[Federal Register Volume 68, Number 85 (Friday, May 2, 2003)]
[Rules and Regulations]
[Pages 23417-23423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10736]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[WT Docket No. 99-266; FCC 03-51]


Practice and Procedure

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission clarifies rules relating to 
tribal lands bidding credits that were established to provide 
incentives for wireless telecommunications carriers to serve 
individuals living on tribal lands. In the Second Report and Order, the 
Commission extends the time period during which winning bidders can 
negotiate with the relevant tribes to obtain the certification needed 
to obtain the credit. The Commission also clarifies various 
administrative matters involved in implementing the credit.

DATES: Effective July 1, 2003.

FOR FURTHER INFORMATION CONTACT: Roger Noel or Linda Chang, Wireless 
Telecommunications Bureau, at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Federal 
Communications Commission's Second Report and Order (2nd R&O), FCC 03-
51, adopted March 7, 2003, and released March 14, 2003. The full text 
of the 2nd R&O is available for public inspection during regular 
business hours at the FCC Reference Information Center, 445 12th St., 
SW., Room CY-A257, Washington, DC 20554. The complete text may be 
purchased from the Commission's duplicating contractor: Qualex 
International, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail at 
[email protected].

Synopsis of Second Report and Order

I. Background

    1. In June 2000, the Commission adopted bidding credits for use by 
winning bidders who pledge to deploy facilities and provide service to 
federally recognized tribal areas that have a telephone service 
penetration rate at or below 70 percent. In setting out the bidding 
credit, the Commission noted that communities on tribal lands have had 
less access to telecommunications services than any other segment of 
the U.S. population. See Extending Wireless Telecommunications Services 
to Tribal Lands, WT Docket No. 99-266, Report and Order, 65 FR 47349 
(August 2, 2000) (R&O), and Further Notice of Proposed Rulemaking, 65 
FR 47366 (August 2, 2000) (FNPRM).
    2. The R&O provided that, in order to obtain a bidding credit in a 
particular market, a winning bidder must indicate on its long-form 
application (FCC Form 601) that it intends to serve tribal lands in 
that market. Following the long-form application filing deadline, the 
applicant has 90 calendar days to amend its application to identify the 
tribal lands to be served, and provide certification from the tribal 
government(s) that: (1) It will allow the bidder to site facilities and 
provide service on its tribal land(s), in accordance with the 
Commission's rules; (2) it has not and will not enter into an exclusive 
contract with the applicant precluding entry by other carriers, and 
will not unreasonably discriminate against any carrier; and (3) its 
tribal land is a qualifying tribal land as defined in the Commission's 
rules, i.e., an area that has a telephone penetration rate at or below 
70 percent. In addition, at the conclusion of the 90-day period, the 
applicant must amend its long-form application to file a certification 
that it will comply with the bidding credit build-out requirement, and 
that it will consult with the tribal government regarding the siting of 
facilities and deployment of service on the tribal land. Upon receipt 
by the Commission of the certifications, the bidding credit is awarded 
and the applicant makes payment of the final net adjusted bid amount. 
If the required certifications are not provided at the conclusion of 
the 90-day period, the bidding credit is not awarded and the applicant 
is required to pay the balance on the original gross bid amount in 
order to be awarded the licenses.
    3. In order to ensure that applicants awarded bidding credits 
actually deploy facilities and provide service to tribal lands, the 
Commission imposed performance requirements as a condition of obtaining 
the bidding credit. The Commission required that a licensee construct 
and operate its system to cover 75 percent of the population of the 
qualifying tribal land within three years of the grant of the license. 
While this 75 percent benchmark is higher than the construction 
benchmarks applicable to auctioned wireless licenses generally, the 
Commission determined that it would ensure that only carriers that are 
committed to serving tribal lands will receive bidding credits, and 
that wireless telecommunications services will be deployed rapidly to 
underserved tribal areas. In the R&O, the Commission required that, at 
the conclusion of the three-year period, licensees file a notification 
of construction indicating that they have met the 75 percent 
construction requirement on the tribal lands for which the credit was 
awarded. If the licensee fails to comply with any condition, it is 
required to repay the bidding credit plus interest thirty days after 
the conclusion of the construction period. In the event the licensee 
fails to repay the amount, the license automatically cancels.
    4. In limiting the scope of the bidding credit to federally 
recognized tribal areas with telephone penetration rates equal to or 
less than 70 percent, the Commission concluded that the credits would 
target the tribal communities with the greatest need for access to 
telecommunications service. Although the Commission acknowledged that 
there are some non-tribal areas with penetration rates lower than the 
national average, it was determined that almost all non-tribal areas 
have penetration rates greater than 70 percent and that non-tribal 
areas have penetration rates significantly greater than most tribal 
areas. Accordingly, the Commission found it appropriate to limit the 
program to tribal lands with a 70 percent or less penetration rate. The 
Commission did not, however, foreclose the possibility of extending the 
credit both to non-tribal areas and to areas with higher penetration 
rates.
    5. In the FNPRM, the Commission solicited comment on ways the 
bidding credit could be extended to encourage further deployment of 
wireless telecommunications services. The Commission specifically 
sought

[[Page 23418]]

comment on whether it should award bidding credits to carriers who 
commit to serve non-tribal areas with a 70 percent or less penetration 
rate, or tribal and/or non-tribal areas with penetration levels above 
70 percent but significantly below the national average. Further, 
comment was requested regarding whether the Commission should expand 
the program to give transferable bidding credits to be used in future 
auctions to existing licensees in already-established wireless services 
who deploy and provide service to unserved tribal communities. The 
Commission also asked whether it should make credits available to 
licensees that enter into partitioning agreements with tribal 
authorities that allow the tribal government to provide service, either 
directly or through negotiation with a third-party carrier.

II. Discussion

A. Modification and Clarification of Bidding Credit Procedures
    6. Certification Procedure. When the Commission adopted the tribal 
lands bidding credit in the R&O, it established the method by which a 
bidding credit would be calculated, as well as the application process 
involved in obtaining a bidding credit. Since the inception of the 
tribal lands bidding credit, there have been 10 auctions, with 375 
winning bidders purchasing 10,479 licenses. However, only 27 winning 
bidders to date have initially indicated on their long-form 
applications that they would be seeking the tribal lands bidding 
credit, and of those applicants, only five submitted the required 90-
day certifications. Upon review of this proceeding, the Commission 
finds that the small number of applications seeking the credit is due, 
at least in part, to the administrative process established by the 
Commission. Specifically, the Commission finds that the 90-day deadline 
for obtaining the certifications from the applicable tribal 
government(s) makes it extremely difficult to qualify for the credit. 
The 90-day deadline and certifications were established: (1) To ensure 
prompt issuance of licenses to winning bidders; (2) to provide a time 
frame for making contact with tribal governments and obtaining 
requisite certifications; and (3) to ensure that the wireless carrier 
intends to provide service to the tribal land. Because ninety days may 
not be a sufficient amount of time for licensees and tribal authorities 
to complete the certification process, the Commission extends the 
tribal lands certification period to 180 days. Accordingly, a winning 
bidder claiming a tribal lands bidding credit will now have 180 days to 
amend its long-form application to identify the tribal lands to be 
served, and provide the required certification from the tribal 
government. Further, the winning bidder will have 180 days to file a 
certification that it will comply with the tribal lands build-out 
requirements, and consult with the tribal government regarding the 
siting of facilities and deployment of service on the tribal land. If 
the winning bidder fails to submit the required certifications within 
the 180-day period, the bidding credit will not be awarded, and the 
winning bidder will be required to pay the balance on the original 
gross bid amount in order to obtain the license.
    7. Full or partial assignments of licenses involving tribal lands 
bidding credits. An issue that was inadvertently omitted in the R&O is 
the impact of license assignments on licenses with tribal lands bidding 
credit construction/repayment obligations. The Commission therefore 
clarifies that if the license is assigned to another entity, the 
construction/repayment obligations associated with the credit are 
transferred as well. Because all obligations of the license 
automatically transfer to the assignee, the Commission will not require 
the assignee to seek re-certification where the original licensee 
received certifications from the appropriate tribal authorities. It is 
important to note that an assignee contracting with a licensee to 
transfer a license for which a tribal lands bidding credit was received 
bears the risk that the tribal government may not allow the assignee to 
deploy facilities on its land. The Commission expects that parties 
interested in obtaining wireless licenses will exercise due diligence 
in identifying whether or not a tribal lands bidding credit 
construction obligation is associated with the license, and, therefore, 
take into account the heightened construction obligation, the 
dependence of the credit on obtaining the consent of the tribal 
government, and the potential for a repayment penalty in case the 
construction requirement is not met within the original three-year time 
frame. It is up to the assignee to verify that the tribe will consent 
to allowing the assignee access to its lands.
    8. Also, the Commission clarifies that in partial license transfers 
involving geographic partitioning, the tribal land must be wholly 
contained within either the assignor's or assignee's proposed license 
area after the partition. The Commission will not permit, for example, 
a tribal area for which a credit was awarded to be ``split'' between 
partitioned areas because this would be inconsistent with the original 
purpose of issuing the credit, i.e., to ensure that at least 75 percent 
of the tribal land is served. Where a partition occurs, the 
construction/repayment obligation will attach to the license for the 
partitioned area that encompasses the tribal land for which the credit 
was awarded. However, in partial license transfers involving spectrum 
disaggregation (but not partitioning), the construction/repayment 
obligation will be presumed to remain with the original licensee whose 
stated intention was to serve the tribal land unless the parties to the 
transaction inform us otherwise. As is the case with partitioning, 
spectrum covering the tribal land must be disaggregated in its entirety 
(i.e. a disaggregation involving only a portion of a tribal area 
subject to a bidding credit will not be permitted).
    9. Notification of Construction. In the R&O, the Commission did not 
clearly set out the notification of construction procedures applicable 
to licensees that are granted tribal lands bidding credits. Pursuant to 
the goals of section 309(j)(4)(B) of the Act, the Commission has set 
out performance requirements for the various services, with alternative 
construction obligations for those licensees using tribal land bidding 
credits. As noted, the Commission imposed more stringent construction 
requirements for those licensees that choose to utilize the tribal 
lands bidding credit in order to ensure that only those most committed 
to building out their facilities will receive bidding credits and that 
service is deployed as quickly as possible. In order to verify 
compliance with the tribal lands construction requirement, any licensee 
employing a bidding credit must file a notification of construction 
(FCC Form 601, Schedule K) electronically at the conclusion of the 
three-year construction period along with an attachment stating 
affirmatively that it is providing coverage to 75 percent of the 
population of the tribal area for which the credit was awarded. In its 
notification of construction, the licensee must provide the total 
population of the tribal area covered by its license as well as the 
number of persons it is serving in the tribal area. If the licensee 
fails to make an adequate showing that it has met the 75 percent 
benchmark, it will be required to repay the bidding credit, plus 
interest, thirty days after the conclusion of the construction period. 
47 CFR 1.2110(f)(3)(vii). Failure to repay this amount will result in 
automatic termination of the license. 47 CFR 1.946(c).

[[Page 23419]]

    10. Penalty for failure to construct and failure to timely repay 
bidding credit. The Commission also takes this opportunity to correct 
an omission in the rules implemented in connection with the R&O, in 
which the Commission stated that a licensee's failure to comply with 
build-out requirements, and subsequent failure to repay the bidding 
credit, plus interest, thirty days after the conclusion of the 
construction period, would result in automatic termination of the 
licensee's license, i.e., termination without any further notification 
being sent to the licensee, opportunity for a hearing, or other 
Commission action. This penalty will now be expressly codified in Part 
1 of the Commission's rules.
B. Use of Bidding Credits in Non-Tribal Areas or Areas With Telephone 
Penetration Rates of More Than 70 Percent
    11. In the FNPRM, the Commission sought comment on whether it 
should apply the bidding credit to non-tribal areas on the same terms 
and conditions as for tribal areas, or alternatively, whether it should 
extend the bidding credit to areas (tribal and non-tribal) with 
penetration levels greater than 70 percent, but below the national 
average of 94 percent. As noted, very few commenters submitted 
responses to the FNPRM. Those who filed comments generally support 
extending bidding credits to entities seeking to provide service to 
non-tribal areas with telephone penetration rates below the national 
average.
    12. The Commission concludes that it is premature to expand the 
program to non-tribal areas or to areas with penetration rates of 
greater than 70 percent at this time. Because this program is still in 
its early stages and few entities have taken advantage of the bidding 
credit thus far, the Commission cannot yet determine whether it would 
be constructive to expand the use of the bidding credit to non-tribal 
areas generally. Moreover, the Commission is concerned about the 
paucity of comment regarding this issue. It is necessary to have a more 
substantial record as to whether the use of bidding credits is 
appropriate to encourage deployment of services into non-tribal areas, 
particularly from those most familiar with dealing with rural and high-
cost service issues. Similarly, the Commission believes the record is 
insufficient at this time to support expanding the use of the bidding 
credit to areas having telephone penetration rates of greater than 70 
percent. However, in an effort to develop a more complete and up-to-
date record on possible adjustment of the penetration rate threshold, 
the Commission seeks comment in its Second Further Notice of Proposed 
Rulemaking on information from the 2000 Census regarding increases in 
tribal penetration rates that has recently been released by the Census 
Bureau. See Extending Wireless Telecommunications Services to Tribal 
Lands, WT Docket No. 99-266, Second Further Notice of Proposed 
Rulemaking, FCC 03-51, adopted March 7, 2003, and released March 14, 
2003.
C. Applying Bidding Credits to Existing Licenses
    13. The Commission noted in the R&O that the current tribal lands 
bidding credit can be applied only in the auction in which it is 
obtained. Accordingly, the bidding credit is not available to carriers 
with existing licenses that were acquired in prior auctions or through 
transfer or assignment. The Commission therefore asked in the FNPRM 
whether a more flexible form of credit should be made available to 
existing licensees who have constructed facilities, using currently-
licensed spectrum to provide service to qualifying tribal lands. Under 
this approach, carriers who use their existing spectrum to provide 
service to such areas could receive bidding credits that could be used 
in future auctions. Further, the Commission sought comment on whether 
such a credit should be transferable to third parties for use in future 
auctions. The Commission also sought comment on its legal authority 
under section 309(j) of the Communications Act to adopt the flexible 
bidding credit.
    14. Although the Commission continues to believe that the tribal 
lands bidding credit is a valuable means to encourage greater 
deployment of telecommunications services into underserved tribal 
areas, the Commission concludes that in light of its still-limited 
experience with the bidding credit program, it should not extend the 
program to already-licensed carriers or make the credit transferable at 
this juncture. The Commission believes that before taking such a step, 
additional time is needed to determine the effectiveness of the program 
as currently structured in meeting its intended goals. The Commission 
also finds that the limited comment it has received in this proceeding 
does not provide sufficient support or guidance for such an expansion 
of the program. Accordingly, the Commission declines to extend the 
program to already-licensed carriers or make the credit transferable at 
this time.
D. Transferable Bidding Credits for Licensees That Partition Tribal 
Areas
    15. In the FNPRM, the Commission solicited comment on whether 
bidding credits should be made available to carriers that enter into 
partitioning agreements with tribal governments to facilitate 
deployment of service to tribal lands. The Commission proposed that a 
credit would be awarded to a geographic area licensee that partitioned 
portions of its license area covering tribal lands to the appropriate 
tribal government. Again, the Commission received limited comment 
regarding this issue, and therefore it concludes that the record does 
not at this time support expanding the bidding credit program as 
proposed.

III. Procedural Matters

A. Paperwork Reduction Act Analysis
    16. The actions taken in the 2nd R&O have been analyzed with 
respect to the Paperwork Reduction Act of 1995 (PRA), Pub. L. No. 104-
13, and found to impose new or modified reporting and recordkeeping 
requirements or burdens on the public. Implementation of these new or 
modified reporting and recordkeeping requirements will be subject to 
approval by the Office of Management and Budget (OMB) as prescribed by 
the PRA, and will go into effect upon announcement in the Federal 
Register of OMB approval.
B. Final Regulatory Flexibility Act Analysis.
    17. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the FNPRM. The Commission sought written public comment 
on the proposals in the FNPRM, including comment on the IRFA. This 
present Final Regulatory Flexibility Analysis (FRFA) conforms to the 
RFA.
Need for, and Objectives of, the 2nd R&O.
    18. In the 2nd R&O, the Commission clarifies rules previously 
adopted in the R&O and FNPRM in WT Docket 99-266 to provide incentives 
for wireless telecommunications carriers to serve individuals living on 
tribal lands. In that R&O, the Commission authorized the grant of 
bidding credits to winning bidders who deploy facilities and provide 
service to federally-recognized tribal areas that have a telephone 
service penetration rate below 70 percent. In the present item, the 
Commission clarifies, on its own motion, administrative matters 
involved in implementing the bidding credit, such as the process by 
which carriers obtain certifications

[[Page 23420]]

permitting them to deploy facilities on tribal lands. This 2nd R&O also 
addresses issues raised in the FNPRM. In the FNPRM, the Commission 
requested comment on whether it should expand the use of bidding 
credits. Specifically, the Commission sought comment as to whether to: 
(1) Apply bidding credits to entities who undertake to serve non-tribal 
areas and/or tribal areas with telephone penetration levels above 70 
percent, but significantly below the national penetration average; (2) 
award bidding credits for use in future auctions to existing geographic 
area licensees who deploy facilities in unserved tribal communities; 
and, (3) grant bidding credits to licensees who enter into partitioning 
agreements with tribal governments that enable tribal entities to 
provide service, either directly or by way of a third-party carrier. It 
is the Commission's goal to ensure that all Americans have access to 
telecommunications service.
    19. While the Commission continues to believe that the tribal lands 
bidding credit is a useful device in improving telephone penetration 
rates on tribal lands, it concludes that the specific measures proposed 
in the Commission's FNPRM to encourage greater deployment should not be 
adopted at this time. Given the nascent state of the tribal lands 
bidding credit program, as well as the lack of a comprehensive record 
supporting the proposed extensions of the bidding credit, the 
Commission believes that it is premature to expand the use of bidding 
credits as proposed.
Summary of Significant Issues Raised by Public Comments in Response to 
the IRFA
    20. No comments were filed that specifically addressed the rules 
and policies proposed in the IRFA.
Description and Estimate of the Number of Small Entities To Which the 
Rules Will Apply.
    21. 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 rules adopted herein. 5 U.S.C. 604(a)(3). The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. 5 U.S.C. 601(3) (incorporating 
by reference the definition of ``small business concern'' in the Small 
Business Act, 15 U.S.C. 632). A ``small business concern'' is one 
which: (1) Is independently owned and operated; (2) is not dominant in 
its field of operation; and (3) satisfies any additional criteria 
established by the Small Business Administration (SBA). 15 U.S.C. 632.
    22. Cellular Licensees. The SBA has developed a small business size 
standard for small businesses in the category ``Cellular and Other 
Wireless Telecommunications.'' 13 CFR 121.201, North American Industry 
Classification System (NAICS) code 513322. Under that SBA category, a 
business is small if it has 1,500 or fewer employees. According to the 
Bureau of the Census, only twelve firms from a total of 1238 cellular 
and other wireless telecommunications firms operating during 1997 had 
1,000 or more employees. Therefore, even if all twelve of these firms 
were cellular telephone companies, nearly all cellular carriers were 
small businesses under the SBA's definition. In addition, the 
Commission notes that there are 1807 cellular licenses; however, a 
cellular licensee may own several licenses. According to the most 
recent Trends in Telephone Service data, 858 carriers reported that 
they were engaged in the provision of either cellular service, Personal 
Communications Service (PCS), or Specialized Mobile Radio telephony 
services, which are placed together in that data. See Trends in 
Telephone Service, Industry Analysis Division, Wireline Competition 
Bureau , Table 5.3--Number of Telecommunications Service Providers that 
are Small Businesses (May 2002). The Commission has estimated that 291 
of these are small under the SBA small business size standard. 
Accordingly, based on this data, the Commission estimates that not more 
than 291 cellular service providers will be affected by these revised 
rules.
    23. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non 
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
definition of small entities specifically applicable to such incumbent 
220 MHz Phase I licensees. To estimate the number of such licensees 
that are small businesses, the Commission applies the definition under 
the SBA rules applicable to ``Cellular and Other Wireless 
Telecommunication'' companies. This category provides that a small 
business is a wireless company employing no more than 1,500 persons. 
According to the Bureau of the Census, only twelve firms from a total 
of 1238 cellular and other wireless telecommunications firms operating 
during 1997 had 1,000 or more employees. If this general ratio 
continues in 2002 in the context of Phase I 220 MHz licensees, the 
Commission estimates that nearly all such licensees are small 
businesses under the SBA's small business standard.
    24. 220 MHz Radio Service--Phase II Licensees. The Phase II 220 MHz 
service is a new service, and is subject to spectrum auctions. In the 
220 MHz Third Report and Order, the Commission adopted a small business 
size standard for defining ``small'' and ``very small'' businesses for 
purposes of determining their eligibility for special provisions such 
as bidding credits and installment payments. See Amendment of Part 90 
of the Commission's Rules to Provide for the Use of the 220-222 MHz 
Band by the Private Land Mobile Radio Service, PR Docket No. 89-552, 
Third Report and Order, 62 FR 16004 (April 3, 1997). This small 
business standard indicates that a ``small business'' is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $15 million for the preceding 
three years. A ``very small business'' is defined as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that do not exceed $3 million for the preceding three 
years. The SBA has approved these small size standards. Auctions of 
Phase II licenses commenced on September 15, 1998, and closed on 
October 22, 1998. In the first auction, 908 licenses were auctioned in 
three different sized geographic areas: three nationwide licenses, 30 
Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) 
Licenses. Of the 908 licenses auctioned, 683 were sold. Thirty-nine 
small businesses won licenses in the first 220 MHz auction. The second 
auction included 225 licenses: 216 EA licenses and 9 EAG licenses. 
Fourteen companies claiming small business status won 158 licenses.
    25. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
the Commission adopted a small business size standard for ``small 
businesses'' and ``very small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. See Service Rules for the 746-764 MHz Bands, and 
Revisions to Part 27 of the Commission's Rules, WT Docket No. 99-168, 
Second Report and Order, 65 FR 17594 (April 4, 2000). A small

[[Page 23421]]

business is an entity that, together with its affiliates and 
controlling principals, has average gross revenues not exceeding $40 
million for the preceding three years. Additionally, a ``very small 
business'' is an entity that, together with its affiliates and 
controlling principals, has average gross revenues that are not more 
than $15 million for the preceding three years. An auction of 52 Major 
Economic Area (MEA) licenses commenced on September 6, 2000, and closed 
on September 21, 2000. Of the 104 licenses auctioned, 96 licenses were 
sold to 9 bidders. Five of these bidders were small businesses that won 
a total of 26 licenses. A second auction of 700 MHz Guard Band licenses 
commenced on February 13, 2001 and closed on February 21, 2001. All 
eight of the licenses auctioned were sold to three bidders. One of 
these bidders was a small business that won a total of two licenses.
    26. Lower 700 MHz Band Licenses. The Commission adopted criteria 
for defining three groups of small businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits. See Reallocation and Service Rules for the 698-746 MHz 
Spectrum Band (Television Channels 52-59), GN Docket No. 01-74, Report 
and Order, 67 FR 5491 (February 6, 2002). The Commission defined a 
small business as an entity that, together with its affiliates and 
controlling principals, has average gross revenues not exceeding $40 
million for the preceding three years. A very small business is defined 
as an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $15 
million for the preceding three years. Additionally, the lower 700 MHz 
Service has a third category of small business status that may be 
claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The 
third category is entrepreneur, which is defined as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $3 million for the preceding 
three years. An auction of 704 licenses (one license in each of the 734 
MSAs/RSAs and one license in each of the six Economic Area Groupings 
[EAGs]) commenced on August 27, 2002, and closed on September 18, 2002. 
Of the 740 licenses available for auction, 484 licenses were sold to 
102 winning bidders. Seventy-two of the winning bidders claimed small 
business, very small business or entrepreneur status and won a total of 
329 licenses.
    27. Private and Common Carrier Paging. In the Paging Second Report 
and Order, the Commission adopted a small size standard for ``small 
businesses'' for purposes of determining their eligibility for special 
provisions such as bidding credits and installment payments. 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, 62 FR 11616 (March 12, 1997). A small business is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $15 million for the preceding 
three years. The SBA has approved this definition. An auction of 
Metropolitan Economic Area (MEA) licenses commenced on February 24, 
2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 440 
were sold. Fifty-seven companies claiming small business status won. At 
present, there are approximately 24,000 Private Paging site-specific 
licenses and 74,000 Common Carrier Paging licenses. According to the 
most recent Trends in Telephone Service, 608 carriers reported that 
they were engaged in the provision of either paging or ``other mobile'' 
services. Of these, the Commission estimates that 589 are small, under 
the SBA-approved small business size standard. The Commission estimates 
that the majority of private and common carrier paging providers would 
qualify as small entities under the SBA definition.
    28. Broadband Personal Communications Service (PCS). The broadband 
PCS spectrum is divided into six frequency blocks designated A through 
F, and the Commission has held auctions for each block. The Commission 
has created a small business size standard for Blocks C and F as an 
entity that has average gross revenues of less than $40 million in the 
three previous calendar years. See Amendment of Parts 20 and 24 of the 
Commission's Rules--Broadband PCS Competitive Bidding and the 
Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 96-59, 
Report and Order, 61 FR 33859 (1996); see also 47 CFR 24.720(b). For 
Block F, an additional small business size standard for ``very small 
business'' was added and is defined as an entity that, together with 
their affiliates, has average gross revenues of not more than $15 
million for the preceding three calendar years. These small business 
size standards, in the context of broadband PCS auctions, have been 
approved by the SBA. No small businesses within the SBA-approved small 
business size standards bid successfully for licenses in Blocks A and 
B. There were 90 winning bidders that qualified as small entities in 
the Block C auctions. A total of 93 ``small'' and ``very small'' 
business bidders won approximately 40 percent of the 1,479 licenses for 
Blocks D, E, and F. On March 23, 1999, the Commission reauctioned 347 
C, D, E, and F Block licenses; there were 48 small business winning 
bidders. Based on this information, the Commission concludes that the 
number of small broadband PCS licensees will include the 90 winning C 
Block bidders and the 93 qualifying bidders in the D, E, and F blocks 
plus the 48 winning bidders in the re-auction, for a total of 231 small 
entity PCS providers as defined by the SBA small business standards and 
the Commission's auction rules. On January 26, 2001, the Commission 
completed the auction of 422 C and F Broadband PCS licenses in Auction 
No. 35. Of the 35 winning bidders in this auction, 29 qualified as 
``small'' or ``very small'' businesses.
    29. Narrowband PCS. The Commission has auctioned nationwide and 
regional licenses for narrowband PCS. There are 11 nationwide and 30 
regional licensees for narrowband PCS. The Commission does not have 
sufficient information to determine whether any of these licensees are 
small businesses within the SBA-approved definition for radiotelephone 
companies. In March 2002, 106 MTA and BTA narrowband PCS licenses were 
granted to 4 licensees. Each of the licensees are small or very small 
businesses.
    30. Specialized Mobile Radio (SMR). Pursuant to 47 CFR 
90.814(b)(1), the Commission has established a small business size 
standard for purposes of auctioning 900 MHz SMR licenses, 800 MHz SMR 
licenses for the upper 200 channels, and 800 MHz SMR licenses for the 
lower 230 channels on the 800 MHz band as a firm that has had average 
annual gross revenues of $15 million or less in the three preceding 
calendar years. 47 CFR 90.814(b)(1). The SBA has approved this small 
business size standard for the 800 MHz and 900 MHz auctions. Sixty 
winning bidders for geographic area licenses in the 900 MHz SMR band 
qualified as small businesses under the $15 million size standard. The 
auction of the 525 800 MHz SMR geographic area licenses for the upper 
200 channels began on October 28, 1997, and was completed on December 
8, 1997. Ten (10) winning bidders for geographic area licenses for the 
upper 200 channels in the 800 MHz SMR band qualified as small 
businesses under the $15 million size standard.
    31. The auction of the 1,050 800 MHz SMR geographic area licenses 
for the

[[Page 23422]]

General Category channels began on August 16, 2000, and was completed 
on September 1, 2000. Eleven (11) winning bidders for geographic area 
licenses for the General Category channels in the 800 MHz SMR band 
qualified as small businesses under the $15 million size standard. In 
an auction completed on December 5, 2000, a total of 2,800 Economic 
Area licenses in the lower 80 channels of the 800 MHz SMR service were 
sold. Of the 22 winning bidders, 19 claimed ``small business'' status. 
Thus, 40 winning bidders for geographic licenses in the 800 MHz SMR 
band qualified as small business. In addition, there are numerous 
incumbent site-by-site SMR licensees on the 800 and 900 MHz band. The 
Commission awards bidding credits in auctions for geographic area 800 
MHz and 900 MHz SMR licenses to firms that had revenues of no more than 
$15 million in each of the three previous calendar years. This analysis 
applies to SMR providers in the 800 MHz and 900 MHz bands that either 
hold geographic area licenses or have obtained extended implementation 
authorizations. The Commission does not know how many firms provide 800 
MHz or 900 MHz geographic area SMR 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. 
The Commission assumes, for purposes of this analysis, that all of the 
remaining existing extended implementation authorizations are held by 
small entities, as that small business size standard is established by 
SBA.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    32. The 2nd R&O modifies the certification process that wireless 
carriers must follow in order to obtain a tribal lands bidding credit. 
The Commission extends the time period during which winning bidders can 
negotiate to obtain the certification needed to obtain the credit, 
however, the Commission declines to expand the credit beyond its 
current scope.
Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered
    33. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
developing its 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. 5 
U.S.C. 603(c).
    34. A certification period of 90 days was previously identified in 
the final regulatory flexibility analysis in the R&O. In the 2nd R&O, 
the Commission extends the time period in which an applicant must 
obtain a certification from tribal governments regarding the siting of 
facilities and deployment of service on tribal lands. The 2nd R&O 
extends the certification period from 90 days to 180 days in order to 
allow applicants more time to conduct necessary research and negotiate 
with tribal governments. The change the Commission is adopting in the 
certification process is minor, and will not have additional 
significant economic impact on tribal governments or carriers seeking 
to serve tribal lands. The extension of the certification period from 
90 to 180 days benefits all carriers, particularly small entities.
    35. Further, the 2nd R&O clarifies partitioning and disaggregation 
rules specific to licensees electing to use the tribal lands bidding 
credit. In clarifying these rules, the Commission considered whether or 
not to apply its existing partitioning and disaggregation rules to 
situations in which a tribal lands bidding credit is utilized. While 
the partitioning and disaggregation rules are slightly more restrictive 
in situations in which tribal lands bidding credits are involved, the 
Commission believes these rules further its original goal of promoting 
service to tribal lands by helping to ensure that those using bidding 
credits fulfill their construction obligations.
    36. Report to Congress: The Commission will send a copy of the 2nd 
R&O, including the 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 2nd R&O, including the FRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration. A 
copy of the 2nd R&O and FRFA (or summaries thereof) will also be 
published in the Federal Register.

IV. Ordering Clauses

    37. Pursuant to the authority of sections 1, 4(i), 303(r), and 
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
154(i), 303(r), and 309(j), the rule changes specified below are 
adopted.
    38. The rule changes set forth below will become effective July 1, 
2003.

List of Subjects in 47 CFR Part 1

    Practice and procedure.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

0
For the reasons discussed in the Preamble, the Federal Communications 
Commission amends 47 CFR part 1 as follows:

PART 1--PRACTICE AND PROCEDURE


0
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).


0
2. Section 1.2110 is amended by revising paragraphs (f)(3)(i), (ii) 
(vi), (vii), and (viii) to read as follows:


Sec.  1.2110  Designated entities.

* * * * *
    (f) * * *
    (3) * * *
    (i) Qualifying tribal land means any federally recognized Indian 
tribe's reservation, Pueblo, or Colony, including former reservations 
in Oklahoma, Alaska Native regions established pursuant to the Alaska 
Native Claims Settlement Act (85 Stat. 688), and Indian allotments, 
that has a wireline telephone subscription rate equal to or less than 
seventy (70) percent based on the most recently available U.S. Census 
Data.
    (ii) Certification. (A) Within 180 days after the filing deadline 
for long-form applications, the winning bidder must amend its long-form 
application and attach a certification from the tribal government 
stating the following:
    (1) The tribal government authorizes the winning bidder to site 
facilities and provide service on its tribal land;
    (2) The tribal area to be served by the winning bidder constitutes 
qualifying tribal land; and
    (3) The tribal government has not and will not enter into an 
exclusive contract with the applicant precluding entry by other 
carriers, and will not unreasonably discriminate among wireless 
carriers seeking to provide service on the qualifying tribal land.
    (B) In addition, within 180 days after the filing deadline for 
long-form applications, the winning bidder must amend its long-form 
application and file a certification that it will comply with

[[Page 23423]]

the construction requirements set forth in paragraph (f)(3)(vi) of this 
section and consult with the tribal government regarding the siting of 
facilities and deployment of service on the tribal land.
    (C) If the winning bidder fails to submit the required 
certifications within the 180-day period, the bidding credit will not 
be awarded, and the winning bidder must pay the balance on the original 
gross bid amount.
* * * * *
    (vi) Post-construction certification. Within fifteen (15) days of 
the third anniversary of the initial grant of its license, a recipient 
of a bidding credit under this section shall file a certification that 
the recipient has constructed and is operating a system capable of 
serving seventy-five (75) percent of the population of the qualifying 
tribal land for which the credit was awarded. The recipient must 
provide the total population of the tribal area covered by its license 
as well as the number of persons that it is serving in the tribal area.
    (vii) Performance penalties. If a recipient of a bidding credit 
under this section fails to provide the post-construction certification 
required by paragraph (f)(3)(vi) of this section, then it shall repay 
the bidding credit amount in its entirety, plus interest. The interest 
will be based on the rate for ten-year U.S. Treasury obligations 
applicable on the date the license is granted. Such payment shall be 
made within thirty (30) days of the third anniversary of the initial 
grant of its license. Failure to repay the bidding credit amount and 
interest within the required time period will result in automatic 
termination of the license without specific Commission action.
    (viii) Partitioning and disaggregation. Parties seeking approval 
for partitioning or disaggregation of tribal areas obtained pursuant to 
the tribal lands bidding credit shall request an authorization for 
partial assignment of a license pursuant to Sec.  1.948.
    (A) Partitioning. A licensee of a market obtained using a tribal 
lands bidding credit may partition the tribal lands within its market. 
The partitioned area must include all tribal areas within the market 
subject to the tribal lands bidding credit. The partitionee must 
certify that it will satisfy the construction requirements set forth in 
paragraph (f)(3)(vi) of this section.
    (B) Disaggregation. Spectrum covering tribal lands may be 
disaggregated in any amount. The disaggregated spectrum must include 
all tribal areas within the market subject to the tribal lands bidding 
credit. The original licensee must certify that it will satisfy the 
construction requirements set forth in paragraph (f)(3)(vi) of this 
section, unless the parties to the transaction inform the Commission 
otherwise.
* * * * *
[FR Doc. 03-10736 Filed 5-1-03; 8:45 am]
BILLING CODE 6712-01-P