[Federal Register Volume 68, Number 85 (Friday, May 2, 2003)]
[Proposed Rules]
[Pages 23431-23438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10737]


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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: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment regarding ways 
to adjust its current tribal lands bidding credit program in order to 
encourage further deployment by carriers of wireless services on tribal 
lands. The Commission also seeks comment on possible adjustments to the 
program based on use of data from the 2000 Census that was not 
available when the program was initiated. Further, the Commission 
requests comment on a limited expansion of the credit program that 
would allow carriers who obtain bidding credits to serve qualifying 
tribal lands to obtain additional credit for extending their coverage 
to immediately adjacent non-tribal areas that also have low penetration 
rates.

DATES: Submit comments on or before June 2, 2003. Submit reply comments 
on or before June 16, 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 Further Notice of Proposed 
Rulemaking (2nd FNPRM), FCC 03-51, adopted March 7, 2003, and released 
March 14, 2003. The full text of the 2nd FNPRM 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 Further Notice of Proposed Rulemaking

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 changing the 
scope of the bidding credit program.

[[Page 23432]]

II. Discussion

    5. In this 2nd FNPRM, the Commission solicits comment on whether it 
is necessary to modify the Commission's existing tribal lands bidding 
credit program in order to further facilitate the use of the bidding 
credit. The tribal lands bidding credit program is still in its early 
stages and few carriers have taken advantage of the bidding credit thus 
far. The record, however, is unclear regarding the reasons behind the 
lack of response to the bidding credit. Because the record in this 
proceeding thus far is not sufficient to make reasoned decisions as to 
what steps, if any, the Commission should take to further encourage 
carriers to provide coverage to tribal lands, the Commission seeks 
additional comment regarding this issue.
A. Modifying the Construction Requirements of the Tribal Lands Bidding 
Credit
    6. The Commission's rules currently impose more stringent 
construction requirements on carriers who seek the tribal lands bidding 
credit than those who do not. All carriers taking advantage of the 
bidding credit are required to serve 75 percent of the population of 
the qualifying tribal land for which the credit was awarded, and must 
do so within three years of license grant. The Commission initially set 
out the more stringent performance requirement because it believed that 
the accelerated buildout requirement ensures that: (1) Only entities 
making a serious commitment to serving tribal lands will receive 
bidding credits; and (2) telecommunications services will be rapidly 
deployed to unserved tribal areas.
    7. It is possible, however, that one reason behind the lack of 
participation in the tribal lands bidding credit program is that 
carriers find that difficulties involved in meeting the enhanced 
construction requirements are not sufficiently mitigated by the 
existing bidding credit. For example, there may be conditions, such as 
technical obstacles, economic factors, or other difficulties, that may 
make it difficult for carriers to satisfy the stricter construction 
requirement. Circumstances may exist on remote tribal lands such as low 
population density, rough terrain, and other factors that can 
negatively affect the ability of carriers to provide the requisite 
coverage to facilities in those areas. Accordingly, the Commission 
seeks comment as to whether it should reconsider the buildout 
obligations imposed on carriers utilizing the tribal lands bidding 
credit. Given that the public has now had a period of time to evaluate 
the bidding credit program, the Commission seeks comment on whether the 
requirement that carriers cover 75 percent of the population within 
three years remains feasible, or whether it should moderate the 
buildout criteria. Specifically, the Commission requests comment on 
what factors or circumstances exist that warrant an across-the-board 
relaxation of the bidding credit construction requirements.
    8. In the event that the Commission determines that the 
construction requirements should be eased, it seeks comment on how the 
requirements should be modified. For example, should the population of 
the qualifying tribal land covered by a carrier be lessened (i.e. 
reduced to a number below 75 percent)? Alternatively, should the time 
period in which to provide coverage to 75 percent of the tribal 
population be extended to a construction period longer than three 
years? Or is the appropriate remedy a combination of a reduced 
population coverage requirement and an expanded construction period? 
Should the Commission adopt a variation of the combination method, such 
as a tiered approach in which construction would occur in phases, e.g., 
a certain percentage of the total tribal population must be covered in 
three years, and a greater percentage would be covered at the five-year 
mark. The Commission seeks comment regarding these alternatives, as 
well as any other options. The Commission notes that any across-the-
board revision of the construction requirements must balance its desire 
to implement achievable construction requirements with the underlying 
purpose of the requirements, that is, to ensure that service is 
actually deployed on tribal lands.
    9. The Commission is also aware that a comprehensive change of the 
construction requirements may not be the appropriate solution. It may 
be that satisfying the tribal lands buildout requirement may be more 
difficult in certain tribal areas in the country than in others. There 
may be difficulties or conditions specific to certain tribal lands, 
that may make it difficult for carriers to satisfy the stricter 
construction requirement, while other carriers deploying the same type 
of service may have no difficulties in meeting the construction 
requirements in other tribal areas. Similarly, the ability to comply 
with the tribal lands bidding credit may depend on the particular 
wireless service at issue. The Commission's rules governing general 
construction and operation obligations of licensees reflect several 
approaches that match a type of license (i.e. site-based versus 
geographic market) or service (e.g. PCS or lower band 700 MHz) with a 
specific buildout requirement. It may therefore be preferable to deal 
with these situations on a case-by-case or service-by-service basis 
rather than an across-the-board method. The Commission therefore seeks 
comment on whether it should resolve any buildout difficulties using an 
ad hoc or waiver approach.
B. Increasing the Bidding Credit Limit
    10. The Commission established the tribal lands bidding credit in 
order to encourage participation in auctions by carriers who are in a 
position to provide service to tribal lands, and to help mitigate the 
economic risks associated with the deployment of such service. In 
recognition of the underlying economic difficulties in providing 
service to high cost areas, the Commission sought to fashion a bidding 
credit that bore a correlation to the infrastructure investment 
necessary to deploy facilities on tribal lands.
    11. As noted, it is not clear why few applicants have thus far 
taken advantage of the tribal lands bidding credit. In addition to the 
required construction requirements, another possibility for the poor 
response may be that the existing bidding credit may not provide 
carriers sufficient incentive to deploy facilities on tribal lands. 
Although no applicant has yet requested a larger credit than the one 
called for under the Commission's tribal lands bidding credit 
methodology, it may be that the current bidding credit amounts are not 
adequate to allow carriers to recoup a significant portion of 
infrastructure costs. Accordingly, the Commission seeks comment on 
whether the existing tribal lands bidding credit remains effective in 
encouraging carriers to provide service in tribal areas. The Commission 
also requests comment on whether and how the bidding credit amount and 
methodology should be modified to provide a greater incentive for 
carriers to deploy facilities on tribal lands.
C. Adjustment of the Bidding Credit Based on 2000 Census Data
    12. The Commission initiated this proceeding in recognition of the 
unusually low telephone service penetration rates on tribal lands as 
identified by the 1990 Census. See Extending Wireless 
Telecommunications Services to Tribal Lands, WT Docket No. 99-266, 
Notice of Proposed Rulemaking, 64 FR 49128 (Sept. 10, 1999) (NPRM). In 
the NPRM,

[[Page 23433]]

the Commission cited 1990 Census data indicating that, although the 
nationwide average penetration rate for those with incomes below $5,000 
living in rural areas was 78.7 percent, the telephone penetration rates 
for individuals on tribal lands at the same income level averaged 46.6 
percent. Further, the 1990 Census found that only 53 percent of those 
living on tribal lands had basic telephone service, as opposed to 94 
percent for the country as a whole.
    13. Recently, the Census Bureau has begun to issue data from the 
2000 Census indicating that average telephone penetration rates on 
tribal lands have increased appreciably from the levels reported in 
1990. The average telephone penetration rate for all tribal areas 
reported by the 2000 Census is 83.1 percent. U.S. Bureau of the Census, 
``Occupancy, Equipment, and Utilization Characteristics of Occupied 
Housing Units: 2000,'' Table GCT-H8. However, despite the improvement 
that this census data indicates in access to basic telephone service 
experienced in some tribal areas, the data also reveals that telephone 
penetration rates on virtually all tribal lands remain well below the 
97.6 percent penetration rate now found in the country as a whole. 
Indeed, certain tribal lands continue to have unusually low telephone 
penetration levels despite gains in subscribership numbers since the 
1990 Census. For example, although the penetration rates of tribal 
areas such as the Navajo Reservation, Fort Apache Reservation, and 
Mississippi Choctaw Reservation and Trust Lands each increased by over 
20 percent since the 1990 Census, these tribal lands continue to have 
very low penetration rates (39.9 percent, 57.2 percent, and 62.6 
percent, respectively). The Commission therefore believes that it is 
appropriate to continue to develop and apply policies aimed at 
promoting further deployment of wireless services to tribal lands. In 
this regard, the Commission seeks comment on whether and to what extent 
it should use the updated information now available regarding tribal 
penetration rates to modify certain aspects of the bidding credit. 
First, should the credit formula be adjusted to require the use of 2000 
Census figures instead of 1990 Census figures in calculating tribal 
penetration for purposes of determining eligibility for the credit? 
Second, to the extent that the 2000 census indicates that penetration 
rates in some tribal areas have risen above 70 percent but remain below 
the national average, should the Commission modify the bidding credit 
formula so that tribal areas with penetration rates greater than 70 
percent but some percentage below the national average are eligible for 
the credit? If the Commission concludes that it is desirable to raise 
the level at which tribal areas are eligible for a credit, what should 
the benchmark be? Further, with respect to tribal lands that have been 
identified by the 2000 Census as continuing to have unusually low 
penetration rates, the Commission requests comment on whether it should 
make adjustments to the bidding credit to create additional and more 
targeted incentives for wireless carriers to provide services in such 
areas.
D. Extending the Tribal Lands Bidding Credit to Adjacent Non-Tribal 
Areas With Low Penetration Rates
    14. The Commission also solicits comment on whether it should 
extend bidding credits to non-tribal areas with penetration rates that 
fall below the percentage threshold used to calculate eligibility for 
the tribal credit. Specifically, the Commission seeks comment on 
whether it should allow a limited expansion of the tribal lands bidding 
credit program that would allow carriers who obtain bidding credits in 
order to serve qualifying tribal lands to seek additional credit for 
extending their coverage to immediately adjacent non-tribal areas that 
have comparably low penetration rates.
    15. In the R&O, the Commission limited the bidding credit program 
to qualifying tribal areas with penetration rates of 70 percent or less 
because the Commission determined that this limitation would target the 
tribal communities with the greatest need for access to 
telecommunications services. The Commission concluded that it would be 
appropriate to limit application of the bidding credit to tribal lands 
because the Commission believed that, even though there are non-tribal 
areas with penetration rates below the national average of 94 percent 
(as reported in the 1990 Census), almost all non-tribal areas have 
telephone penetration rates higher than 70 percent. In reviewing this 
proceeding, however, the Commission recognizes that there may be 
certain areas abutting tribal lands that also lack adequate access to 
telecommunications services. It is likely that some non-tribal areas 
share with their neighboring tribal communities the same barriers to 
access, such as geographic remoteness, sparse population clusters, and 
low income levels. Further, it is likely that areas adjacent to tribal 
communities also have significant Native American populations.
    16. Extending the bidding credit to underserved non-tribal areas 
could serve dual purposes. First, extending the credit furthers the 
objectives of the Communications Act which directs the Commission to 
ensure the rapid and efficient deployment of wire and radio 
communications ``to all the people of the United States.'' See 47 
U.S.C. 151. Further, allowing applicants to seek bidding credits for 
non-tribal areas immediately adjacent to tribal communities may make it 
more likely that entities will seek bidding credits to serve tribal 
lands. Accordingly, the Commission seeks comment on whether it should 
give those applicants who commit to serve a qualifying tribal area the 
ability to augment the bidding credit for also serving adjacent non-
tribal areas.
    17. In the event that the bidding credit is extended to non-tribal 
areas, the Commission seeks comment on how to define the geographic 
areas that would trigger eligibility for an additional credit amount. 
For example, is it suitable to use county-wide penetration rates to 
establish eligibility, or, given the large size of certain counties, 
would the use of county-wide figures fail to accurately gauge the 
penetration level of some specific areas? Alternatively, the Commission 
seeks comment on whether measuring telephone penetration based on 
smaller geographic areas would more accurately reflect underserved 
areas. For example, the Census Bureau tabulates data according to a 
variety of small geographic areas, such as census tracts or census 
blocks.
    18. The Commission also requests comment on the appropriate 
certification process; e.g. is it sufficient that the applicant itself 
certify that the applicable non-tribal area has a telephone penetration 
rate that meets the percentage threshold to qualify for the credit? In 
particular, the Commission requests comment on the possible method(s) 
that would enable it to accurately target the non-tribal areas that 
share the same characteristics of tribal lands and are thus appropriate 
to target for support through bidding credits. Although it is likely 
that areas adjacent to tribal lands have significant tribal 
populations, and may possess characteristics (e.g. geographic 
remoteness, low subscribership) that similarly warrant support, the 
Commission recognizes that certain areas immediately adjacent to tribal 
lands include highly populated, urban areas. The Commission therefore 
requests comment on any widely applicable methodology that would enable 
the Commission to easily distinguish between urban/highly

[[Page 23434]]

populated areas with high telephone penetration rates and those that 
have characteristics warranting support. The Commission seeks comment 
on any other measures or conditions that should be adopted that will 
safeguard the integrity of the Commission's bidding credit program.
    19. Further, the Commission tentatively concludes that, in the 
event it extends the bidding credit's applicability to adjoining non-
tribal lands, it should use the existing formula to calculate the 
additional credit. In order to determine the total credit for a market, 
the applicable ``square kilometers'' of the relevant non-tribal area 
would be added to the qualifying tribal area within the license market. 
The Commission seeks comment on this approach, and on any alternative 
ways to calculate the credit.
    20. In the R&O, the Commission concluded that it has the authority 
to establish the tribal lands bidding credit because the Act, inter 
alia, directs the Commission to: (1) Facilitate the rapid and efficient 
deployment of wire and radio communications ``to all the people of the 
United States;'' (2) foster ``the development and rapid deployment of 
new technologies, products, and services for the benefit of the public, 
including those residing in rural areas;'' and, (3) promote the 
``efficient and intensive use of the electromagnetic spectrum.'' See 
R&O, citing 47 U.S.C. 151, 47 U.S.C. 309(j)(3)(A), and 47 U.S.C. 
309(j)(3)(D). The Commission further concluded that section 706(A) of 
the Act authorizes bidding credits designed to remove or reduce 
economic barriers to infrastructure investment. The Commission 
tentatively concludes that these provisions also allow the Commission 
to extend the bidding credit to cover adjacent non-tribal areas. The 
Commission requests comment on this analysis.

III. Procedural Matters

A. Ex Parte Rules--Permit-But-Disclose Proceeding
    21. This proceeding is a permit-but-disclose notice and comment 
rulemaking proceeding. Ex parte presentations are permitted, except 
during the Sunshine Agenda period, provided they are disclosed as 
provided in Commission rules. See generally 47 CFR 1.1202, 1.1203, and 
1.1206.
B. Initial Paperwork Reduction Act Analysis
    22. The 2nd FNPRM has been analyzed with respect to the Paperwork 
Reduction Act and found to impose no new or modified reporting and 
recordkeeping requirements or burdens on the public.
C. Initial Regulatory Flexibility Analysis
    23. The Commission has prepared an Initial Regulatory Flexibility 
Analysis (IRFA) for the 2nd FNPRM, as required by the Regulatory 
Flexibility Act. The Commission requests written public comment on the 
analysis. Comments must be filed in accordance with the same filing 
deadlines as comments filed in response to the 2nd FNPRM, and must have 
a separate and distinct heading designating them as responses to the 
IRFA. The Commission will send a copy of the 2nd FNPRM, including this 
IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). See 5 U.S.C. 603(a).
Need for, and Objectives of, the 2nd FNPRM
    24. The tribal lands bidding credit program is still in its early 
stages and few carriers have taken advantage of the bidding credit thus 
far. The record, however, is unclear regarding the reasons behind the 
lack of response to the bidding credit. Because the record in this 
proceeding thus far is not sufficient to make reasoned decisions as to 
what steps, if any, should be taken to further encourage carriers to 
provide coverage to tribal lands, the Commission seeks additional 
comment regarding this issue.
    25. Modifying the construction requirements of the tribal lands 
bidding credit. The Commission's rules currently impose more stringent 
construction requirements on carriers who seek the tribal lands bidding 
credit than those who do not. All carriers taking advantage of the 
bidding credit are required to serve 75 percent of the population of 
the qualifying tribal land for which the credit was awarded, and must 
do so within three years of license grant. One possible reason behind 
the lack of participation in the bidding credit program is that 
carriers find that difficulties involved in meeting the enhanced 
construction requirements are not sufficiently mitigated by the 
existing bidding credit. For example, there may be conditions, such as 
technical obstacles, economic factors, or other difficulties, that may 
make it difficult for carriers to satisfy the stricter construction 
requirement. Circumstances may exist on remote tribal lands such as low 
population density, rough terrain, and other factors that can 
negatively affect the ability of carriers to provide the requisite 
coverage to facilities in those areas. Accordingly, the Commission 
seeks comment as to whether it should reconsider the buildout 
obligations imposed on carriers utilizing the tribal lands bidding 
credit. The Commission seeks comment on whether the requirement that 
carriers cover 75 percent of the population within three years remains 
feasible, or whether it should moderate the buildout criteria. 
Specifically, the Commission requests comment on what factors or 
circumstances exist that warrant an across-the-board relaxation of the 
bidding credit construction requirements.
    26. In the event that it is determined that the construction 
requirements should be eased, the Commission seeks comment on how the 
requirements should be modified. For example, should the population of 
the qualifying tribal land covered by a carrier be lessened (i.e. 
reduced to a number below 75 percent)? Alternatively, should the time 
period in which to provide coverage to 75 percent of the tribal 
population be extended to a construction period longer than three 
years? Or is the appropriate remedy a combination of a reduced 
population coverage requirement and an expanded construction period? 
Should the Commission adopt a variation of the combination method such 
as a tiered approach? In other words, construction would occur in 
phases, e.g., a certain percentage of the total tribal population must 
be covered in three years, and a greater percentage would be covered at 
the five-year mark.
    27. A comprehensive change of the construction requirements may not 
be the appropriate solution. It may be that satisfying the tribal lands 
buildout requirement may be more difficult in certain tribal areas in 
the country than in others. There may be difficulties or conditions 
specific to certain tribal lands, that may make it difficult for 
carriers to satisfy the stricter construction requirement, while other 
carriers deploying the same type of service may have no difficulties in 
meeting the construction requirements in other tribal areas. Similarly, 
the ability to comply with the tribal lands bidding credit may depend 
on the particular wireless service at issue. The Commission's rules 
governing general construction and operation obligations of licensees 
reflect several approaches that match a type of license (i.e. site-
based versus geographic market) or service (e.g. PCS or lower band 700 
MHz) with a specific buildout requirement. It may therefore be 
preferable to deal with these situations on a case-by-case or service-
by-service basis rather than an across-the board

[[Page 23435]]

method. The Commission therefore seeks comment on whether buildout 
difficulties should be resolved using an ad hoc or waiver approach.
    28. Increasing the bidding credit limit. In addition to the 
required construction requirements, another possibility for the poor 
response may be that the existing bidding credit may not provide 
carriers sufficient incentive to deploy facilities on tribal lands. 
Although no applicant has yet requested a larger credit than the one 
called for under the tribal lands bidding credit methodology, it may be 
that the current bidding credit amounts are not adequate to allow 
carriers to recoup a significant portion of infrastructure costs. 
Accordingly, the Commission seeks comment on whether the existing 
tribal lands bidding credit remains effective in encouraging carriers 
to provide service in tribal areas. The Commission also requests 
comment on whether and how the bidding credit amount and methodology 
should be modified to provide a greater incentive for carriers to 
deploy facilities on tribal lands.
    29. Adjustment of the Bidding Credit based on 2000 Census Data. 
Recently issued data from the 2000 Census indicates that telephone 
penetration rates on tribal lands have increased appreciably from the 
levels reported in 1990. However, despite the improvement in access to 
basic telephone service experienced by many tribal areas, the census 
information reveals that telephone penetration rates on tribal lands 
remain well below the 97.6 percent penetration rate found in the 
country as a whole. Certain tribal lands continue to have unusually low 
telephone penetration levels despite gains in subscribership numbers 
since the 1990 Census. Accordingly, the Commission seeks comment on 
whether the improved tribal penetration rates require that certain 
aspects of the bidding credit be modified. For example, should the 
credit formula be adjusted using 2000 Census figures instead of 1990 
Census figures? While some of the more populous tribal areas continue 
to have penetration rates below 70 percent, many tribal lands now have 
penetration rates above 70 percent. Accordingly, to the extent that 
tribal penetration rates have improved, but remain below the national 
average, should the bidding credit formula be modified so that tribal 
areas with penetration rates greater than 70 percent but below the 
national average are eligible for the credit? What should the benchmark 
be? Further, with respect to tribal lands that have been identified by 
the 2000 Census as continuing to have unusually low penetration rates, 
the Commission requests comment on whether the Commission should make 
adjustment to the bidding credit to provide additional incentives for 
such areas.
    30. Extending the Tribal Lands Bidding Credit to Adjacent Non-
tribal Areas with Low Penetration Rates. The Commission recognizes that 
there may be certain areas abutting tribal lands that also lack 
adequate access to telecommunications services. It is likely that some 
non-tribal areas share with their neighboring tribal communities the 
same barriers to access, such as geographic remoteness, sparse 
population clusters, and low income levels. Further, it is likely that 
areas adjacent to tribal communities also have significant Native 
American populations. Accordingly, in the 2nd FNPRM, the Commission 
solicits comment on whether bidding credits should be extended to non-
tribal areas with penetration rates of less than 70 percent. 
Specifically, the Commission seeks comment on whether it should allow a 
limited expansion of the tribal lands bidding credit program that would 
allow carriers who seek bidding credits in order to serve qualifying 
tribal lands to obtain additional credit for extending their coverage 
to immediately adjacent non-tribal areas that also have penetration 
rates of less than 70 percent.

Legal Basis

    31. The Commission tentatively concludes that it has authority 
under sections 4(i), 303(r), 309(j) and 706 of the Communications Act 
of 1934, as amended, 47 U.S.C. 154(i), 303(r), 309(j) and 706, to adopt 
the proposals set forth in the 2nd FNPRM.
    Description and Estimate of the Number of Small Entities to which 
the rules will apply.
    32. 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.
    33. 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.
    34. 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

[[Page 23436]]

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.
    35. 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.
    36. 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 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.
    37. 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.
    38. 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.
    39. 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% of the 1,479 licenses for Blocks 
D, E, and F. On March 23, 1999, the Commission

[[Page 23437]]

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.
    40. 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.
    41. 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.
    42. The auction of the 1,050 800 MHz SMR geographic area licenses 
for the 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.
    43. The 2nd FNPRM does not propose any specific reporting, 
recordkeeping or compliance requirements. However, the Commission seeks 
comment on what, if any, requirements it should impose if it adopts the 
proposals set forth in the 2nd FNPRM. Steps Taken to Minimize 
Significant Economic Impact on Small Entities, and Significant 
Alternatives Considered.
    44. 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).
    45. The 2nd FNPRM seeks comment regarding ways to adjust the 
current tribal lands bidding credit program in order to encourage 
further deployment by carriers, as well as on additional uses of the 
bidding credit program to facilitate the provision of service to 
underserved non-tribal areas adjacent to tribal communities. The 2nd 
FNPRM does not make specific implementation proposals, but seeks 
guidance from the public on how to further expand the Commission's 
bidding policies. The Commission tentatively concludes that these 
proposals should not have a significant economic impact on small 
carriers.
D. Comment Dates
    46. The Commission invites comment on the issues and questions set 
forth in the 2nd FNPRM, Paperwork Reduction Analysis, and IRFA 
contained herein. Pursuant to sections 1.415 and 1.419 of the 
Commission's rules, interested parties may file comments on or before 
June 2, 2003, and reply comments on or before June 16, 2003. Comments 
may be filed using the Commission's Electronic Comment Filing System 
(ECFS) or by filing paper copies. See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998).
    47. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/e-file/ecfs.html. 
Generally, only one copy of an electronic submission must be filed. If 
multiple docket or rulemaking numbers appear in the caption of this 
proceeding, however, commenters must transmit one electronic copy of 
the comments to each docket or rulemaking number referenced in the 
caption. In completing the transmittal screen, commenters should 
include their full name, Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit 
electronic comments by Internet e-mail. To receive filing instructions 
for e-mail comments, commenters should send an e-mail to [email protected], 
and should include the following words in the body of the message, 
``get form .'' A sample form and 
directions will be sent in reply. Or you may obtain a copy of the ASCII 
Electronic Transmittal From (FORM-ET) at http://www.fcc.gov/e-file/email.html.
    48. Parties who choose to file by paper must file an original and 
four copies of each filing. Filings can be sent by hand or messenger 
delivery, by commercial overnight courier, or by first-class or 
overnight U.S. Postal Service mail (although the Commission continues 
to experience delays in receiving U.S. Postal Service mail). The 
Commission's contractor, Vistronix,

[[Page 23438]]

Inc., will receive hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 
110, Washington, DC 20002. The filing hours at this location will be 8 
a.m. to 7 p.m. All hand deliveries must be held together with rubber 
bands or fasteners. Any envelopes must be disposed of before entering 
the building.
    49. Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail, 
Express Mail, and Priority Mail should be addressed to 445 12th Street, 
SW., Washington, DC 20554. All filings must be addressed to the 
Commission's Secretary, Office of the Secretary, Federal Communications 
Commission.

------------------------------------------------------------------------
If you are sending this type of document    It should be addressed for
   or using this delivery method . . .           delivery to . . .
------------------------------------------------------------------------
Hand-delivered or messenger-delivered     236 Massachusetts Avenue, NE.,
 paper filings for the Commission's        Suite 110, Washington, DC
 Secretary.                                20002 (8 a.m. to 7 p.m.).
Other messenger-delivered documents,      9300 East Hampton Drive,
 including documents sent by overnight     Capitol Heights, MD 20743 (8
 mail (other than United States Postal     a.m. to 5:30 p.m.).
 Service Express Mail and Priority Mail).
United States Postal Service first-class  445 12th Street, SW.,
 mail, Express Mail, and Priority Mail.    Washington, DC 20554.
------------------------------------------------------------------------

    50. Regardless of whether parties choose to file electronically or 
by paper, parties should also file one copy of any documents filed in 
this docket with the Commission's copy contractor, Qualex 
International, Portals II, 445 12th Street, SW., CY-B402, Washington, 
DC 20554 (see alternative addresses above for delivery by hand or 
messenger) (telephone 202-863-2893; facsimile 202-863-2898) or via e-
mail at [email protected].
    51. The full text of this document is available for public 
inspection and copying during regular business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC 20554. This document may also be purchased from 
the Commission's duplicating contractor, Qualex International, Portals 
II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 
202-863-2893, facsimile 202-863-2898, or via e-mail [email protected]. 
Alternative formats (computer diskette, large print, audio cassette and 
Braille) are available to persons with disabilities by contacting Brian 
Millin at (202) 418-7426, TTY (202) 418-7365, or at [email protected].

IV. Ordering Clauses

    52. Pursuant to sections 1, 4(i), 303(r), 309(j) and 706 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 303(r), 
309(j), and 706, the Second Further Notice of Proposed Rulemaking is 
adopted.
    53. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Second Further 
Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis to the Chief Counsel for Advocacy of the Small 
Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-10737 Filed 5-1-03; 8:45 am]
BILLING CODE 6712-01-P