allowing PLMR licensees the flexibility to modify their 
licenses for CMRS use permits the PLMR licensee to assess marketplace 
needs and economic factors when determining the best and most efficient 
use of spectrum.
    102. We disagree with those commenters opposed to permitting the 
incorporation of PLMR spectrum into CMRS systems, who argue that it 
will reduce the available supply of PLMR spectrum. They note that the 
Commission's purpose in eliminating intercategory sharing of non-SMR 
spectrum by SMR applicants was to stop encroachment on PLMR frequencies 
by commercial SMR licensees and eligibles, and argue that allowing CMRS 
use of 800 MHz PLMR spectrum would further exacerbate the current 
shortage of private spectrum. See Amendment of Part 90 of the 
Communications Act Regulatory Treatment of Mobile Services, PR Docket 
93-144, First Report and Order, Eighth Report and Order and Second 
Further Notice of Proposed Rulemaking, 61 FR 6138 and 61 FR 6212 
(February 16, 1996); See 47 CFR 90.621(e). In 1997, the Commission 
affirmed its decision to eliminate intercategory sharing by SMR 
eligibles. See Memorandum Opinion and Order on Reconsideration. We do 
not find these concerns persuasive. These objections seem to envision a 
scenario in which current PLMR licensees voluntarily surrender their 
rights to frequencies they are not using or are using inefficiently and 
these frequencies are then returned to the PLMR pool so as to be 
available for licensing to other private users. It has been our 
experience, however, that licensees do not in any large measure turn 
back to the Commission PLMR frequencies they no longer need or are 
using inefficiently; rather, they continue to hold the spectrum. 
Consequently, we believe that allowing licensees to modify their 
licenses for CMRS use or assign or transfer these frequencies to CMRS 
entities will not materially affect the supply of available spectrum 
for licensing from the PLMR pool.
    103. However, we deny Nextel's proposal to eliminate the 
distinction between CMRS spectrum and non-Public Safety PLMR spectrum 
with respect to initial licensing. We believe that the existing PLMR 
pool of

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unassigned frequencies should remain available on an initial basis to 
PLMR eligibles only, to construct new systems or expand existing 
systems. Therefore, we maintain the eligibility criteria for all new 
applications.
    104. While we will allow incumbent PLMR licensees to transfer or 
modify their licenses for CMRS use, we do not want to facilitate 
trafficking of PLMR spectrum (e.g., PLMR eligibles acquiring new 
licenses from the existing pool of unassigned frequencies for the 
purpose of selling them to CMRS providers). We will thus preclude a 
licensee that modifies its license or transfers or assigns its license 
to a CMRS operator, or an affiliate of the modifying or assigning 
licensee, from applying for 800 MHz PLMR spectrum in the same area for 
one year. We note that a one-year moratorium has been imposed upon 
General Category licensees that make partial assignment of a station's 
frequencies to stem trafficking in licenses. See 47 CFR 90.609(c).
    105. In addition, we will allow modification to CMRS use or 
assignment to a CMRS operator only in the case of PLMR licenses that 
were initially granted at least five years prior to the modification, 
transfer, or assignment. See Competitive Bidding Fifth Report and Order 
(explaining that a holding period would be imposed to avoid sham 
arrangements with broadband PCS licenses). We believe a five-year 
holding period is appropriate because such a requirement has been 
applied to other situations where speculation and trafficking were 
concerns. For example, our rules provide that licensees are subject to 
unjust enrichment payments for any license transfer that occurs within 
five years of the license grant. See 47 CFR 1.2111(b)(1). In this 
regard, we also note that 800 MHz PLMR licensees can receive an 
extended implementation period for of up to five years, if they 
demonstrate that such a period is required to construct the proposed 
wide-area system. See 47 CFR 90.629. One of our goals in requiring a 
holding period is to ensure that these channels will continue to be 
initially licensed only to entities that will use them for PLMR 
communications. A holding period of less than five years could 
undermine this goal by allowing many wide-area licensees to modify or 
transfer their licenses for CMRS use before they finish construction.
    106. We will not apply this five year holding period to licenses 
already granted, or for which the application already was filed, as of 
the adoption date of the Report and Order. It is our belief that no 
purpose would be served by applying the holding period to licenses 
obtained or requested before we amended our rules to permit assignment 
and/or transfer of 800 MHz Business and I/LT channels for CMRS use, 
because prior to adoption of the Report and Order, no speculative 
incentive to acquire Business and I/LT frequencies can be inferred.
    107. We are confident that the rules adopted herein, coupled with 
existing requirements in our rules, provide the necessary safeguards 
against trafficking in PLMR licenses for the purpose of assigning the 
license to a CMRS operator or using the spectrum to provide a CMRS 
service. Section 90.155 requires the licensee to have its station 
placed in operation within twelve months from the date of grant to 
avoid automatic cancellation. See 47 CFR 90.155. Moreover, Sec. 90.609 
requires complete construction of the radio facility prior to any 
transfer or assignment. See 47 CFR 90.609. Additionally, Sec. 90.157 
provides that a license will cancel automatically if there is 
discontinuance of station operation for twelve months or more. See 47 
CFR 90.157. We note that neither the one-year moratorium nor the five-
year holding requirement is applicable to PLMR-to-PLMR assignments and/
or transfers.
    108. In addition, we note that there have been incidents of 
interference to public safety licensees in this band even though CMRS 
providers operate within their licensed parameters. To address this 
issue, an FCC/public safety/industry task force is investigating 
solutions for preventing and fixing interference to 800 MHz public 
safety operations. We seek to avoid the potential for future incidents 
of such interference that could result from the modification of PLMR 
facilities to CMRS. Consequently, we will require 800 MHz licensees 
seeking to use spectrum for CMRS, upon submitting a modification 
application, to: (a) certify that the co- or adjacent channel 800 MHz 
public safety licensees in the same geographic area have been notified 
of the application; and (b) commit that they will take affirmative 
steps to avoid harmful interference to such public safety licensees. 
See also 47 CFR 90.173(b), 90.403(e) (requiring licensees to undertake 
precautions to avoid harmful interference). We believe that these 
actions together will reduce the risk of increased interference in this 
band.
    109. All 800 MHz PLMR licenses, including those granted before the 
rule change, may be assigned, transferred or modified in accordance 
with the new rules set forth herein. In addition, all new and pending 
applications for assignment, transfer, or modification will be subject 
to these new rules. However, other transactions were approved under 
previous and arguably more flexible terms and conditions. In this 
connection, we note that an application for review is pending with 
respect to the prior Nextel applications and associated waiver 
requests. Thus, in that regard, we believe that we should defer any 
decision affecting the transactions associated with the Nextel waivers 
to the disposition of the application for review. We believe that this 
approach will provide us with flexibility with respect to our treatment 
of the issues raised in the application for review.
v. Revision of Part 90 Multiple Licensing Rules
    110. Background. In the NPRM, we sought comment on whether 
eliminating or modifying the multiple licensing rules would be 
appropriate in light of the potential expansion of our auction 
authority to include private radio services. The multiple licensing 
rules provide that two or more entities may be licensed for the same 
land station, provided that each licensee complies with the 
Commission's Rules regarding permissible communications and each 
licensee is eligible for the frequency(ies) on which the land station 
operates. See 47 CFR 90.185.
    111. A ``multiple-licensed'' system, also known as a ``community 
repeater,'' is a base station in the part 90 private land mobile radio 
services which functions as a mobile relay, enabling low power mobile 
units to communicate with one another over a wide area by picking up a 
signal from one unit and repeating it to another. Generally, the 
licensees who share a multiple-licensed facility have been brought 
together by a third party, often the manufacturer of the land mobile 
equipment or a retailer, who operates the station on a profit-making 
basis. The Commission does not usually regulate this third party's 
activity and the third party is not licensed by the Commission. 
Multiple licensing has been a widespread practice in the land mobile 
services since the 1960s.
    112. Discussion. We agree that multiple licensing is still 
permissible as a matter of law and desirable as a matter of public 
policy because the ``practical realities'' which led to the development 
of community repeaters continue to prevail. A commenter states that 
most part 90 licensees cannot independently afford the monthly site 
rent for a tower or rooftop which could provide the necessary coverage, 
and that if each

[[Page 51]]

entity had to construct a separate system, it would be difficult to 
coordinate.
    113. In addition, given the light response to our request for 
comment on whether to modify the multiple licensing rules, we will not 
eliminate multiple licensing. Furthermore, eliminating multiple 
licensing would be contrary to our current efforts to introduce more, 
not less, flexibility in how licensees use their spectrum. Thus, we 
will continue to closely monitor multiple-licensed systems and judge 
their validity on a case-by-case basis.

G. Section 337 Licensing for Public Safety Services

    114. Background. The Balanced Budget Act added a new section 337 to 
the Communications Act. Section 337 of the Communications Act, inter 
alia, provides certain public safety entities the opportunity to apply 
for unused spectrum not otherwise allocated for public safety use. For 
purposes of applying section 337 and determining who may invoke its 
provisions, subsection 337(f) defines the term ``public safety 
services'' as ``services--
    (A) the sole or principal purpose of which is to protect the safety 
of life, health or property;
    (B) that are provided--
    (i) by State or local government entities; or
    (ii) by nongovernmental organizations that are authorized by a 
governmental entity whose primary mission is the provision of such 
services; and
    (C) that are not made commercially available to the public by the 
provider.''
    115. The terms and conditions under which an eligible entity may 
apply to the Commission for spectrum under section 337 are provided at 
subsection (c)(1) of section 337 as follows:
    (c) Licensing of Unused Frequencies for Public Safety Services.--
    (1) Use of unused channels for public safety services.--Upon 
application by an entity seeking to provide public safety services, the 
Commission shall waive any requirement of this Act or its regulations 
implementing this Act (other than its regulations regarding harmful 
interference) to the extent necessary to permit the use of unassigned 
frequencies for the provision of public safety services by such entity. 
An application shall be granted under this subsection if the Commission 
finds that--
    (A) no other spectrum allocated to public safety services is 
immediately available to satisfy the requested public safety service 
use;
    (B) the requested use is technically feasible without causing 
harmful interference to other spectrum users entitled to protection 
from such interference under the Commission's regulations;
    (C) the use of the unassigned frequency for the provision of public 
safety services is consistent with other allocations for the provision 
of such services in the geographic area for which the application is 
made;
    (D) the unassigned frequency was allocated for its present use not 
less than 2 years prior to the date on which the application is 
granted; and
    (E) granting such application is consistent with the public 
interest.
    116. If the Commission finds that the applicant satisfies the 
statutory criteria, the authorization pursuant to section 337 is 
granted. Providers of public safety services may obtain spectrum via 
section 337(c) without engaging in competitive bidding.
    117. In the NPRM, we sought comment on how to apply the statutory 
criteria. We specifically requested commenters to address the statutory 
requirement that the frequency applied for be ``unassigned'' and that 
the showing necessary to demonstrate that granting the application 
would be in the public interest, with particular attention to the 
question of whether it would be in the public interest for applicants 
seeking to provide public safety services to apply for frequencies 
that, while not yet licensed to another entity, already have been 
identified and designated by the Commission as frequencies to be 
licensed by auction. Since enactment of the statute, we have issued 
several decisions on section 337 applications.
    118. Discussion. Some commenters suggest that an applicant need not 
satisfy all five statutory criteria to satisfy the requirements of 
section 337(c), if it makes a particularly strong showing for the 
factors it does meet. We disagree. We do not find any statutory basis 
or legislative history supporting such a conclusion. Indeed, the 
legislative history clearly states, ``Before granting applications 
under this subsection, the Commission must make five specific 
findings.'' All five statutory criteria must be satisfied to receive 
authorization based on a section 337 request.
    119. In addition, we believe that further exposition regarding two 
of the criteria is warranted. With regard to the statutory requirement 
that ``no other spectrum allocated to public safety services is 
immediately available to satisfy the requested public safety service 
use,'' several section 337 applicants apparently have interpreted this 
provision as only requiring a showing that no public safety frequencies 
are currently available in the same band as the frequencies being 
requested. We disagree with this interpretation. We believe that the 
statutory language is clear in that it expressly requires that no other 
spectrum allocated to public safety services be available without any 
qualification. Thus, we believe that the statute requires that there be 
no unassigned public safety spectrum, or not enough for the proposed 
public safety use, in any band in the geographic area in which the 
section 337 applicant seeks to provide public safety services.
    120. With regard to the statutory requirement that ``granting such 
application is consistent with the public interest,'' we believe that 
our analysis under this criterion generally will entail a balancing of 
various public interest factors. For instance, some commenters assert 
that unlicensed spectrum should be available to entities seeking to 
provide public safety services, even if the spectrum is in the process 
of being auctioned. We agree that spectrum does not per se become 
unavailable to section 337 applicants once we have initiated the 
competitive bidding process. Competing spectrum management goals may be 
implicated by section 337 requests, depending upon when such requests 
are filed during the competitive bidding process. On the one hand, we 
do not believe that Congress intended for section 337 applications to 
compromise or frustrate the competitive bidding process generally. On 
the other hand, there may be circumstances in which the public interest 
would warrant grant of a section 337 request on spectrum that is 
subject to competitive bidding. Thus, we conclude that the state of the 
competitive bidding process when the section 337 application is 
received is relevant to our determination of whether grant of the 
waiver request and the associated application(s) is in the public 
interest, as required by subsection (c)(1)(E).
    121. As a result, we will balance such determinations on a case-by-
case basis. In a number of cases to date we have granted section 337 
requests utilizing the five criteria for spectrum that was potentially 
subject to auction. For example, we granted such a request by South Bay 
Regional Communications Authority for channels in the 470-512 MHz band. 
As part of that grant we assigned auctionable narrowband PCS channels 
to a third party that applied for the same channels South Bay 
requested. This resolution enabled South Bay to gain access to spectrum 
it needed for important public safety needs. In another instance, the 
Wireless

[[Page 52]]

Telecommunications Bureau granted a section 337 request for channels 
that had been designated for auction in the 900 MHz band. The Bureau 
weighed the five factors in the statute, and determined that a grant 
was warranted, despite the fact the spectrum was subject to an 
application freeze and a paging auction. Significantly, at the time the 
section 337 request was filed in this case, the auction date had not 
yet been established for the frequencies at issue.
    122. Therefore, in reviewing section 337 waiver requests, we will 
balance a variety of public interest factors such as the likelihood 
that the spectrum will be auctioned, the likely timetable for such an 
auction, and the effect that grant of the request may have on such a 
future auction against the stated needs of the applicant and our 
obligation to promote public safety. Section 337 requests received 
early in the competitive bidding process, before an auction is 
announced, will likely weigh more in favor of a grant than requests 
received on the eve of an auction. For example, at the rulemaking 
stage, when we are soliciting comments on whether to auction a 
particular spectrum band, we may give more weight to the public 
interest considerations of the public safety applicant than to our 
concerns about the impact on the auction process. However, once the 
mechanisms for a particular spectrum auction are in place, beginning 
with the issuance of a Public Notice announcing the date of the auction 
(typically four to six months before the auction), the competitive 
bidding process is substantially underway. At this juncture, we believe 
that accepting section 337 applications would substantially impair our 
ability to conduct an orderly auction, on which prospective bidders 
depend in planning their auction strategies. Consequently, such 
requests will be subject to stricter review than those received 
earlier, and we anticipate that only in highly extraordinary 
circumstances will they be found to satisfy the requirements of section 
337(c)(1)(E). In these situations, section 337 applicants will be 
expected to provide a showing that grant of their requests would result 
in significant public interest benefits that outweigh the uncertainty 
and disruption to the auction process that would be associated with a 
grant of their requested waiver.
    123. Finally, we take this opportunity to streamline our processing 
of section 337 requests by amending our rules to require that section 
337 requests be filed in the same manner and on the same form(s) as 
ordinary applications requesting the subject spectrum. Specifically, 
section 337 waiver requests and applications for commercial spectrum 
must be filed through the Universal Licensing System using Form 601 
Main Form and Schedules B and J, and applicants will need to register 
their Taxpayer Identification Number or Employer Identification Number. 
Additionally, antennas that require registration must be registered 
prior to filing the request.

H. Final Regulatory Flexibility Analysis

    124. As required by the Regulatory Flexibility Act (``RFA''), an 
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in 
the NPRM in WT Docket 99-87. See Implementation of Sections 309(j) and 
337 of the Communications Act of 1934 as Amended; Promotion of Spectrum 
Efficient Technologies on Certain Part 90 Frequencies; Establishment of 
Public Service Radio Pool in the Private Mobile Frequencies Below 800 
MHz, WT Docket No. 99-87, RM-9332, RM-9405, Notice of Proposed Rule 
Making, 64 FR 28130 (May 25, 1999). The Commission sought written 
public comment on the issues and proposals in the NPRM, including 
comment on the IRFA. The comments received are discussed. This Final 
Regulatory Flexibility Analysis (``FRFA'') conforms to the RFA. See 5 
U.S.C. 604.

I. Need for, and Objectives of, the Report and Order

    125. The Report and Order was initiated to evaluate the 
Commission's auction authority for wireless telecommunications services 
following the enactment of the Balanced Budget Act of 1997. The 
Balanced Budget Act revised the original spectrum auction standard that 
had been established under the Omnibus Budget Reconciliation Act of 
1993. In the Report and Order, we develop a framework for making 
certain determinations for future licensing of the private wireless 
services and the scope of the Balanced Budget Act's exemption from 
competitive bidding for licenses and permits issued for public safety 
radio services. In attempting to maximize the use of private radio 
spectrum, we continue our efforts to improve the efficiency of spectrum 
use, maintain public safety services, reduce the regulatory burden on 
spectrum users, facilitate technological innovation, and provide 
opportunities for development of competitive new service offerings. The 
policies adopted in the Report and Order are also designed to implement 
Congress' goal of giving small businesses the opportunity to 
participate in the provision of spectrum-based services in accordance 
with section 309(j) of the Communications Act of 1934, as amended. See 
47 U.S.C. 309(j)(3)(B); see also 47 U.S.C. 257.
    126. The Report and Order also amends certain part 1 and 90 rules 
to conform the application and licensing procedures in the private 
radio services with the new policies described in the Report and Order. 
In particular, these amendments adopt filing procedures for license 
applications submitted pursuant to section 337 of the Communications 
Act, describe procedures by which mutually exclusive applications for 
licenses in the public safety radio services will be resolved, and 
revise certain part 90 regulations applicable to the Private Land 
Mobile Radio (``PLMR'') services.

J. Description and Estimate of the Number of Small Entities To Which 
the Rules Will Apply

    127. 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. See 5 U.S.C. 603(b)(3). 
Under the RFA, small entities may include small organizations, small 
businesses, and small governmental jurisdictions. See 5 U.S.C. 601(6). 
The RFA generally defines the term ``small business'' as having the 
same meaning as the term ``small business concern'' under the Small 
Business Act. Compare 5 U.S.C. 601(3) (RFA) with 15 U.S.C. 632 (SBA). 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 SBA. See Small 
Business Act, 5 U.S.C. 632 (1996). A small organization is generally 
``any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field.'' 5 U.S.C. 601(4). 
Nationwide, as of 1992, there were approximately 275,801 small 
organizations.
    128. The rule changes effectuated by the Report and Order apply to 
users of public safety radio services, and private radio licensees that 
are regulated under part 90 of the Commission's rules, and may also 
affect manufacturers of radio equipment. An analysis of the number of 
small entities affected follows.
    129. Public Safety radio services and Governmental entities. Public 
Safety radio services include police, fire, local governments, forestry 
conservation, highway maintenance, and emergency medical services. With 
the exception of the special emergency service, these services are 
governed by subpart B of part 90 of the Commission's rules. See

[[Page 53]]

47 CFR 90.15 through 90.27. The police service includes 26,608 
licensees that serve state, county and municipal enforcement through 
telephony (voice), telegraphy (code) and teletype and facsimile 
(printed material). The fire radio service includes 22,677 licensees 
comprised of private volunteer or professional fire companies as well 
as units under governmental control. The local government service that 
is presently comprised of 40,512 licensees that are state, county or 
municipal entities that use the radio for official purposes not covered 
by other public safety services. There are 7,325 licensees within the 
forestry service which is comprised of licensees from state departments 
of conservation and private forest organizations who set up 
communications networks among fire lookout towers and ground crews. The 
9,480 state and local governments are licensed to highway maintenance 
service provide emergency and routine communications to aid other 
public safety services to keep main roads safe for vehicular traffic. 
The 1,460 licensees in the Emergency Medical Radio Service (EMRS) use 
the 39 channels allocated to this service for emergency medical service 
communications related to the actual delivery of emergency medical 
treatment. See 47 CFR 90.15 through 90.27. The 19,478 licensees in the 
special emergency service include medical services, rescue 
organizations, veterinarians, handicapped persons, disaster relief 
organizations, school buses, beach patrols, establishments in isolated 
areas, communications standby facilities and emergency repair of public 
communication facilities. See 47 CFR 90.33 through 90.55. The SBA rules 
contain a definition for small radiotelephone (wireless) companies, 
which encompasses business entities engaged in radiotelephone 
communications employing no more that 1,500 persons. See 13 CFR 121.201 
(SIC Code 4812). There are a total of approximately 127,540 licensees 
within these services. Governmental entities as well as private 
businesses comprise the licensees for these services. The RFA also 
includes small governmental entities as a part of the regulatory 
flexibility analysis. ``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 estimates that 81,600 
(91 percent) are small entities.
    130. Specialized Mobile Radio (``SMR''). The Commission awards 
bidding credits in auctions for geographic area 800 MHz and 900 MHz SMR 
licenses to two tiers of firms: (1) ``small entities,'' those with 
revenues of no more than $15 million in each of the three previous 
calendar years; and (2) ``very small entities,'' those with revenues of 
no more than $3 million in each of the three previous calendar years. 
The regulations defining ``small entity'' and ``very small entity'' in 
the context of 800 MHz SMR (upper 10 MHz and lower 230 channels) and 
900 MHz SMR have been approved by the SBA. The Commission does 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 our purposes 
here, that all of the remaining existing extended implementation 
authorizations are held by small entities, as that term is defined by 
the SBA. The Commission has held auctions for geographic area licenses 
in the 800 MHz (upper 10 MHz) and 900 MHz SMR bands. There were 60 
winning bidders that qualified as small and very small entities in the 
900 MHz auction. Of the 1,020 licenses won in the 900 MHz auction, 263 
licenses were won by bidders qualifying as small and very small 
entities. In the 800 MHz SMR auction, 38 of the 524 licenses awarded 
were won by small and very small entities.
    131. Estimates for PLMR Licensees. Private land mobile radio 
systems serve an essential role in a vast range of industrial, 
business, land transportation, and public safety activities. These 
radios are used by companies of all sizes operating in all U.S. 
business categories. Because of the vast array of PLMR users, the 
Commission has not developed a definition of small entities 
specifically applicable to PLMR users, nor has the SBA developed any 
such definition. The SBA rules do, however, contain a definition for 
small radiotelephone (wireless) companies. See 13 CFR 121.201 (SIC Code 
4812). Included in this definition are business entities engaged in 
radiotelephone communications employing no more that 1,500 persons. 
According to the Bureau of the Census, only twelve radiotelephone firms 
of a total of 1,178 such firms which operated during 1992 had 1,000 or 
more employees. For the purpose of determining whether a licensee is a 
small business as defined by the SBA, each licensee would need to be 
evaluated within its own business area. The Commission's fiscal year 
1994 annual report indicates that, at the end of fiscal year 1994, 
there were 1,101,711 licensees operating 12,882,623 transmitters in the 
PLMR bands below 512 MHz.
    132. Equipment Manufacturers. We anticipate that at least six radio 
equipment manufacturers will be affected by our decisions in this 
proceeding. According to the SBA's regulations, a radio and television 
broadcasting and communications equipment manufacturer must have 750 or 
fewer employees in order to qualify as a small business concern. See 13 
CFR 121.201, Standard Industrial Code (SIC) 3663. Census Bureau data 
indicate that there are 858 U.S. firms that manufacture radio and 
television broadcasting and communications equipment, and that 778 of 
these firms have fewer than 750 employees and would therefore be 
classified as small entities.

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

    133. The Report and Order establishes a framework for making 
certain determinations for future licensing of the private wireless 
services and the scope of the Balanced Budget Act's exemption from 
competitive bidding for licenses and permits issued for public safety 
radio services. The Report and Order also imposes new compliance 
requirements for part 90 PLMR licensees seeking to modify their 
licenses to for use in CMRS systems.
    134. We make minor revisions to the compliance requirements in 
Parts 1 and 90 of the Commission's Rules to conform the application and 
licensing procedures in the private and public safety radio services 
with the policies described in the Report and Order. These amendments 
require public safety applicants seeking lisense section 337 of the 
Communications Act to file using the Commission's Web-based Universal 
Licensing System, and require PLMR licensees seeking to modify 800 MHz 
non-Public Safety PLMR licenses for use in CMRS systems to demonstrate 
that they meet the requirements to be eligible for such modifications.
    135. Also, in response to incidents of interference to public 
safety licensees, a joint task force composed of members of the public 
safety community, Commission licensees, and Commission

[[Page 54]]

representatives is investigating solutions for preventing and fixing 
interference to 800 MHz public safety operations. We seek to avoid the 
potential for further incidents of such interference that could result 
from the conversion to CMRS. Consequently, we will require licensees 
seeking to convert to CMRS, upon submitting a modification application, 
to:
    (a) Certify that the co- or adjacent-channel 800 MHz public safety 
licensees in the same geographic area have been notified of the 
application; and
    (b) Commit that they will take affirmative steps to avoid harmful 
interference to such public safety licensees. We believe that these 
actions together will reduce the risk of increased interference in this 
band.

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

    136. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities. See 5 U.S.C. 603(c).
    137. The part 1 rule adopted in the Report and Order clarifies our 
policies with regard to the processing of applications for licenses in 
the public safety radio services under section 337 of the 
Communications Act. While we considered the alternative of accepting 
section 337 requests on an ad hoc basis, such an approach would not 
eliminate the procedural uncertainties faced by public safety entities 
seeking spectrum. Further, clarification of the process and use of the 
electronic ULS will greatly reduce the cost of preparing wireless 
applications and pleadings, while increasing the speed of the licensing 
process. We expect that these changes will benefit all public safety 
entities, including those 96% of governmental entities considered to be 
small entities. Further, use of the ULS will present tremendous 
advantages for small businesses because it permits access to licensing 
information at tremendously reduced costs. Finally, we observe that we 
continue to review the burdens imposed by these and other regulations 
in our biennial review processes in an effort to minimize regulatory 
impacts.
    138. The part 90 regulations amended by this permit the conversion 
of 800 MHz non-Public Safety PLMRS licensees be permitted to convert 
their spectrum to CMRS use under certain circumstances, and clarify 
that spectrum in the 800 MHz non-Public Safety PLMRS may not be shared 
under our part 90 multiple licensing rule. We denied a proposal to 
eliminate the distinction between CMRS spectrum and non-Public Safety 
PLMR spectrum with respect to initial licensing. We believe that the 
existing PLMR pool of unassigned frequencies should remain available on 
an initial basis to PLMR eligibles only, to construct new systems or 
expand existing systems. Therefore, we maintain the eligibility 
criteria for all new applications. Similarly, we considered an 
alternative of permitting PLMRS licensees to convert their spectrum 
without restriction, but rejected that idea because it would undercut 
important public interest objectives. The Report and Order imposes a 
holding period to prevent trafficking of PLMR spectrum (e.g., PLMR 
eligible acquiring new PLMR licenses from existing pool of unassigned 
frequencies for the purpose of selling them to CMRS providers). Rather 
than negatively impact small businesses, we believe that this rule 
change is likely to benefit small business PLMR licensees by giving 
them greater ability to assess marketplace needs and economic factors 
when determining the best and most efficient use of spectrum. We 
believe that the benefits of this rule change the costs that may be 
associated with providing the required notice to potentially affected 
public safety licensees. Further, the Report and Order finds that 
allowing licensees to convert their frequencies to CMRS use or assign 
or transfer these frequencies to CMRS entities will not affect the 
supply of available PLMR spectrum for licensing from the PLMR pool, and 
thus should not further exacerbate the current shortage of private 
spectrum available to small business entities and other PLMR eligibles.
    139. Report to Congress: The Commission will send a copy of the 
Report and Order, including this FRFA, in a report to be sent to 
Congress pursuant to the Congressional Review Act. See 5 U.S.C. 
801(a)(1)(A). In addition, the Commission will send a copy of the 
Report and Order, including the FRFA, to the Chief Counsel for Advocacy 
of the SBA. A copy of the Report and Order and FRFA (or summaries 
thereof) will also be published in the Federal Register. See 5 U.S.C. 
604(b).
    140. Accordingly, pursuant to sections 1, 2, 4(i), 5(c), 7(a), 
11(b), 301, 302, 303, 307, 308, 309(j) , 310, 312a, 316, 319, 323, 324, 
332, 333, 336, 337, and 351 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152, 154(i), 155(c), 157(a), 161(b), 301, 302, 
303, 307, 308, 309(j), 310, 312a, 316, 319, 323, 324, 332, 333, 336, 
337, and 351, the Balanced Budget Act of 1997, Public Law 105-33, Title 
III, 111 Stat. 251 (1997), and Secs. 1.421 and 1.425 of the 
Commission's Rules, 47 CFR 1.421 and 1.425, it is ordered that the 
Report and Order is hereby adopted.
    141. It is further ordered that, pursuant to sections 1, 2, 4(i), 
and 303 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
152, 154(i) and 303, and Sec. 1.425 of the Commission's Rules, 47 CFR 
1.425, the Petition for Rulemaking filed by the American Mobile 
Telecommunications Association, Inc. on July 30, 1999 (RM-9705) is 
denied.
    142. It is further ordered that, pursuant to sections 1, 2, 4(i), 
303, and 337 of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154(i), 303, and 337, the Petition for Rulemaking filed by 
UTC, The Telecommunications Association, the American Petroleum 
Institute, and the Association of American Railroads on August 14, 1998 
(RM-9405) is denied.
    143. It is further ordered that parts 1 and 90 of the Commission's 
Rules are amended as set forth, and that these rules shall be effective 
March 5, 2001, except Sec. 90.621 which contains information collection 
requirement that has not been approved by the Office of Management and 
Budget. The FCC will publish a document in the Federal Register 
announcing the effective date for this section.
    144. It is further ordered that the Commission's Consumer 
Information Bureau, Reference Information Center, shall send a copy of 
the Report and Order, including the Final Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the U.S. Small Business 
Administration.

List of Subjects in 47 CFR Parts 1 and 90

    Radio, Reporting and recordkeeping requirements.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications

[[Page 55]]

Commission amends 47 CFR parts 1 and 90 as follows:

PART 1--PRACTICE AND PROCEDURE

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

    Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309 
and 325(e).

    2. Section 1.913 is amended by adding paragraph (g) to read as 
follows:


Sec. 1.913  Application forms; electronic and manual filing.

* * * * *
    (g) Section 337 Requests. Applications to provide public safety 
services submitted pursuant to 47 U.S.C. 337 must be filed on the same 
form and in the same manner as other applications for the requested 
frequency(ies).

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

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

    Authority: Sections 4(i), 11, 303(g), 303(r), and 332(c)(7) of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 161, 
303(g), 303(r), 332(c)(7).

    4. Section 90.179 is amended by revising paragraph (g) to read as 
follows:


Sec. 90.179  Shared use of radio stations.

* * * * *
    (g) The provisions of this section do not apply to licensees 
authorized to provide commercial mobile radio service under this part, 
including licensees authorized to use channels transferred or assigned 
pursuant to Sec. 90.621(e)(2).

    5. Section 90.621 is amended by revising paragraph (e)(2) to read 
as follows:


Sec. 90.621  Selection and assignment of frequencies.

* * * * *
    (e) * * *
    (2) Notwithstanding paragraph (e)(5) of this section, licensees of 
channels in the Industrial/Land Transportation and Business categories 
may request a modification of the license, see Sec. 1.947 of this 
chapter, to authorize use of the channels for commercial operation. The 
licensee may also, at the same time or thereafter, seek authorization 
to transfer or assign the license, see Sec. 1.948 of this chapter, to 
any person eligible for licensing in the General or SMR categories. 
Applications submitted pursuant to this paragraph must be filed in 
accordance with the rules governing other applications for Industrial/
Land Transportation and Business channels, and will be processed in 
accordance with those rules, except that the modification application 
and the assignment application will be placed on public notice in 
accordance with Sec. 1.933 of this chapter. Grant of requests submitted 
pursuant to this paragraph is subject to the following conditions:
    (i) A licensee that modifies its license to authorize commercial 
operations will not be authorized to obtain additional 800 MHz Business 
or Industrial/Land Transportation category channels for sites located 
within 113 km (70 mi.) of the station for which the license was 
modified, for a period of one year from the date the license is 
modified. This provision applies to the licensee, its controlling 
interests and their affiliates, as defined in Sec. 1.2110 of this 
chapter.
    (ii) With respect to licenses the initial application for which was 
filed on or after November 9, 2000, requests submitted pursuant to 
paragraph (e)(2) of this section may not be filed until five years 
after the date of the initial license grant. In the case of a license 
that is modified on or after November 9, 2000 to add 800 MHz 
Industrial/Land Transportation or Business frequencies or to add or 
relocate base stations that expand the licensee's the interference 
contour, requests submitted pursuant to paragraph (e)(2) of this 
section for these frequencies or base stations may not be filed until 
five years after such modification.
    (iii) Requests submitted pursuant to paragraph (e)(2) of this 
section must include a certification that written notice of the 
modification application has been provided to all Public Safety 
licensees, see Sec. 90.20(a), with base stations within 113 km (70 mi.) 
of the site of the channel(s) for which authorization for commercial 
use is sought that operate within 25 kHz of the center of those 
channel(s). If, pursuant to paragraph (e)(2) of this section, 
modification and assignment or transfer applications are filed at 
different times, the written notice required by this paragraph must be 
provided each time.
    (iv) The applicant must certify that it will take reasonable 
precautions to avoid causing harmful interference to Public Safety 
licensees, see Sec. 90.20(a), and to take such action as may be 
necessary to eliminate interference to such licensees caused by its 
operations. (When an assignment or transfer application is filed 
pursuant to paragraph (e)(2) of this section, this representation is 
required only of the assignee or transferee.) Licensees of stations 
suffering or causing harmful interference are expected to cooperate and 
resolve this problem by mutually satisfactory arrangements. If the 
licensees are unable to do so, the Commission may impose restrictions 
including specifying the transmitter power, antenna height, or area or 
hours of operation.
* * * * *
[FR Doc. 01-40 Filed 12-29-00; 8:45 am]
BILLING CODE 6712-01-P