[Federal Register Volume 67, Number 242 (Tuesday, December 17, 2002)]
[Rules and Regulations]
[Pages 77173-77174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31711]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 01-76; FCC 02-320]


Assessment and Collection of Regulatory Fees for Fiscal Year 2001

AGENCY: Federal Communications Commission.

ACTION: Final rule; denial of petition for reconsideration.

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SUMMARY: In this document, the Commission denies the petition for 
reconsideration of Bennet & Bennet, PLLC, on behalf of its local 
multipoint distribution service (LMDS) clients, filed August 10, 2001.

FOR FURTHER INFORMATION CONTACT: Rob Fream, Office of Managing Director 
at (202) 418-0408 or Roland Helvajian, Office of Managing Director at 
(202) 418-0444.

SUPPLEMENTARY INFORMATION: Adopted: November 21, 2002; Released 
December 4, 2002.

I. Introduction

    1. By this order we deny the petition for reconsideration of Bennet 
& Bennet, PLLC, on behalf of its LMDS clients, filed August 10, 
2001.\1\ Bennet seeks reconsideration of Assessment of Regulatory Fees 
for Fiscal Year 2001, 16 FCC Rcd 13525 (2001), 66 FR 36177, July 11, 
2001, (2001 Fee Order), to the extent that order reaffirmed the 
classification of the LMDS within the category of MDS services for 
purposes of assessing regulatory fees for FY 2001. As a result of this 
determination, LMDS facilities are subject to an annual fee of $450 per 
call sign. Bennet asserts that LMDS should be classified as a microwave 
service, which would subject it to a $5 annual fee payable for an 
entire ten year license term at the time of renewal (total payment 
$50). Bennet also argues that the FY 2001 MDS fee is excessive.
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    \1\ Sprint Corp. filed an opposition on August 27, 2001.
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II. Background

    2. In the 2001 Fee Order, the Commission rejected the arguments of 
Winstar Communications, Inc. that LMDS should be reclassified as a 
microwave service. Fee Order, 16 FCC Rcd 13532 paragraph 22. Winstar 
justified its proposal by arguing that there had been increased 
administrative activity associated with part 21 MDS this year, whereas 
there had been little activity associated with LMDS. It also noted 
generally that it could think of no similarity between LMDS and MDS and 
no reason why LMDS should be treated differently than other part 101 
fixed Microwave services. Sprint opposed the proposal, noting that the 
LMDS administrative burden had been higher in the year 2000 and had 
been supported by fee contributions by MDS users. Further, Sprint 
argued that there were many similarities between the services, 
including that they both provided the same high speed voice and data 
services, although LMDS focused on large business users and MMDS 
focused on residential consumers. The Commission held that although 
LMDS and microwave services may utilize the same equipment, LMDS is 
operationally similar to MDS. The Commission concluded that this 
functional classification had proven adequate for more than 2 years and 
there was no reason to change it. Additionally, the Commission rejected 
the arguments of Worldcom, Inc. that the increase in the MDS fee from 
$275 in FY 2000 to $450 was excessive. Fee Order, 16 FCC Rcd at 13531-
32 paragraphs 18-20. The Commission found that the $450 figure 
reflected the best accounting methods and the most accurate data 
available.

III. Bennet's Petition for Reconsideration

    3. Bennet, who did not file comments earlier in this proceeding, 
now seeks reconsideration of the Commission's decision to continue to 
include LMDS in the MDS category for assessing regulatory fees. Bennet 
contends that LMDS should be included in the microwave category for 
purposes of assessing fees. In support of its contention, Bennet posits 
that significant differences exist between the LMDS and MDS services. 
According to Bennet, these differences include: That MDS uses site 
based licenses and individually licensed station hub sites, while LMDS 
uses geographically based licenses and generally does not use 
individually licensed hubs; that MDS is primarily a one-way video 
service, while LMDS is primarily a two-way service; and that LMDS and 
MDS use different equipment and network configurations and have 
different propagation characteristics, with LMDS and microwave services 
having more propagation limitations. It further states that the 
services serve different markets. In this regard, it notes that LMDS 
and other part 101 microwave services compete against each other in the 
same target markets and that the Commission's regulatory fee scheme 
unjustifiably places LMDS at a competitive disadvantage because the 
other part 101 services pay only a nominal regulatory fee. It also 
notes that licensing and rulemaking actions for MDS require more 
administrative resources than the resources required for LMDS. As to 
the size of the MDS fee, Bennet maintains that the increase from $275 
to $450 is burdensome and not supported by any corresponding increase 
in regulatory costs.
    4. Sprint responds that MDS and LMDS are operationally, 
competitively, and legally similar, both providing high speed wireless 
voice and data services, but noting that MDS serves primarily 
residential users and LMDS primarily serves large business users. 
Sprint contends that differences in the cost of licensing LMDS and MDS 
are irrelevant since the cost of licensing is not included in 
calculating annual fees. Fee Order, 16 FCC Rcd at 13595. In Sprint's 
view, reclassifying LMDS would

[[Page 77174]]

unfairly increase the fees for other MDS operators.

IV. Discussion

    5. Based on our review of the record in this proceeding, we find 
that Bennet's petition fails to provide sufficient grounds for us to 
depart summarily from the Commission's previous analysis regarding this 
matter. The Commission's decision to subject LMDS and MDS to identical 
regulatory fees stemmed largely from the fact that LMDS was 
operationally similar to MDS and MMDS.\2\ In this regard, we note, for 
example, that we have previously noted that LMDS is competitive with 
MMDS.\3\ Moreover, as the Commission has permitted licensees increasing 
flexibility in the use of their spectrum, the pattern has been for 
distinctions between LMDS and MMDS to erode.\4\ While Bennet attempts 
to illustrate that LMDS more closely parallels certain microwave 
services, it does not dispute the similarities which we have previously 
noted between LMDS and MMDS. We also concur with Sprint's argument that 
licensing costs, which are covered by application fees assessed under 
section 8 of the Act, 47 U.S.C. 158, are not recovered through section 
9 regulatory fees of the Act, 47 U.S.C. 159, and, therefore, have no 
bearing on our decision. We note, moreover, that, pending changes to 
the statutory schedule of fees in section 8, LMDS services have not 
been assessed any section 8 application fees. Consequently, we continue 
to believe, based on the record before us, that LMDS should be included 
in the MDS category for regulatory fees for FY 2001. As to the increase 
in the MDS fee, we believe that we have thoroughly explained this 
matter in the 2001 Fee Order. No further discussion of this point is 
warranted. Moreover, the public interest would not be served by 
disrupting the current fee process, which has been completed by 
numerous entities, pending resolution of this matter, particularly 
given that many of Bennet's arguments were raised for the first time on 
reconsideration.
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    \2\ Assessment of Regulatory Fees for Fiscal Year 2001, 16 FCC 
Rcd 13525, 13532 para. 22 (2001).
    \3\ Rulemaking to Amend Parts 1, 2, 21, and 25 of the 
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, 
to Reallocate the 29.5-30.0 GHz Frequency Band, to Establish Rules 
and Policies for Local Multipoint Distribution Service and for Fixed 
Satellite Services, 15 FCC Rcd 11857, 11868 para. 25 (2000).
    \4\ For example, the Commission has authorized MMDS providers, 
like LMDS licensees, to offer two-way communications. Amendments of 
Parts 21 and 74 to Enable Multipoint Distribution Service and 
Instructional Television Fixed Service Licensees to Engage in Fixed 
Two-Way Transmissions, MM Docket No. 97-217, 13 FCC Rcd 19112 
(1998), recon. 14 FCC Rcd 12764 (1999), further recon., 15 FCC Rcd 
14566 (2000). Moreover, as a result of the Commission's 
reorganization, MMDS matters, like LMDS matters, now are handled by 
the Wireless Telecommunications Bureau. Wireless Bureau to Assume 
All Regulatory Duties Associated with ITFS and MDS/MMDS Services, 
Public Notice (Mar. 18, 2002).
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    6. While an insufficient record exists to lead us to modify our 
decision with respect to LMDS services in FY 2001, we plan to develop a 
more complete record on these issues in the next regulatory fee 
proceeding. In addition, in light of continuing technological 
convergence, innovation, and evolving service offerings in the 
marketplace, we will provide parties in an upcoming wireless bureau 
proceeding the opportunity to address our existing fixed wireless 
regulatory fee assessments and their application to similarly situated 
service providers. The development of a comprehensive record on these 
issues will enable us to review our existing classifications for 
certain services and identify the need, if any, for modifications in 
the regulatory fee amounts assessed for particular service categories.
    7. Accordingly, it is ordered, that the petition for 
reconsideration of Bennet & Bennet, PLLC on behalf of its LMDS clients, 
filed August 10, 2001, is denied.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-31711 Filed 12-16-02; 8:45 am]
BILLING CODE 6712-01-P