[Federal Register Volume 68, Number 227 (Tuesday, November 25, 2003)]
[Proposed Rules]
[Pages 66232-66251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29193]



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Part III





Federal Communications Commission





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47 CFR Parts 1, 2, 20, 21, 22, 24, 25, 27, 74, 78, 80, 87, 90, 95, 97, 
and 101



Promoting Efficient Use of Spectrum Through Elimination of Barriers to 
the Development of Secondary Markets; Proposed Rule and Rule

  Federal Register / Vol. 68, No. 227 / Tuesday, November 25, 2003 / 
Proposed Rules  

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 2, 20, 21, 22, 24, 25, 27, 74, 78, 80, 87, 90, 95, 
97, and 101

[WT Docket No. 00-230; FCC 03-113]


Promoting Efficient Use of Spectrum Through Elimination of 
Barriers to the Development of Secondary Markets

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document we seek comment on several actions the 
Commission could take to further enhance spectrum access and efficient 
use of spectrum through the development of more robust secondary 
markets in spectrum usage rights in the wireless radio and satellite 
services. We also seek comment on how to encourage the development of 
information and clearinghouse mechanisms that will facilitate secondary 
market transactions between licensees and new users in need of access 
to spectrum. Finally, we seek comment on further streamlining of 
application processing for spectrum leasing, transfer of control, 
license assignments, expanding leasing to additional services, and 
modifying or eliminating other regulatory barriers impeding secondary 
market transactions.

DATES: Comments by the public on the proposals set forth in the Further 
Notice of Proposed Rulemaking (Further NPRM) are due December 5, 2003. 
Reply comments are due January 5, 2004.

FOR FURTHER INFORMATION CONTACT: Paul Murray, Wireless 
Telecommunications Bureau, at (202) 418-7240, or via the Internet at 
[email protected]; for additional information concerning the 
information collections contained in this document, contact Judith-B. 
Herman at (202) 418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further NPRM portion of the Commission's Report and Order and Further 
Notice of Proposed Rulemaking, FCC 03-113, in WT Docket No. 00-230, 
adopted on May 15, 2003, and released on October 6, 2003. 
Contemporaneous with this document, the Commission issues a Report and 
Order (published elsewhere in this publication). The full text of this 
document is available for inspection and copying during normal business 
hours in the FCC Reference Information Center, 445 12th Street, SW., 
Washington, DC 20554. The complete text may be purchased from the FCC's 
copy contractor, Qualex International, 445 12th Street, SW., Room CY-
B402, Washington, DC 20554. The full text may also be downloaded at: 
http://www.fcc.gov. Alternative formats are available to persons with 
disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 
418-7365 or at [email protected].

Synopsis of the Further NPRM

I. Introduction

A. Wireless Radio Services

    1. We adopt a Further Notice of Proposed Rulemaking (Further NPRM) 
that proposes several actions the Commission could take to further 
enhance spectrum access and efficient spectrum use on a wider scale 
following adoption of the Report and Order in this proceeding. We seek 
comment on how to encourage the development of information and 
clearinghouse mechanisms that will facilitate secondary market 
transactions between licensees and new users in need of access to 
spectrum. We also seek comment on further streamlining of application 
processing for spectrum leasing, transfers of control, and license 
assignments, expanding leasing to additional services not covered by 
the Report and Order, and modifying or eliminating other regulatory 
barriers impeding secondary market transactions.

B. Satellite Services

    2. In the Further NPRM, we further explore and seek comment on 
improving access to unused or underutilized satellite spectrum through 
secondary markets.

II. Background

    3. In November 2000, the Commission concurrently adopted the Policy 
Statement and the Notice of Proposed Rulemaking (NPRM), 65 FR 81475 
(December 26, 2000) in this proceeding regarding secondary markets in 
spectrum usage rights. The Policy Statement enunciated general goals 
and principles for the further development of those secondary markets, 
while the NPRM proposed concrete steps the Commission might take to 
implement such policies with respect to Wireless Radio Services and 
Satellite Services. Thirty-seven parties commented on the proposals set 
forth in the NPRM, and twenty-one filed reply comments.
    4. In 2002, the Commission's staff-level Spectrum Policy Task Force 
undertook a comprehensive review of spectrum policy. In examining 90 
years of spectrum policy, the Task Force sought to assist the 
Commission in developing policies that are more responsive to the 
consumer-driven evolution of new wireless technologies, devices, and 
services. The findings and recommendations submitted to the Commission 
in November 2002 in the Spectrum Policy Task Force Report addressed 
many issues relevant to the promotion of secondary markets in spectrum 
usage rights.
    5. Concurrent with the adoption of the Further NPRM, and as part of 
the same document, we adopted a Report and Order portion (Report and 
Order), in which we take several actions to remove unnecessary 
regulatory barriers to the development of secondary markets in spectrum 
usage rights in the Wireless Radio Services. Specifically, in the 
Report and Order, we take several steps to facilitate and streamline 
the ability of spectrum users to gain access to licensed spectrum by 
entering into spectrum leasing arrangements that are suited to the 
parties' respective needs. As a threshold matter, we revise the 
Commission's interpretation of the de facto control standard relating 
to section 310(d) of the Communications Act, 47 U.S.C. 310(d), in the 
context of spectrum leasing, replacing the standard that has been in 
place since 1963 under the Intermountain Microwave decision, 12 FCC 2d 
559 (1963), with a refined standard that better accords with our 
contemporary market-oriented spectrum policies, fast-changing consumer 
demands, and technological advances. The Intermountain Microwave 
standard, which focuses its de facto control analysis on whether 
licensees exercise close working control over all of the facilities 
using licensed spectrum, is not required by the Communications Act. 
Moreover, this standard impedes innovative and efficient leasing 
arrangements with third party spectrum users that do not require 
Commission approval under the statute. The updated standard we adopt 
today for leasing refines the de facto control analysis, consistent 
with statutory requirements, by focusing instead on whether licensees 
continue to exercise effective working control over any spectrum they 
lease to others.
    6. In the Report and Order, we implement two different options for 
spectrum leasing. One option enables licensees and ``spectrum lessees'' 
to enter into leasing arrangements, without the need for Commission 
approval, so long as the licensee retains de facto control of the 
leased spectrum under the newly refined standard. The other option 
permits parties to enter into arrangements in which the licensee 
transfers de facto control to the lessee

[[Page 66233]]

pursuant to streamlined approval procedures.
    7. In addition, consistent with our efforts to facilitate secondary 
markets in spectrum by providing for streamlined approval procedures 
for certain spectrum leasing arrangements that involve transfers of de 
facto control, the Report and Order implements similar streamlined 
Commission approval procedures for all license assignments (whether a 
full or partial assignment of the license) and transfers of control in 
the same Wireless Radio Services covered by our newly adopted spectrum 
leasing policies.

III. Further Notice of Proposed Rulemaking

    8. We recognize that the steps taken in the Report and Order are 
limited in scope, addressing only the legal framework for certain types 
of leasing transactions involving exclusive use wireless licenses. In 
order to facilitate secondary markets and improve opportunities for 
more users to gain access to spectrum, we believe we must provide a 
greater range of incumbent licensees with the requisite regulatory 
framework as well as the practical capability and economic incentive to 
permit access to unused spectrum encompassed within their 
authorizations. Thus, additional actions by the Commission are needed 
to further promote more flexible and, ultimately, more efficient use of 
the spectrum, with significant public interest benefits.

A. Achieving a More Efficient Spectrum Marketplace

1. The Commission's Role in Providing Secondary Market Information and 
Facilitating Exchanges
    9. In the Policy Statement, we observed that the market for 
spectrum, unlike the market for most other goods and services, lacks an 
efficient means for identifying buyers and sellers, comparing prices, 
and completing transactions. We also noted that negotiation for 
spectrum transactions can be complicated by the Commission's technical 
and service rules, and that approval of transactions by the Commission 
can involve complex submissions in a time-consuming and expensive 
process for the parties involved.
    10. Our vision for the future spectrum marketplace presumes that 
access to adequate information is essential for ensuring that improved 
secondary markets achieve the highest benefit for spectrum users and 
consumers. Entities desiring to obtain access to spectrum must be able 
to identify the potential suppliers of that access, and we seek to 
ensure that the costs of obtaining such information and entering into 
transactions governing spectrum access are not driven by regulatory 
constraints.
    11. There are a variety of approaches the Commission could pursue 
to promote access to spectrum information needed in the secondary 
marketplace. The simplest of these approaches--maintaining an on-line 
database of licensees, lessees, and certain other types of users--is 
most readily facilitated by Commission action. Specifically, because 
the Commission is responsible for issuing spectrum licenses and 
enforcing its rules and policies, it necessarily must collect certain 
basic and pertinent information, such as the names of licensees and the 
geographic areas and frequency bands for which they hold their 
authorizations.
    12. In the Report and Order, we provide for the public availability 
of this type of information in the leasing context. Based on the 
notifications and applications required to be filed by licensees and 
spectrum lessees, the ULS database will contain information on, inter 
alia, the identity of each licensee and spectrum lessee, licensee and 
lessee contact information, the spectrum and geographic area 
encompassed within the lease, and the term of the lease. We ask parties 
to comment on whether collection of this type of information by the 
Commission is sufficient to provide potential users of spectrum with 
adequate information about possible spectrum lease opportunities. 
Should we collect additional information from licensees, spectrum 
lessees, or any other authorized users about the nature of their 
operations (e.g., more detail about the geographic area actually 
covered and the frequencies actually used)? Would the collection of 
more detailed operational information be burdensome for affected 
parties? Does the Commission receive information through any other data 
gathering requirements that might be useful for secondary market 
purposes? In addition, we ask parties about their experience in 
searching on ULS and how to ensure that it is a useful tool for 
researching secondary market opportunities.
    13. We also seek comment on whether and to what extent the 
Commission should support or encourage the establishment of additional 
information services, such as listing offers to transfer, assign, or 
lease, establishing exchange mechanisms, or brokering exchanges. As a 
general matter, we continue to believe that the private sector is 
better suited both to determine what types of information parties might 
demand, and to develop and maintain information on the licensed 
spectrum that might be available for use by third parties. We seek 
comment on the likelihood that private sector mechanisms will develop 
for the collection and dissemination of secondary market information.
    14. We also request comment on the potential for independent third 
parties, i.e., parties other than licensees and potential lessees, to 
emerge as ``market-makers'' that not only collect and disseminate 
information, but actually negotiate, broker, or otherwise facilitate 
spectrum leasing transactions. We ask interested parties to comment 
whether they think there is a useful role to be played by market-makers 
in facilitating secondary markets and increased access to unused 
spectrum. Are such facilitators necessary? If so, will they emerge 
naturally as rules allowing secondary market trading are established, 
or are there steps the Commission should take to promote them? If the 
Commission takes steps to promote market-makers, what steps should it 
take?
    15. Finally, if interested parties have any alternative proposals 
for facilitating operation of the marketplace in spectrum capability, 
we request that they outline and describe such alternatives.
2. Developing Policies That Maximize Potential Public Benefits Enabled 
by Advanced Technologies, Including Opportunistic Devices
    16. Both the Policy Statement and the Spectrum Policy Task Force 
Report emphasize that emerging technologies are creating significant 
new opportunities for enabling more intensive and efficient use of 
spectrum. In particular, these developments increasingly allow more 
users the technical ability to access unused spectrum in different 
bands for short periods of time, and to do so with more tolerance of 
interference than in the past. The Spectrum Policy Task Force noted 
that the increased use of digital technologies in general, and specific 
advances in software-defined radio, frequency-agile radio, and spread 
spectrum technologies, were creating new opportunities for spectrum 
access and use. Both the Policy Statement and the Spectrum Policy Task 
Force Report noted that these technological advances have important 
implications with respect to the nature of policies the Commission 
might adopt to facilitate access to spectrum, including access via 
secondary markets. Both recommended that the Commission develop 
licensing

[[Page 66234]]

and access models that take this new technological potential into 
account.
    17. We seek comment here on additional steps that the Commission 
can take to implement spectrum licensing policies that eliminate 
unnecessary regulatory barriers and promote the potential public 
benefits made possible by this increasingly dynamic and innovative 
nature of spectrum use. We agree with the Spectrum Policy Task Force 
Report that these technological advances potentially provide several 
answers to current and future spectrum policy challenges. In 
particular, they make possible more intensive and efficient use of 
spectrum. They also allow operators to take advantage of the time 
dimension of the radio spectrum, which could enable additional access 
to spectrum for more users and services.
    18. We also request comment on the recommendations made in the 
Spectrum Policy Task Force Report regarding Commission policies on 
access to spectrum as provided by opportunistic devices in currently 
licensed bands. In particular, we propose to move forward with the Task 
Force's general recommendation that, with regard to currently licensed 
bands, the Commission focus on advancing and improving a secondary 
markets approach to access to spectrum by opportunistic devices during 
the near term. Under this approach, the Commission initially would look 
to promote secondary markets through multiple steps, the first of which 
we are taking in the Report and Order.
    19. The Spectrum Policy Task Force Report noted that a secondary 
markets approach did not necessarily require that the prospective 
opportunistic user negotiate individually with each affected licensee. 
It suggested that other mechanisms, such as band managers, frequency 
coordinators, and other intermediaries such as clearinghouses, could 
possibly manage the secondary uses on licensees' behalf. We seek 
comment on the possible use of any or all of these mechanisms, and how 
any such tool should be structured by the Commission.
    20. Finally, we seek comment on whether the policies and procedures 
adopted in the Report and Order provide sufficient flexibility for 
dynamic leasing arrangements involving opportunistic uses of currently 
licensed spectrum bands. If not, we seek comment on additional steps 
the Commission should take consistent with our statutory authority. To 
facilitate secondary access by opportunistic devices, should the 
Commission more exhaustively define the nature of the rights embodied 
in ``exclusive use'' licenses in the Wireless Radio Services?

B. Forbearance From Individualized Prior Commission Approval for 
Certain Categories of Spectrum Leases and Transfers of Control/License 
Assignments

    21. The Report and Order takes significant steps to facilitate 
certain categories of spectrum leasing and to reduce the regulatory 
process requirements that can delay the timely implementation of 
business arrangements, increase transaction costs, and present 
potential regulatory uncertainty. Despite these advancements, however, 
we are concerned that even the streamlined regulatory process we have 
established for de facto transfer leasing may raise unnecessary hurdles 
for transactions that we could find, as a categorical determination, 
are consistent with the public interest.
    22. Similarly, we have adopted policies in the Report and Order 
that should significantly streamline and facilitate the regulatory 
process applicable to transfers of control and license assignments in a 
significant number of our Wireless Radio Services. Nevertheless, we 
continue to consider additional actions we might take to minimize any 
unnecessary regulatory impediments to the effectuation of marketplace 
transactions while ensuring that we satisfy our statutory obligations 
relevant to license transfers of control and assignments.
    23. The record before us suggests the need to explore in greater 
detail how to grant increased flexibility to parties to design leasing 
arrangements that are responsive to their business needs and to 
implement them without facing unnecessary regulatory delays. We also 
want to assess whether the public interest objectives and policy goals 
that underpin any revised approach to de facto transfer leasing that we 
may adopt are also applicable to some categories of outright license 
transfers and assignments. As part of this examination, we will assess 
whether, in light of all relevant statutory and public interest 
factors, we should strive to provide some parity in treatment between 
lease arrangements that involve a transfer of de facto control and full 
assignment of licenses and transfers of licensee control. This review 
thus must assess the possible applicability of forbearance or other 
streamlining steps to transaction applications.
    24. Forbearance standard. Section 10 of the Communications Act 
authorizes the Commission to forbear from applying any provision of the 
Communications Act with respect to telecommunications carriers or 
telecommunications services (or a particular class thereof), provided a 
three-pronged test is satisfied. Wireless radio service licensees that 
are telecommunications carriers, as defined by the Act, or otherwise 
provide commercial mobile radio services (CMRS) and common carrier-
based services, fall within the scope of the Commission's statutory 
forbearance authority. The forbearance proposals we describe with 
respect to spectrum leasing thus would be applicable only to entities 
and services meeting this test. Regulatory processing of leasing 
transactions involving spectrum and authorizations restricted to 
private use would not be encompassed within any forbearance-based 
structure we may adopt.
    25. In determining whether forbearance from the prior approval 
processes is consistent with the public interest, the Commission must 
consider whether forbearance will promote competitive market 
conditions, including whether it will enhance competition among 
telecommunications service providers. If the Commission determines that 
forbearance will promote competition among providers of 
telecommunications services, that determination may be the basis for 
finding that forbearance is in the public interest (one of the three 
prongs of the test).
1. Forbearance With Respect to Certain Spectrum Leasing Arrangements
    26. We seek comment on whether to forbear from individual prior 
review and approval by the Commission for certain categories of leasing 
arrangements involving a transfer of de facto control that would not 
raise any public interest concerns. We propose particular benchmarks or 
elements for leasing transactions (related to the public interest 
concerns we generally consider in evaluating transactions involving a 
transfer of de jure and/or de facto control) that would, if satisfied, 
allow spectrum lease agreements to be handled under the forbearance 
model we propose in this Further NPRM. We also seek comment on 
appropriate notification requirements for leases that would not be 
subject to individualized prior approval under this proposal.
a. Elements of Leasing Transactions That Would Not Require Prior 
Commission Approval
    27. We propose to forbear from the requirements of sections 308, 
309, and 310(d) of the Communications Act to the extent necessary to 
permit us to

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process notification filings regarding leases involving a transfer of 
de facto control that satisfy the conditions enunciated in this section 
without 30 days prior public notice and without prior Commission review 
and consent. Rather, as discussed below, the parties to the leasing 
arrangement would be required to file a notification with the 
Commission within 14 days of execution of the lease. Responsibility for 
compliance with Commission rules, resolving interference issues, and 
making Commission filings would shift to the lessee, in the same manner 
as described under the de facto transfer leasing model in the Report 
and Order above.
    28. The lessee must satisfy applicable eligibility and use 
restrictions associated with the leased spectrum. For a leasing 
agreement to be eligible for processing pursuant to this forbearance 
proposal, the lessee would be required to meet any applicable 
eligibility limitations and comply with any use restrictions associated 
with the spectrum it plans to lease. A lessee would also have to meet 
our basic qualification requirements for holding an authorization.
    29. We seek comment on this proposed element. We note that 
inclusion of this element does not stand as an absolute bar to a lease 
contemplating spectrum usage that is inconsistent with applicable 
regulations but only serves to prevent such a lease proposal from being 
implemented without prior public notice or Commission review. We 
believe that, at present, such proposals should be subject to 
Commission review and evaluation before the lease is implemented. Is 
there any way to permit greater flexibility in lessee use of spectrum 
with forbearance-based notification without undermining other policies 
adopted by the Commission? Do retaining use and eligibility 
restrictions for lessees as a condition of permissible forbearance 
processing serve as a significant barrier to implementation of spectrum 
leases?
    30. While we propose to require a lessee to meet any eligibility 
limitations applicable to the licensee from which it is leasing 
spectrum, we request comment about how to apply this objective, if we 
adopt it, in the context of licensees that are designated entities and/
or entrepreneurs. Should we require a lessee to be eligible for the 
same level of competitive bidding benefits, such as bidding credits, as 
the licensee from which it is leasing? Should we require only that the 
lessee be qualified to hold the license? If so, do we impose unjust 
enrichment obligations on a lessee that is qualified for a lesser level 
of competitive bidding benefits? How do we ensure that the Commission 
has an opportunity to calculate and collect any unjust enrichment 
payments?
    31. The lessee must comply with the foreign ownership provisions 
applicable to Commission licensees. In order for parties to a lease to 
avail themselves of forbearance processing as discussed in this Further 
NPRM, we first propose that, for a lease involving any radio 
authorization, the lessee not be a foreign government or the 
representative thereof. This limitation is derived from section 310(a), 
which is an absolute ban on foreign government holding of Commission 
radio authorizations. Second, for leases involving common carrier radio 
authorizations, we propose that the lessee must meet the requirements 
of sections 310(b)(1) through (3), i.e., it must not be an alien or a 
representative thereof, a corporation organized under the laws of any 
foreign government, or have more than 20 percent direct foreign 
ownership. Third, we propose that, as a condition of eligibility for 
forbearance, the lessee must not have more than 25 percent indirect 
foreign ownership, or must have previously obtained a declaratory 
ruling from the Commission in advance of entering into the subject 
lease that its lease of the spectrum at issue is consistent with the 
Commission's foreign ownership policies.
    32. We request parties to address the merits of applying the 
proposed foreign ownership conditions. Do the conditions ensure that we 
are meeting our obligations to enforce and apply sections 310(a) and 
(b) in the context of spectrum leases that we allow to proceed without 
individualized prior Commission approval of a lease arrangement? What 
risk exists that parties could attempt to escape the applicability of 
the foreign ownership limitations by implementing a lease following 
only notification to the Commission? Conversely, is this element too 
strict in terms of applying our foreign ownership policies? Is there 
any way we can expand the scope of permissible indirect foreign 
ownership in lessees where we are not individually reviewing the 
application?
    33. We note that, as part of our foreign ownership review process, 
we coordinate with Executive Branch agencies to ensure that the level 
and identity of the foreign ownership does not present any concerns 
with respect to national security, law enforcement, foreign policy, or 
trade policy. We seek comment on whether our proposed foreign ownership 
conditions for forbearance raise any questions concerning enforcement 
of national security, law enforcement, foreign policy, or trade policy 
by Executive Branch agencies. What steps do we need to take to ensure 
that national security and other concerns addressed by Executive Branch 
agencies are satisfactorily handled? We note that no Executive Branch 
agencies provided comments for the record on this issue and 
particularly seek their input at this time.
    34. The spectrum lease arrangement must not raise any competitive 
concerns. The Commission acknowledges in the Report and Order the 
potential competitive effects that may be associated with a spectrum 
lease. We seek to clarify under what conditions leases would not pose 
any significant risk to our competition policies such that we would 
allow these transactions to proceed without individual Commission 
review and approval. We note that to the extent we can create more 
certainty for the parties involved in transactions, we are more likely 
to promote efficient secondary markets.
    35. The benchmarks under which we would allow spectrum leases to 
proceed without prior Commission approval must consider the competitive 
effects on both the input and output markets. The input market looks at 
the spectrum and the number of licensees in an area, while the output 
market concerns itself with wireless service and the number of entities 
actually providing service. If concentration increases in the output 
market (i.e., the number of service providers decreases) as a result of 
a transaction, there is a potential that higher prices may be charged 
to consumers. If concentration in the input market increases (i.e., 
fewer licensees), then there is a potential that higher prices will be 
charged to the actual providers of service for use of the spectrum, 
also leading to higher prices to consumers.
    36. For the output market, we look at the effect on service 
providers. We propose that, in order to be eligible for forbearance 
processing under this proposal, a spectrum lease arrangement must not 
result in the loss of service in any geographic area by an independent, 
facilities-based CMRS provider involved in the transaction. We note 
that this requirement should impose no burden on spectrum licensees 
that provide service in a given market and that simply wish to lease 
unused portions of their spectrum. Nor should this requirement burden 
licensees that have not constructed and are therefore not providing 
service. The only effect of this condition should be on a licensee that

[[Page 66236]]

is providing service and that, as a result of a contemplated lease, 
would cease to provide such service. We decline, at this time, to 
forbear from review of this latter class of leases. We request comment 
whether this is an appropriate safe harbor or whether some other 
benchmark would more effectively serve the public interest while 
ensuring that spectrum lease applications processed pursuant to 
forbearance-based procedures do not pose unacceptable threats to our 
competition policies. If we adopt this or another safe harbor, we 
request comment whether we should require the licensee, the lessee, or 
both to certify that the lease would not result in the loss of an 
existing, independent competitor in the geographic area encompassed 
within the lease.
    37. For the input market, we consider the potential competitive 
effects by looking at the amount of spectrum held by the parties 
involved in the lease. For leases involving a transfer of de facto 
control, we propose to consider the lessee as having influence over the 
spectrum encompassed within the subject lease agreement. In the case of 
de facto transfer leasing, the lessee is gaining sufficient control of 
the spectrum to be able to affect competition in the geographic area 
encompassed by the lease. Although the Commission has eliminated the 
spectrum cap it applied to certain CMRS offerings and replaced it with 
a case-by-case examination of the competitive effects of a proposed 
transaction, we believe that a defined, readily understood benchmark is 
necessary in this context. Identifying a readily ascertainable safe 
harbor provides certainty to parties. We request commenters to provide 
us with recommendations for a safe harbor definition that satisfies 
these objectives, including a discussion of how the proposed safe 
harbor level will ensure that no significant competitive issues are 
posed by a particular lease transaction.
    38. We note that our prior spectrum cap addressed only CMRS 
offerings, which are a subset of the wireless services to which we are 
proposing to extend the opportunity to implement spectrum leases 
without advance individualized review by the Commission. As a 
supplement to or replacement of a defined CMRS benchmark, we could 
specify that a lessee have an attributable interest in no more than a 
specified amount of common carrier wireless spectrum in the geographic 
market. We request commenters endorsing a limitation based on total 
common carrier wireless spectrum to discuss the appropriate level and 
the justification for their recommendation.
    39. We request comment on these proposals for ensuring that 
spectrum leases for which we no longer require prior individualized 
review and approval do not raise competitive issues. With regard to 
competitive issues, do we need to be concerned only about CMRS 
spectrum? Are there any individual services covered by our proposals in 
this Further NPRM for which we need to be concerned about potential 
anticompetitive effects resulting from aggregation of spectrum? Are 
there other groups of services (similar to the services previously 
covered by the CMRS spectrum cap--PCS, cellular, and certain SMR 
spectrum) for which we should establish a total spectrum aggregation 
benchmark in order to prevent any adverse competitive effects stemming 
from spectrum leases implemented without prior Commission approval? How 
should we account for leases of private spectrum in this competitive 
benchmark setting? How should we determine what spectrum is 
attributable to a particular entity for competition analysis purposes? 
Should we consider a test based on ``significant influence'' over the 
spectrum?
    40. When combined with our benchmark protecting the level of 
competition in the output market, is a benchmark tied to level of 
spectrum aggregation, whether for CMRS only, other sets of services, or 
common carrier wireless services generally, an appropriate means for 
enforcing our competition policies in the context of spectrum leases 
that may proceed without prior Commission review and approval? We seek 
to ensure that any benchmarks we define are not too restrictive and 
thus likely to impede marketplace arrangements that do not raise any 
competitive concerns. Conversely, we wish to avoid benchmark levels 
that present unacceptable levels of competitive risk. Is there a better 
way to define a competitive benchmark?
    41. Addressing any other public interest concerns associated with 
spectrum leases implemented pursuant to forbearance procedures. 
Finally, we seek comment on whether spectrum leasing arrangements 
involving transfers of de facto control may raise any other public 
interest concerns that we need to address in defining those types of 
leases that could be implemented without individualized prior approval 
under an exercise of our forbearance authority. We request that 
commenters identifying any other relevant public interest 
considerations discuss whether those concerns can be addressed by some 
form of benchmark or safe harbor, and what that benchmark or safe 
harbor might be.
    42. Are these proposed prerequisites to spectrum leasing 
sufficiently clear to permit licensees and lessees to readily comply 
with them and to provide the information required by a modified Form 
603 that we would employ for purposes of notifying us of a spectrum 
lease? Are there any steps we can take to simplify any of these 
benchmarks and to facilitate licensee/lessee compliance therewith?
    43. Under the proposed forbearance model, parties would be able to 
implement a lease after filing the required notification and without 
any prior Commission review necessarily having occurred. The Commission 
and members of the public would be allowed to review the notification 
and the Commission could request additional information from the 
parties if so warranted. As a result, could forbearance processing 
undercut our ability to enforce our policies? What actions can and 
should we take in response to a spectrum lease that is improperly 
implemented under our forbearance processing proposal?
b. Notification
    44. As part of our forbearance proposal, we propose that the 
parties to a spectrum lease arrangement that qualifies for forbearance 
be required to file, within 14 days of executing the lease, a 
notification with the Commission similar to that filed by parties to a 
pro forma assignment or transfer of control, including the date on 
which the parties expect to put the lease into effect. The 
notifications would be placed on an informational public notice on a 
weekly basis, and would be ``deemed approved'' as of the date of the 
public notice. We seek comment on this proposal as well as any other 
proposal that commenters might suggest.
    45. We note that by placing the notifications on public notice, we 
provide members of the public with the opportunity to scrutinize such 
filings, similar to our handling of notifications concerning pro forma 
transfers of control and assignment of licenses. Any interested party 
would be entitled, consistent with our rules and policies concerning 
standing, to file a petition for reconsideration within 30 days of the 
date of that informational public notice. Similarly, Commission staff 
would be able to reconsider the grant on its own motion within 30 days 
of the public notice date, and the Commission would be able to 
reconsider the grant on

[[Page 66237]]

its own motion within 40 days of the public notice date.
    46. We note that we want to ensure that we have sufficient 
information about lease arrangements in order to effectuate our public 
interest responsibilities while minimizing the burden on the filing 
parties in terms of the information they must submit to the Commission. 
Accordingly, we request parties to discuss the types of information and 
level of detail that should be included in leasing notifications filed 
in accordance with this proposed procedure. How much detail should the 
parties provide regarding the ownership and affiliates of a lessee? 
What information should the parties provide about any spectrum overlaps 
created by a spectrum lease?
c. Compliance With the Forbearance Standard
    47. As noted above, forbearance from prior approval for spectrum 
leases involving a transfer of de facto control would be available only 
where telecommunications carriers and telecommunications services are 
involved in the transaction. We believe that, if we establish the 
benchmarks outlined above or something comparable, forbearing from the 
public notice and prior approval requirements would meet the test 
imposed by section 10.
    48. We request commenters to address whether the conditions we have 
proposed above for permitting leases to proceed without prior public 
notice and Commission review and approval satisfy the section 10 
requirements to support adoption of forbearance. Specifically, have we 
accurately assessed satisfaction of the section 10 requirements in this 
context? Can parties provide any further explanation why forbearance 
from the 30-day public notice period and individualized prior 
Commission review and approval supports a finding that the section 10 
test has been met? Are there other factors that need to be assessed in 
making the section 10 determination? To the extent parties suggest 
alternative or additional conditions and benchmarks to be used to 
define leasing arrangements that can be processed on a forbearance 
basis, we request that they address in detail the section 10 
implications of their proposals.
2. Eliminating Prior Commission Approval for Spectrum Leases Involving 
Non-Telecommunications Carriers and Non-Telecommunications Services
    49. Because our section 10 forbearance authority applies only to 
providers of telecommunications services, we may forbear from applying 
section 310(d) requirements only for leases involving 
telecommunications carriers and telecommunications services. 
Nevertheless, we wish to explore whether we can provide similar relief 
to parties whose lease transactions otherwise meet the conditions we 
have proposed above for forbearance processing but do not fall within 
the scope of section 10. We believe such action is necessary and 
appropriate in order to place substantively similar wireless 
transactions involving different types of licenses on a comparable 
basis and to minimize unnecessary regulatory discrimination.
    50. As a practical matter, many licenses that are beyond the scope 
of section 10 are not subject to the statutory requirement of 30 days 
public notice prior to Commission approval, which applies only to 
common carrier and broadcast licenses. Nonetheless, section 310(d) 
requires prior Commission review and approval of all transaction 
applications involving non-common carrier and non-broadcast licenses 
(as well as applications involving common carrier and broadcast 
licenses). While the review period may be shortened because the 30-day 
public notice period is not required as part of that process, the 
requirement of prior Commission approval can still cause delays and 
costs for parties seeking to enter into such transactions, many of 
which raise no significant public interest issues.
    51. We therefore seek comment on whether and how the Commission can 
structure its review to minimize possible delays in processing time for 
leases involving non-telecommunications carriers and non-
telecommunications services. (We note that this proposal encompasses 
only services covered by the Report and Order and services that might 
be added pursuant to this Further NPRM. Are there policy or legal 
barriers to designating additional categories of leases involving non-
telecommunications carriers and non-telecommunications services that 
would not be subject to prior approval? Do we have authority to take 
action under other existing provisions of the Communications Act? Are 
there any other steps we can take in our processing of spectrum lease 
applications and/or notifications related to such facilities to help 
place these types of filings on comparable footing with spectrum leases 
involving only telecommunications services and telecommunications 
carriers?
3. Forbearance With Respect to Certain Transfers and Assignments
    52. We seek to promote secondary markets generally. Secondary 
markets include not only spectrum leasing arrangements but also 
transfers of control of licensees and assignment of licenses. In order 
to not distort the marketplace in favor of spectrum leases and against 
transfers or assignments that might otherwise be pursued as a matter of 
sound business decision-making, we believe it is important to ensure 
that leases involving the temporary transfer of de facto control and 
transfers and assignments involving the permanent transfer of de facto 
and de jure control are treated consistently to the extent feasible 
under our statutory obligations. We further believe that many of the 
same policy and public interest considerations that apply in the 
leasing context are equally applicable to transfers and assignments. 
Accordingly, we seek comment in this section on whether to use our 
forbearance authority to permit certain transfers of control and 
assignment of licenses to proceed without prior individualized 
Commission review and consent, based on benchmarks similar to those we 
propose to use in the leasing context. We ask parties to address 
whether the differences between a transfer of de jure and de facto 
control, on the one hand, and the transfer of de facto control alone 
pursuant to a lease agreement, on the other hand, warrant similar or 
distinct regulatory treatments. In addition to the fact that one type 
of transaction involves a transfer of de jure control, we note that 
such a transfer also is irrevocable. Under a lease, in contrast, the 
licensee retains an interest in the authorization and may revoke the 
lease under the terms agreed to by the parties or as prescribed by our 
rules and policies.
    53. Specifically, we seek comment on whether transfers of control 
and assignment of licenses (including applications proposing to 
disaggregate spectrum and/or partition a geographic area, or a partial 
assignment) meeting certain conditions or benchmarks could be eligible 
for a forbearance-based notification-only consent process. Could we 
determine that prior review of such transactions is not necessary to 
fulfill our public interest duties and goals? Clearly, any transfer and 
assignment arrangements found to be eligible for forbearance-based 
regulatory processing must be subject to appropriate conditions to 
ensure that crucial Commission policies are not thwarted by means of 
secondary market arrangements. Would allowing these categories of 
transactions to proceed

[[Page 66238]]

with a minimum of regulatory cost and delay facilitate the movement of 
spectrum in the secondary market to its highest valued use, improve 
efficient use of spectrum, increase opportunities for access to 
spectrum where needed, and benefit wireless consumers by enhancing the 
services made available to them?
    54. If we were to permit transfers of control and assignment of 
licenses to proceed on a notification-only basis, we request comment on 
transactions involving unjust enrichment payments and/or the assumption 
by a transferee or assignee of the licensee's installment payment plan 
terms. Under such a regulatory structure, should the presence of either 
one or both of these factors disqualify a transfer of control or 
assignment of license from processing under our forbearance procedures? 
Alternatively, would we be able to build a process for determining the 
amount of the applicable unjust enrichment payment as well as preparing 
and signing the documents necessary for a transferee or assignee to 
assume some portion or all of a licensee's installment payment 
obligations that ensures that these efforts do not unduly delay 
implementation of a lease agreement while affording the Commission 
sufficient time to act?
    55. If we were to allow transfers of control and assignment of 
licenses to proceed without prior Commission approval, what safe 
harbors or conditions should we impose to ensure that our public 
interest objectives are not impeded by permitting such transactions to 
proceed without individualized Commission review? We could apply the 
same conditions and elements set forth above for spectrum lease 
arrangements, including: the transferee or assignee must satisfy 
applicable eligibility and use restrictions associated with the 
licensed spectrum; the transferee or assignee must comply with the 
foreign ownership requirements applicable to Commission licensees; the 
transfer or assignment must not raise any competitive concerns; and, 
the transfer or assignment must not raise any other public interest 
concerns, to the extent we determine we need to adopt any other 
benchmarks or conditions.
    56. We request commenters to assess the appropriateness of each of 
these conditions in applying forbearance from prior public notice and 
Commission consent to transfers of control and assignment of licenses. 
Further, the same questions raised regarding these conditions and 
benchmarks in the context of spectrum leasing eligible for forbearance 
processing are applicable in this context, and we request interested 
parties to address those matters here as well. In particular, would 
forbearance from prior Commission approval for transfers and 
assignments that meet these conditions facilitate our objectives for 
development of secondary markets? Would comparability of treatment 
between spectrum leases, on the one hand, and transfers of control and 
license assignments, on the other hand, help promote a marketplace that 
provides incentives to parties to employ the most appropriate 
arrangements and more effectively drive spectrum use to its highest 
valued use? In light of the fact that transfers and assignments involve 
transfer of de jure as well as de facto control, and on a permanent 
basis, should we impose any conditions on forbearance that would not 
apply in the leasing context?
    57. If we were to pursue forbearance for transfer and assignment 
applications, should we employ the same notification requirements as 
proposed for spectrum leases in a forbearance regime as set forth in 
the Report and Order? Does this provide sufficient notice to interested 
parties, in light of the differences between spectrum leases and 
transfers of de jure and de facto control? Could this process be 
revised in any way to achieve a better balance among the competing 
public policy objectives implicated by any such plan for forbearance 
for transfers and assignments?
    58. We request commenters to address whether the forbearance 
conditions noted above would satisfy the section 10 requirements for 
extending forbearance to some applications involving transfers of 
control and/or license assignments. Can parties provide any further 
explanation why forbearance from the 30-day public notice period and 
individualized prior Commission review and approval supports a finding 
that the section 10 test has been met? To the extent parties suggest 
alternative or additional conditions and benchmarks to be used to 
define transfers of control and assignment of licenses that might be 
processed on a forbearance basis, we request that they address in 
detail the section 10 implications of their proposals.
    59. In assessing whether forbearance from prior public notice and 
individualized Commission review meet the section 10 test, we request 
commenters to consider the provisions of section 310(d), in particular 
the requirement that no transfer of control or assignment of license 
may take place unless the Commission finds that ``the public interest, 
convenience, and necessity will be served thereby.'' The statutory 
transfer of control obligations help to ensure that a licensee, 
initially found qualified to hold a Commission authorization, does not 
in turn replace itself with an unqualified entity or somehow use the 
transfer/assignment process to shirk its obligations to the Commission. 
We wish to ensure that any forbearance policies adopted in the context 
of transfer and assignment applications will not undercut our ability 
to carry out this obligation.
    60. We acknowledge that in seeking comment on extending forbearance 
policies to some transfer and assignment applications, we are striving 
to balance competing goals. We anticipate that more successful 
functioning of secondary markets--both spectrum leases and outright 
transfers and assignments--will benefit consumers by increasing the 
range of wireless services available to them and driving spectrum to 
its highest valued use. But our public interest considerations are not 
limited solely to an assessment of competitive issues. We must also 
look to the Commission's other statutory objectives in weighing whether 
forbearance from traditional application processing for transfer and 
assignment applications in total furthers the public interest and 
whether it can be authorized in accordance with the provisions of 
section 10. We specifically request comment from interested parties 
regarding all the factors that should be taken into account in making 
our public interest calculus in this situation.
    61. Finally, to the extent that we pursue forbearance from 
traditional regulatory processing for substantial transfer and 
assignment applications in the Wireless Radio Services encompassed 
within the Report and Order or in any additional services based on this 
Further NPRM, relief from prior public notice and Commission approval 
requirements would be available only for telecommunications services 
and telecommunications carriers. In a manner parallel to adopting 
forbearance-based notification processing for spectrum leases, we 
recognize the need to provide consistent treatment to similar types of 
wireless service licenses. In addition, in the case of transfers and 
assignments, there is a real likelihood in today's environment that a 
licensee would have licenses that would be eligible for forbearance and 
some that would not. We seek comment on how to ensure that we can 
expeditiously process a proposed transfer of control or assignment of 
license that involves both categories of licenses. Are there 
alternative ways we can streamline processing of transfer and 
assignment applications involving

[[Page 66239]]

non-telecommunications services and non-telecommunications carriers? We 
note that we seek comment only with respect to services covered by the 
Report and Order and services that might be added pursuant to this 
Further NPRM.

C. Extending the Policies Adopted in the Report and Order to Additional 
Spectrum-Based Services

    62. In the Report and Order, we extend our new leasing policies to 
most Wireless Radio Services in which licensees hold exclusive rights 
to use the licensed spectrum. We wish to consider extending our leasing 
policies, as adopted in the Report and Order and as they may be 
modified based on this Further NPRM, to additional spectrum-based 
services. In light of our conclusions about the public interest 
benefits of spectrum leasing in the services for which we have adopted 
spectrum leasing policies, we consider in this Further NPRM whether we 
should extend the policies adopted in the Report and Order to some of 
the radio services that we have excluded to date.
    63. Public safety services. Our Public Safety Radio Pool is 
regulated pursuant to part 90 of our rules. State and local 
jurisdictions rely upon our Public Safety Radio Pool to carry out their 
public safety obligations. The pool encompasses the licensing of the 
radio communications of state and local governmental entities and 
certain other categories of activities. Communications transmitted over 
these facilities may include communications among members of a 
firefighting team, directions to an ambulance crew, and coordination 
among different police and fire agencies responding to a regional 
crisis. In many instances, such public safety communications are highly 
time-critical, but episodic in nature.
    64. We seek comment here on whether to permit licensees in the 
Public Safety Radio Pool to lease access rights to their licensed 
spectrum. Initially, we note that any such leasing would be a voluntary 
transaction by a public safety licensee, and not the use of this 
spectrum by third parties without consent by that licensee. We also 
recognize that public safety licensees require near-instant access to 
their full spectrum capacity, when demand surges due to emergencies. 
Using traditional technology, the only way to guarantee such access has 
been full-time dedicated spectrum. New technologies, however, may allow 
both ultra-reliable near-instant access by public safety licensees and 
use by other licensees at times of low public safety demand. We note 
that the Spectrum Policy Task Force recommended that the Commission 
consider permitting public safety licensees to lease their spectrum 
usage rights under conditions in which they could immediately reclaim 
and use their spectrum in such emergencies. Some have proposed to allow 
public safety licensees to lease their spectrum to others on an 
interruptible basis, whereby third parties could lease under the 
condition that they would immediately cease using the spectrum if the 
public safety licensees exercised their right to preempt such leased 
use. Under these circumstances, the public safety entity would lose no 
access to use of its spectrum, which it nevertheless could also make 
available at certain times to third parties. We intend to begin a 
proceeding later this year on cognitive radio technologies, including 
those that would enable interruptible spectrum leasing. That proceeding 
will consider the state of technology as well as changes to the 
Commission's technical rules, policies, procedures, or practices that 
could facilitate the economic development of such technologies.
    65. In light of this, we request that commenters evaluate whether 
we should permit public safety licensees to lease their spectrum to 
third parties. Generally, we ask whether leasing in this spectrum will 
further the public interest, for instance, by resulting in more 
efficient use of the public safety spectrum, by providing another 
avenue for multiple public safety entities to use the same spectrum, 
and/or of providing financial resources to public safety licensees. 
Should we permit public safety licensees to lease to entities that are 
not eligible to obtain a public safety authorization, which would 
provide for a larger number of possible arrangements? If we permit 
leasing of public safety radio pool spectrum, should it be subject to 
any special rules in light of the importance of ensuring adequate 
access to spectrum for public safety purposes? Parties supporting 
leasing in the public safety frequencies should identify any elements 
of such arrangements that the Commission should consider in adopting 
policies.
    66. We also seek comment on the significance, if any, of the 1997 
Balanced Budget Act for spectrum leasing of 700 MHz public safety 
spectrum. In that Act, Congress directed the Commission to reallocate 
24 MHz of the spectrum recovered from TV channels 60-69 for public 
safety services, and the Commission did so shortly thereafter. Congress 
specifically defined the ``public safety services'' that are intended 
to benefit from this spectrum allocation. Section 337(f) of the 
Communications Act defines the term ``public safety services'' as 
services: ``(A) the sole or principal purpose of which is to protect 
the safety of life, health, or property; (B) that are provided--(i) by 
State or local government entities; or (ii) by nongovernmental 
organizations that are authorized by a governmental entity whose 
primary mission is the provision of such services; and (C) that are not 
made commercially available to the public by the provider.''
    67. We seek comment on whether this allocation of spectrum under 
section 337(a)(1) affects the ability of licensees in the Public Safety 
700 MHz band to lease this spectrum for use that does not meet the 
definition of public safety services. We also seek comment on the 
significance for spectrum leasing, if any, of the statutory provision 
that permits nongovernmental organizations to be authorized as 
licensees of this spectrum by the relevant governmental entities. 
Because we recently adopted the same eligibility framework for the 50 
MHz of spectrum at 4940-4990 MHz that is designated in support of 
public safety (the 4.9 GHz band), we pose the same questions relative 
to that band.
    68. We also note that certain portions of the 700 MHz public safety 
spectrum are subject to special licensing regimes under our rules. For 
instance, 2.4 MHz of the Public Safety 700 MHz band is licensed to each 
state as a geographic area ``State License.'' The Commission adopted 
the State License structure after concluding that it would allow, but 
not require, each state to plan and develop shared, wide-area systems 
under a substantially streamlined licensing process. In this regard, 
the Commission revised the rules to allow state licensees to authorize 
appropriate public safety agencies, including federal entities, within 
a state and its political subdivisions to use the spectrum pursuant to 
the state licensee's authorization. We seek comment on the 
significance, if any, of this regime to our consideration of whether to 
permit licensees to lease this spectrum.
    69. Similarly, we point out that a total of 12.5 MHz of the Public 
Safety 700 MHz band (the ``General Use'' channels), as well as 6 MHz of 
public safety spectrum at 821-824/866-869 MHz, is administered by 
regional or state-level planning committees. We seek comment on whether 
and/or how leasing would work for spectrum governed by these planning 
committees and processes.
    70. Section 337(c) of the Communications Act provides that the 
Commission must waive any rules

[[Page 66240]]

(other than its regulations regarding harmful interference) necessary 
to authorize entities providing public safety services to operate on 
unassigned non-public safety spectrum, if the Commission makes five 
specific findings. First, the applicant must demonstrate that no other 
spectrum allocated for public safety use is immediately available. 
Second, the public safety entity must demonstrate that its use of the 
requested spectrum will not cause harmful interference to other 
spectrum users entitled to protection. Third, it must show that public 
safety use of the frequencies is consistent with other public safety 
spectrum allocations in the geographic area in question. Fourth, the 
applicant must show that the unassigned frequencies were allocated for 
their present use not less than two years prior to the grant of the 
application at issue. Finally, the applicant must demonstrate that 
grant of the application is consistent with the public interest. 
Waivers granted under section 337(c) thus are intended to meet a public 
safety entity's immediate need for spectrum. Can we extend the spectrum 
leasing policies adopted in the Report and Order to licenses granted 
under section 337(c)? Are there special considerations we should take 
into account in making this determination? Are there any additional 
limits that should be imposed on public safety licensees granted 
licenses under this section in entering into spectrum leasing 
arrangements?
    71. Finally, some public safety spectrum is specifically designated 
for ``interoperability,'' ``mutual aid,'' or similar activities. Given 
the importance of this spectrum in the event of significant disaster or 
other activity requiring communication and coordination, are there any 
unique factors we should take into account in considering whether, and 
if so how, to permit licensees to voluntarily lease this spectrum?
    72. Various Private Wireless and Personal Radio Services. The 
Private Wireless Services include spectrum licensed under parts 80 
(Maritime Services), 87 (Aviation Services), and 97 (Amateur Radio 
Service). The Personal Radio Services include spectrum licensed under 
part 95 of our rules. We use a variety of methods to license the 
spectrum in these rule parts, from licensing by rule, to conditioning 
operation on successful completion of a required test, to site-based 
licensing, to geographic area licensing. In assessing whether our 
spectrum leasing policies should be extended to any of these services, 
the nature of the authorization granted to users of the covered 
spectrum must be taken into account.
    73. Some services encompassed within parts 80, 87, and 95 are 
licensed by rule. The rules governing these services indicate who may 
operate in the particular services and constitute the authorization to 
operate; no individual licenses are issued by the Commission. 
Specifically, users of the Wireless Medical Telemetry Service, Medical 
Implant Communications Service, Family Radio Service, Radio Control 
Radio Service, Citizens Band Service, Low Power Radio Service, and 
Multi-Use Radio Service do not receive an individualized license to 
cover operation. Given this licensing approach, we query whether it 
makes sense to extend our spectrum leasing policies to any services 
where licenses are issued by rule. We request any parties addressing 
this issue to discuss the legal and practical ramifications of their 
position, as well as whether spectrum leasing in such services would 
further the public interest.
    74. In other private and personal wireless services, users have 
access to spectrum because they have passed a testing requirement. Upon 
successful completion of the required testing, users have the privilege 
of using the spectrum pursuant to an operator license. Moreover, these 
operators generally are not entitled to exclusive access to spectrum 
but instead must share access to the spectrum with all operators who 
have successfully completed the exam requirements.
    75. Indeed, in some cases, the operations in these services are not 
governed by the issuance of a Commission license. We also note that in 
many of these services, stations do not have a fixed transmitting 
location. We point out that, for many of the services authorized and 
regulated under these parts, a user does not have authority to transfer 
or assign an authorization or license. Finally, spectrum throughout 
these rule parts is subject to shared, not exclusive, use.
    76. These factors potentially present significantly different 
issues in considering whether spectrum leasing is meaningful and/or 
beneficial in these services than does spectrum leasing of exclusively 
licensed spectrum. For instance, if a licensee has no ability to 
transfer or assign a license, should that individual or entity have the 
ability to engage in spectrum leasing under the policies adopted in 
this rulemaking? Accordingly, we seek comment on the special 
considerations potentially applicable to the implementation of spectrum 
leasing to any of these services. We invite comments on the propriety 
of expanding the scope of our leasing policies to reach such services. 
Would such leasing promote more efficient spectrum use? Is spectrum 
leasing even a reasonable concept for some of these services? Would it 
further the public interest? Conversely, could it undermine the 
purposes of these services?
    77. The Report and Order facilitates spectrum leasing by licensees 
on Industrial/Business Radio frequencies with exclusive authorizations, 
but requires that they lease only to entities that are also eligible 
for Industrial/Business Radio licensees. Should we revise our policies 
to permit leasing on these frequencies to commercial providers of 
wireless services? We seek comment on the significance, if any, to our 
determination on this issue of the Commission's decision in 2000 to 
permit such licensees to convert to commercial operation or to assign a 
private license to a commercial licensee in certain defined 
circumstances.
    78. Wireless services on shared frequencies. In the Report and 
Order, we declined to allow leasing on shared frequencies, since 
parties can readily obtain their own authorizations on shared 
frequencies and they are not foreclosed from applying for an 
authorization by the existence of another licensee in the same 
geographic area. In light of our proposals in this Further NPRM to 
expand spectrum leasing and to take other steps to promote secondary 
markets, we wish to give further consideration to the possible value 
and implementation of spectrum leasing pursuant to authorizations 
involving shared frequencies. It might be possible, for example, for a 
group of licensees operating on the same frequency on a shared basis to 
cooperate in leasing spectrum to another entity. We recognize that 
leasing on shared frequencies may raise different implementation issues 
than leasing pursuant to an authorization involving the exclusive use 
of a block of frequencies in a particular geographic area. We welcome 
comments on the feasibility and possible public interest benefits of 
leasing involving shared frequencies. To the extent commenters take a 
position on this issue, we request that they address any implementation 
issues or other considerations that might be unique to this type of 
leasing. We also ask commenters whether permitting leasing on such 
spectrum would defeat the purpose of having shared spectrum available 
to a number of potential users as licensees or would in fact promote 
achievement of such goals.

[[Page 66241]]

    79. Non-multilateration LMS. Non-multilateration LMS systems, 
regulated under part 90, transmit data to and from objects passing 
through particular locations (e.g., automated tolls, monitoring of 
railway cars), and are licensed on a site-by-site basis, except that 
municipalities or other governmental operations may file for a non-
multilateration license covering an Economic Area. Should the 
Commission extend its spectrum leasing rules to non-multilateration 
LMS? Given the nature of the operations and in light of the shared 
spectrum usage in this service, would spectrum leasing potentially be 
of benefit in this service?
    80. Instructional Television Fixed Service and Multipoint 
Distribution Service. These services currently are regulated under 
parts 74 and 21, respectively. Our rules currently allow ITFS licensees 
to lease their excess channel capacity to others. Specifically, an ITFS 
licensee may lease up to 95 percent of its channel capacity for non-
educational programming, consistent with policies unique to this 
leasing environment. We recently instituted a comprehensive review of 
the service rules relating to MDS and ITFS. Among other issues, we 
sought comment on whether there are any circumstances under which we 
should restrict or require leasing in order to ensure that access to 
spectrum is not unduly limited.
    81. In this proceeding, we query whether we should extend the 
policies developed in this docket to leasing involving ITFS and MDS 
licensees, which have developed with their own approach to excess 
capacity leasing. Should we offer leasing based on the models used in 
this docket as an alternative format to the licensees in this service 
as well? Should the leasing policies adopted in this rulemaking replace 
the leasing standards that have been developed on a case-by-case basis 
for ITFS and MDS? How does action in this proceeding fit with the 
issues being considered in the open rulemaking proposing to evaluate 
the licensing structure for ITFS and MDS? We note that the record 
compiled in this proceeding on this issue may be taken into account in 
WT Docket No. 03-66 as we overhaul the rules and policies generally 
applicable to ITFS and MDS.
    82. Cable Television Relay Service. This category includes cable 
television relay service under part 78. Although we explicitly excluded 
this service from consideration in the NPRM, we now request comment 
from interested parties as to whether we should permit spectrum leasing 
in this service. Parties addressing this issue should discuss any 
special considerations that should affect our decision whether to 
permit licensees voluntarily to lease this spectrum.
    83. Multichannel Video Distribution and Data Service. Multichannel 
Video Distribution and Data Service (MVDDS) is regulated pursuant to 
subpart P of part 101. MVDDS licensees ``must use spectrum in the 12.2-
12.7 GHz band for any digital fixed non-broadcast service (broadcast 
services are intended for reception of the general public and not on a 
subscribership basis) including one-way direct-to-home/office wireless 
service.'' This service was established subsequent to the Commission's 
adoption of the NPRM in this proceeding. Although the Commission 
established multiple geographic service areas, the rules specifically 
provide that each geographic area license will be auctioned to one 
licensee. We request interested parties to address whether the 
Commission's decision to authorize only one licensee per service area 
in this band should affect our determination whether to permit 
licensees voluntarily to lease this spectrum. What would be the 
benefits and/or harms of extending our spectrum leasing policies to 
this service?
    84. 700 MHz Guard Band Managers. The part 27 Guard Band Manager 
Service is not included within the scope of action take in the Report 
and Order. Should we take any action to revise the rules that govern 
the activities of 700 MHz guard band managers? Should such band 
managers be given the same opportunities as other licensees to engage 
in a greater range of spectrum leasing activities? Do the 
considerations related to interference and other operational factors 
affect the determination we might make with respect to leasing in the 
700 MHz guard band manager frequencies?
    85. Satellite Services. Although we decided in the Report and Order 
to make no changes in the spectrum leasing policies applicable to our 
satellite services at this time, we remain receptive to proposals for 
extending the policies we have developed in this proceeding to 
satellite services or considering alternative lease arrangements. 
Accordingly, we request parties to address whether we should take any 
further action in this proceeding to make spectrum leasing as defined 
in this proceeding available to satellite services as well in order to 
promote more efficient use of spectrum.
    86. Forbearance. The forbearance provisions of section 10 apply 
only to telecommunication services and telecommunications carriers. 
Some of the licenses listed above involve spectrum operations that do 
not fall within the definition of telecommunications services. Do we 
have any other basis under the Act pursuant to which we could adopt any 
of the policies set forth in the Report and Order or proposed in this 
Further NPRM?
    87. Extending streamlined processing of transfer and assignment 
applications to additional services. The Report and Order applies 
streamlined processing rules to transfer and assignment applications 
involving authorizations in the services for which we adopt spectrum 
leasing policies. Should we expand the scope of authorizations to which 
this streamlined processing applies? Can we encompass non-
telecommunications services and non-telecommunications carriers within 
this streamlined process? Does it make sense to extend streamlined 
application processing to transfer and assignment applications 
involving other services? We request commenters to document the 
benefits and/or harms (depending upon the position they take) 
associated with expanding the availability of streamlined processing of 
transfer and assignment applications to additional services. We note 
that we seek comment only with respect to services covered by the 
Report and Order and services that might be added pursuant to this 
Further NPRM.

D. Application of the New De Facto Control Standard for Spectrum 
Leasing to Other Issues and Types of Arrangements

    88. As noted in the Report and Order, we are at present limiting 
application of our newly adopted de facto control standard to the 
leasing context. Thus, the facilities-based Intermountain Microwave 
standard for evaluating de facto control continues to be the prevailing 
standard in other regulatory contexts that call for assessment of the 
exercise of de facto control over an applicant or licensee, such as in 
the case of designated entity and entrepreneur eligibility and 
management agreements.
    89. We now examine whether we should apply our new de facto control 
standard to regulatory contexts other than leasing. We seek comment on 
whether our conclusion that the Intermountain Microwave standard no 
longer serves the public interest in the leasing context is also 
relevant to our application of the standard in other contexts. 
Alternatively, we seek comment on whether there are policy reasons to 
continue using a facilities-based approach to de facto control analysis 
in other regulatory contexts. Are there contexts in which evaluating

[[Page 66242]]

licensee control of facilities continues to be important to regulatory 
objectives that are distinguishable from our objectives in the leasing 
context? If we elect to continue using a facilities-based approach in 
some contexts but not others, how do we reconcile the existence of 
divergent de facto control standards under section 310(d) and other 
provisions of the Act?
    90. Designated entity and entrepreneur eligibility. At present, our 
rules for determining affiliation under our designated entity and 
entrepreneur policies largely incorporate the Intermountain Microwave 
test. We request commenters to address whether the new standard for 
assessing de facto control adopted in the Report and Order should also 
be employed for assessing affiliation and eligibility for designated 
entity and entrepreneur status. Specifically, does section 309(j) 
implicate different concerns from section 309(d)? Do the statutory 
objectives of section 309(j) require more of a focus on actual 
facilities control by the beneficiary of our designated entity/
entrepreneur policies, or is it sufficient that such an entity can 
obtain an authorization in an auction and then lease the spectrum 
pursuant to the Commission authorization without constructing and 
operating its own facilities? The underlying goals of section 309(j) 
necessarily will affect whether we conclude that the new de facto 
control standard is suitable in this context. Would the new de facto 
control standard ensure that the intended beneficiaries of section 
309(j) in fact receive those benefits and that the designated entity/
entrepreneur rules (to the extent they are retained) can not be 
unfairly manipulated?
    91. Management agreements. The Commission has long permitted the 
use of management agreements and other agency arrangements by its 
licensees as a means to manage their authorized services and 
facilities. The issue of whether a licensee has retained de facto 
control vis-a-vis a manager in turn has long been premised on the 
Intermountain Microwave decision and our related Motorola decision. 
This assessment of management agreements is inherently a case-by-case 
determination as well as strongly tied to the control of facilities and 
operations implemented pursuant to a Commission authorization. Should 
we adopt the new de facto control standard for management agreements as 
well? Is there anything in the new standard that would forbid elements 
of management agreements previously entered into in reliance on the 
Intermountain Microwave and Motorola standards? Could extending a 
revised de facto control standard to management agreements allow 
parties to enter into a purported management agreement--which would not 
be subject to the notification and other obligations applicable to 
spectrum leasing--when in fact the arrangement should be considered 
under spectrum leasing policies? Would this allow parties to undercut 
our efforts to obtain adequate information for enforcement purposes as 
well as facilitating the efficient functioning of secondary markets?
    92. Finally, are there any other contexts in which we currently use 
the Intermountain Microwave standard but should now consider adoption 
of our new de facto control standard? We request commenters identifying 
any such situations to discuss the appropriateness of the new standard 
in terms of overall policy objectives as well as practical deployment 
considerations.

E. Effect of Secondary Markets on Designated Entity/Entrepreneur 
Policies

    93. The Commission's designated entity and entrepreneur policies 
were adopted to further statutory requirements and to promote 
participation in the provision of spectrum-based services by certain 
designated entities. These policies were created in 1994 as one 
component of the Commission's implementation of the competitive bidding 
policies and procedures mandated by sections 309(j)(3) and 309(j)(4) of 
the Act. Historically, the Commission's designated entity policies have 
sought to ensure that small businesses were given the opportunity to 
participate in the provision of spectrum-based services.
    94. The Commission currently applies a control test to ensure that 
its designated entity and entrepreneur policies serve the programs' 
intended beneficiaries. Section 1.2110(c)(2) sets forth the controlling 
interest standard and is generally used for determining which entities 
are eligible for small business or entrepreneur status. The premise of 
this rule is that all parties that control an applicant or have the 
power to control an applicant, and such parties' affiliates, will have 
their gross revenues counted and attributed to the applicant in 
determining the applicant's eligibility for small business status or 
for any other size-based status using a gross revenue threshold.
    95. From the outset, the Commission has also been determined to 
ensure, pursuant to section 309(j)(4)(E), that the designated entity 
and entrepreneur policies would not be abused. As the Commission has 
explained, these policies are designed, among other reasons, to ``deter 
speculation and participation in the licensing process by those who do 
not intend to offer service to the public, or who intend to use our 
preferences to obtain a license at a lower cost than they otherwise 
would have to pay and later sell it at the market price.'' The 
Commission has also indicated that the unjust enrichment rules were 
designed to recapture for the government a portion of the value of the 
bidding credit or other special provision if a designated entity 
prematurely transfers its licenses to an ineligible entity. The 
Commission's unjust enrichment provisions have been codified in section 
1.2111 of the Commission's rules.
    96. We inquire whether we should alter the policies adopted in the 
Report and Order for designated entity leasing under the de facto 
transfer leasing option or under the proposals contained in this 
Further NPRM. Should we permit a designated entity or entrepreneur 
licensee to lease some or all of its spectrum usage rights to any 
entity, regardless of whether that entity would qualify for the same 
small business designated entity status as that of the licensee? What 
would be the public interest benefits of revising the policies and 
rules in this manner? Would such a revision be consistent with our 
unjust enrichment policies and rules? What alternative approaches might 
the Commission take were it to decide to provide additional flexibility 
to designated entity licensees? How would we best design policies so as 
to ensure compliance with our statutory obligations to prevent unjust 
enrichment?

IV. Procedural Matters

A. Initial Regulatory Flexibility Analysis Regarding the Further NPRM

    97. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), see 5 U.S.C. 603, the Commission has prepared this 
present Initial Regulatory Flexibility Analysis (IRFA) of the possible 
significant economic impact on a substantial number of small entities 
by the policies and rules proposed in the Further NPRM. Written public 
comments are requested on this IRFA. These comments must be filed in 
accordance with the same filing deadlines for comments on the Further 
NPRM, and they must have a separate and distinct heading designating 
them as responses to the Initial Regulatory Flexibility Analysis. The 
Commission will send a copy of the Further NPRM, including this IRFA, 
to the Chief Counsel for Advocacy of the Small

[[Page 66243]]

Business Administration (SBA) in accordance with the Regulatory 
Flexibility Act. See 5 U.S.C. 603(a).
1. Need for, and Objectives of, the Proposed Rules
    98. While the changes we adopt today in the Report and Order are an 
important step towards facilitating leasing of spectrum usage rights 
and enhancing the functioning of the secondary spectrum marketplace 
generally, we believe that there are additional measures that we might 
take to improve efficiency and promote access to a secondary spectrum 
market in order to ensure the greatest benefit to spectrum users and 
consumers. Thus, in the Further NPRM, we seek comment on: (1) How to 
encourage the development of information and clearinghouse mechanisms 
to facilitate secondary market transactions between licensees and new 
users in need of access to spectrum; (2) further streamlining of 
application processing for spectrum leasing, transfers of control, and 
license assignments; (3) expanding our spectrum leasing policies to 
additional services not encompassed within the Report and Order; (4) 
applying the new de facto control standard adopted for spectrum leasing 
to other issues and types of arrangements; and, (5) evaluating whether 
the spectrum leasing policies adopted in the Report and Order for 
designated entities should be altered in any respect. We discuss the 
potential impact of these on small entities in the paragraphs that 
follow.
2. Legal Basis
    99. The potential actions on which comment is sought in this 
Further NPRM would be authorized under sections 1, 4(i), and 303(r), of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), and 
303(r).
3. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules Will Apply
    100. The RFA requires that an initial regulatory flexibility 
analysis be prepared for notice-and-comment rulemaking proceedings, 
unless the Agency certifies that ``the rule will not, if promulgated, 
have a significant impact on a substantial number of small entities.'' 
The RFA generally defines the term ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small governmental jurisdiction.'' In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act. 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). A small 
organization is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
This IRFA describes and estimates the number of small entity licensees 
that may be affected if the proposals in this Further NPRM are adopted.
    101. This Further NPRM could result in rule changes that, if 
adopted, would create new opportunities and obligations for Wireless 
Radio Services licensees and other entities that may lease spectrum 
usage rights from these licensees. When identifying small entities that 
could be affected by our new rules, we provide information describing 
auctions results, including the number of small entities that are 
winning bidders. We note, however, that the number of winning bidders 
that qualify as small businesses at the close of an auction does not 
necessarily reflect the total number of small entities currently in a 
particular service. The Commission does not generally require that 
applicants provide business size information, except in the context of 
an assignment or transfer of control application where unjust 
enrichment issues are implicated. Consequently, to assist the 
Commission in analyzing the total number of potentially affected small 
entities, we request commenters to estimate the number of small 
entities that may be affected by any rule changes resulting from this 
Further NPRM.
a. Wireless Radio Services
    102. Many of the potential rules on which comment is sought in this 
Further NPRM, if adopted, would affect small entity licensees of the 
Wireless Radio Services identified herein:
    103. Cellular Licensees. The SBA has developed a small business 
size standard for small businesses in the category ``Cellular and Other 
Wireless Telecommunications.'' 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 out of a total of 977 cellular and other 
wireless telecommunications firms that operated for the entire year in 
1997 had 1,000 or more employees. Therefore, even if all twelve of 
these firms were cellular telephone companies, nearly all cellular 
carriers are small businesses under the SBA's definition.
    104. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
definition of small entities specifically applicable to such incumbent 
220 MHz Phase I licensees. To estimate the number of such licensees 
that are small businesses, we apply the small business size standard 
under the SBA rules applicable to ``Cellular and Other Wireless 
Telecommunications'' companies. This category provides that a small 
business is a wireless company employing no more than 1,500 persons. 
According to the Census Bureau data for 1997, only twelve firms out of 
a total of 977 such firms that operated for the entire year in 1997, 
had 1,000 or more employees. If this general ratio continues 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.
    105. 220 MHz Radio Service--Phase II Licensees. The Phase II 220 
MHz service is subject to spectrum auctions. In an order relating to 
this service, we 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. 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, 693 were sold. Thirty-nine small businesses won 373 licenses 
in the first 220 MHz auction. A second auction included 225 licenses: 
216 EA licenses and 9 EAG licenses. Fourteen companies claiming small 
business status won 158 licenses. A third auction included four 
licenses: 2 BEA licenses and 2 EAG licenses in the 220 MHz Service. No 
small or very

[[Page 66244]]

small business won any of these licenses.
    106. Lower 700 MHz Band Licenses. We adopted criteria for defining 
three groups of small businesses for purposes of determining their 
eligibility for special provisions such as bidding credits. We have 
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. The SBA has approved these small size standards. An 
auction of 740 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. A second auction commenced on May 28, 2003, and closed on 
June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 CMA 
licenses. Seventeen winning bidders claimed small or very small 
business status and won sixty licenses, and nine winning bidders 
claimed entrepreneur status and won 154 licenses.
    107. Upper 700 MHz Band Licenses. The Commission released an order 
authorizing service in the upper 700 MHz band. This auction, previously 
scheduled for January 13, 2003, has been postponed.
    108. Paging. In a recent order relating to paging, we adopted a 
size standard for ``small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. 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 2,499 licenses auctioned, 985 were sold. Fifty-seven 
companies claiming small business status won 440 licenses. An auction 
of Metropolitan Economic Area (MEA) and Economic Area (EA) licenses 
commenced on October 30, 2001, and closed on December 5, 2001. Of the 
15,514 licenses auctioned, 5,323 were sold. 132 companies claiming 
small business status purchased 3,724 licenses. A third auction, 
consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in 
all but three of the 51 MEAs commenced on May 13, 2003, and closed on 
May 28, 2003. Seventy-seven bidders claiming small or very small 
business status won 2,093 licenses. Currently, 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 Report, 608 private and common carriers reported that they were 
engaged in the provision of either paging or ``other mobile'' services. 
Of these, we estimate that 589 are small, under the SBA-approved small 
business size standard. We estimate that the majority of private and 
common carrier paging providers would qualify as small entities under 
the SBA definition.
    109. 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. For Block F, an additional small 
business size standard for ``very small business'' was added and is 
defined as an entity that, together with its 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 155 C, D, E, and F Block 
licenses; there were 113 small business winning bidders.
    110. Narrowband PCS. The Commission held an auction for Narrowband 
PCS licenses that commenced on July 25, 1994, and closed on July 29, 
1994. A second commenced on October 26, 1994 and closed on November 8, 
1994. For purposes of the first two Narrowband PCS auctions, ``small 
businesses'' were entities with average gross revenues for the prior 
three calendar years of $40 million or less. Through these auctions, 
the Commission awarded a total of forty-one licenses, 11 of which were 
obtained by four small businesses. To ensure meaningful participation 
by small business entities in future auctions, the Commission adopted a 
two-tiered small business size standard in an order relating to 
narrowband PCS. A ``small business'' is an entity that, together with 
affiliates and controlling interests, has average gross revenues for 
the three preceding years of not more than $40 million. A ``very small 
business'' is an entity that, together with affiliates and controlling 
interests, has average gross revenues for the three preceding years of 
not more than $15 million. The SBA has approved these small business 
size standards. A third auction commenced on October 3, 2001 and closed 
on October 16, 2001. Here, five bidders won 317 (MTA and nationwide) 
licenses. Three of these claimed status as a small or very small entity 
and won 311 licenses.
    111. Specialized Mobile Radio (SMR). The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years. The Commission awards ``very small entity'' bidding 
credits to firms that had revenues of no more than $3 million in each 
of the three previous calendar years. The SBA has approved these small 
business size standards for the 900 MHz Service. The Commission has 
held auctions for geographic area licenses in the 800 MHz and 900 MHz 
bands. The 900 MHz SMR auction began on December 5, 1995, and closed on 
April 15, 1996. Sixty bidders claiming that they qualified as small 
businesses under the $15 million size standard won 263 geographic area 
licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper 
200 channels began on October 28, 1997, and was completed on December 
8, 1997. Ten bidders claiming that they qualified as small businesses 
under the $15 million size standard won 38 geographic area licenses for 
the upper 200 channels in the 800 MHz SMR band. A second auction for 
the 800 MHz band was held

[[Page 66245]]

on January 10, 2002 and closed on January 17, 2002 and included 23 BEA 
licenses. One bidder claiming small business status won five licenses.
    112. 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 bidders won 108 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 
and won 129 licenses. Thus, combining all three auctions, 40 winning 
bidders for geographic licenses in the 800 MHz SMR band claimed status 
as small business.
    113. In addition, there are numerous incumbent site-by-site SMR 
licensees and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do 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. We 
assume, 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 the 
SBA.
    114. Private Land Mobile Radio (PLMR). PLMR systems serve an 
essential role in a range of industrial, business, land transportation, 
and public safety activities. These radios are used by companies of all 
sizes operating in all U.S. business categories, and are often used in 
support of the licensee's primary (non-telecommunications) business 
operations. For the purpose of determining whether a licensee of a PLMR 
system is a small business as defined by the SBA, we could use the 
definition for ``Cellular and Other Wireless Telecommunications.'' This 
definition provides that a small entity is any such entity employing no 
more than 1,500 persons. The Commission does not require PLMR licensees 
to disclose information about number of employees, so the Commission 
does not have information that could be used to determine how many PLMR 
licensees constitute small entities under this definition. Moreover, 
because PLMR licensees generally are not in the business of providing 
cellular or other wireless telecommunications services but instead use 
the licensed facilities in support of other business activities, we are 
not certain that the Cellular and Other Wireless Telecommunications 
category is appropriate for determining how many PLMR licensees are 
small entities for this analysis. Rather, it may be more appropriate to 
assess PLMR licensees under the standards applied to the particular 
industry subsector to which the licensee belongs.
    115. The Commission's 1994 Annual Report on PLMRs indicates that at 
the end of fiscal year 1994, there were 1,087,267 licensees operating 
12,481,989 transmitters in the PLMR bands below 512 MHz. Because any 
entity engaged in a commercial activity is eligible to hold a PLMR 
license, the revised rules in this context could potentially impact 
every small business in the United States.
    116. Fixed Microwave Services. Fixed microwave services include 
common carrier, private-operational fixed, and broadcast auxiliary 
radio services. Currently, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not yet defined a small business with respect to 
microwave services. For purposes of this FRFA, we will use the SBA's 
definition applicable to ``Cellular and Other Wireless 
Telecommunications'' companies--that is, an entity with no more than 
1,500 persons. The Commission does not have data specifying the number 
of these licensees that have more than 1,500 employees, and thus is 
unable at this time to estimate with greater precision the number of 
fixed microwave service licensees that would qualify as small business 
concerns under the SBA's small business size standard. Consequently, 
the Commission estimates that there are 22,015 or fewer small common 
carrier fixed licensees and 61,670 or fewer small private operational-
fixed licensees and small broadcast auxiliary radio licensees in the 
microwave services that may be affected by the rules and policies 
adopted herein. The Commission notes, however, that the common carrier 
microwave fixed licensee category includes some large entities.
    117. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The FCC auctioned geographic area licenses in the 
WCS service. In the auction, which commenced on April 15, 1997, and 
closed on April 25, 1997, there were seven bidders that won 31 licenses 
that qualified as very small business entities, and one bidder that won 
one license that qualified as a small business entity. An auction for 
one license in the 1670-1674 MHz band commenced on April 30, 2003, and 
closed the same day. One license was awarded. The winning bidder was 
not a small entity.
    118. 39 GHz Service. The Commission defines ``small entity'' for 39 
GHz licenses as an entity that has average gross revenues of less than 
$40 million in the three previous calendar years. ``Very small 
business'' is defined as an entity that, together with its affiliates, 
has average gross revenues of not more than $15 million for the 
preceding three calendar years. The SBA has approved these definitions. 
The auction of the 2,173 39 GHz licenses began on April 12, 2000, and 
closed on May 8, 2000. The 18 bidders who claimed small business status 
won 849 licenses.
    119. Local Multipoint Distribution Service. An auction of the 986 
Local Multipoint Distribution Service (LMDS) licenses began on February 
18, 1998, and closed on March 25, 1998. The Commission defined ``small 
entity'' for LMDS licenses as an entity that has average gross revenues 
of less than $40 million in the three previous calendar years. An 
additional classification for ``very small business'' was added and is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. These regulations defining ``small entity'' in the 
context of LMDS auctions have been approved by the SBA. There were 93 
winning bidders that qualified as small entities in the LMDS auctions. 
A total of 93 small and very small business bidders won approximately 
277 A Block licenses and 387 B Block licenses. On March 27, 1999, the 
Commission re-auctioned 161 licenses; there were 32 small and very 
small business winning bidders that won 119 licenses.
    120. 218-219 MHz Service. The first auction of 218-219 MHz 
(previously referred to as the Interactive and Video Data Service or 
IVDS) spectrum resulted in 178 entities winning licenses for 594 
Metropolitan Statistical Areas (MSAs). Of the 594 licenses, 567 were 
won by 167 entities qualifying as a small

[[Page 66246]]

business. For that auction, we defined a small business as an entity 
that, together with its affiliates, has no more than a $6 million net 
worth and, after federal income taxes (excluding any carry over 
losses), has no more than $2 million in annual profits each year for 
the previous two years. In an order relating to the 218-219 MHz 
Service, we defined a small business as an entity that, together with 
its affiliates and persons or entities that hold interests in such an 
entity and their affiliates, has average annual 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 
persons or entities that hold interests in such an entity and its 
affiliates, has average annual gross revenues not exceeding $3 million 
for the preceding three years. The SBA has approved of these 
definitions. At this time, we cannot estimate the number of licenses 
that will be won by entities qualifying as small or very small 
businesses under our rules in future auctions of 218-219 MHz spectrum. 
Given the success of small businesses in the previous auction, and the 
prevalence of small businesses in the subscription television services 
and message communications industries, we assume for purposes of this 
IRFA that in future auctions, many, and perhaps all, of the licenses 
may be awarded to small businesses.
    121. Location and Monitoring Service (LMS). Multilateration LMS 
systems use non-voice radio techniques to determine the location and 
status of mobile radio units. For purposes of auctioning LMS licenses, 
the Commission has defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the preceding three years not exceeding $15 million. 
A ``very small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the preceding three years not exceeding $3 million. These 
definitions have been approved by the SBA. An auction for LMS licenses 
commenced on February 23, 1999, and closed on March 5, 1999. Of the 528 
licenses auctioned, 289 licenses were sold to four small businesses. We 
cannot accurately predict the number of remaining licenses that could 
be awarded to small entities in future LMS auctions.
    122. Rural Radiotelephone Service. We use the SBA definition 
applicable to cellular and other wireless telecommunication companies, 
i.e., an entity employing no more than 1,500 persons. There are 
approximately 1,000 licensees in the Rural Radiotelephone Service, and 
the Commission estimates that there are 1,000 or fewer small entity 
licensees in the Rural Radiotelephone Service that may be affected by 
the rules and policies adopted herein.
    123. Air-Ground Radiotelephone Service. We use the SBA definition 
applicable to cellular and other wireless telecommunication companies, 
i.e., an entity employing no more than 1,500 persons. There are 
approximately 100 licensees in the Air-Ground Radiotelephone Service, 
and the Commission estimates that almost all of them qualify as small 
entities under the SBA definition.
    124. Offshore Radiotelephone Service. This service operates on 
several ultra high frequency (UHF) TV broadcast channels that are not 
used for TV broadcasting in the coastal area of the states bordering 
the Gulf of Mexico. At present, there are approximately 55 licensees in 
this service. We use the SBA definition applicable to cellular and 
other wireless telecommunication companies, i.e., an entity employing 
no more than 1,500 persons. The Commission is unable at this time to 
estimate the number of licensees that would qualify as small entities 
under the SBA definition. The Commission assumes, for purposes of this 
FRFA, that all of the 55 licensees are small entities, as that term is 
defined by the SBA.
    125. Multiple Address Systems. MAS entities, in general, fall into 
two categories: (1) Those using MAS spectrum for profit-based uses, and 
(2) those using MAS spectrum for private internal uses. With respect to 
the first category, the Commission defines ``small entity'' for MAS 
licenses as an entity that has average gross revenues of less than $15 
million in the three previous calendar years. ``Very small business'' 
is defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $3 million for the preceding three 
calendar years. The SBA has approved of these definitions. The majority 
of these entities will most likely be licensed in bands where the 
Commission has implemented a geographic area licensing approach that 
would require the use of competitive bidding procedures to resolve 
mutually exclusive applications. The Commission's licensing database 
indicates that, as of January 20, 1999, there were a total of 8,670 MAS 
station authorizations. Of these, 260 authorizations were associated 
with common carrier service. In addition, an auction for 5,104 MAS 
licenses in 176 EAs began November 14, 2001, and closed on November 27, 
2001. Seven winning bidders claimed status as small or very small 
businesses and won 611 licenses.
    126. With respect to the second category, which consists of 
entities that use, or seek to use, MAS spectrum to accommodate their 
own internal communications needs, we note that MAS serves an essential 
role in a range of industrial, safety, business, and land 
transportation activities. MAS radios are used by companies of all 
sizes, operating in virtually all U.S. business categories, and by all 
types of public safety entities. For the majority of private internal 
users, the definitions developed by the SBA would be more appropriate. 
The applicable definition of small entity in this instance appears to 
be the ``Cellular and Other Wireless Telecommunications'' definition 
under the SBA rules. This definition provides that a small entity is 
any entity employing no more than 1,500 persons. The Commission's 
licensing database indicates that, as of January 20, 1999, of the 8,670 
total MAS station authorizations, 8,410 authorizations were for private 
radio service, and of these, 1,433 were for private land mobile radio 
service.
    127. Incumbent 24 GHz Licensees. The rules that we adopt could 
affect incumbent licensees who were relocated to the 24 GHz band from 
the 18 GHz band, and applicants who wish to provide services in the 24 
GHz band. The Commission did not develop a definition of small entities 
applicable to existing licensees in the 24 GHz band. Therefore, the 
applicable definition of small entity is the definition under the SBA 
rules for ``Cellular and Other Wireless Telecommunications.'' This 
definition provides that a small entity is any entity employing no more 
than 1,500 persons. We believe that there are only two licensees in the 
24 GHz band that were relocated from the 18 GHz band, Teligent and TRW, 
Inc. It is our understanding that Teligent and its related companies 
have less than 1,500 employees, though this may change in the future. 
TRW is not a small entity. Thus, only one incumbent licensee in the 24 
GHz band is a small business entity.
    128. Future 24 GHz Licensees. With respect to new applicants in the 
24 GHz band, we have defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the three preceding years not exceeding $15 million. 
``Very small business'' in the 24 GHz band is defined as an entity 
that, together with controlling interests and affiliates, has average 
gross revenues not exceeding $3 million for the preceding three years. 
The SBA has approved

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these definitions. The Commission will not know how many licensees will 
be small or very small businesses until the auction, if required, is 
held.
    129. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
we adopted size standards for ``small businesses'' and ``very small 
businesses'' for purposes of determining their eligibility for special 
provisions such as bidding credits and installment payments. A small 
business in this service 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. SBA approval of 
these definitions is not required. 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 nine 
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.
    130. Multipoint Distribution Service, Multichannel Multipoint 
Distribution Service, and Instructional Television Fixed Service. 
Multichannel Multipoint Distribution Service (MMDS) systems, often 
referred to as ``wireless cable,'' transmit video programming to 
subscribers using the microwave frequencies of the Multipoint 
Distribution Service (MDS) and Instructional Television Fixed Service 
(ITFS). In connection with the 1996 MDS auction, the Commission defined 
``small business'' as an entity that, together with its affiliates, has 
average gross annual revenues that are not more than $40 million for 
the preceding three calendar years. The SBA has approved of this 
standard. The MDS auction resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 claimed status as a small business. At this time, 
we estimate that of the 61 small business MDS auction winners, 48 
remain small business licensees. In addition to the 48 small businesses 
that hold BTA authorizations, there are approximately 392 incumbent MDS 
licensees that have gross revenues that are not more than $40 million 
and are thus considered small entities. After adding the number of 
small business auction licensees to the number of incumbent licensees 
not already counted, we find that there are currently approximately 440 
MDS licensees that are defined as small businesses under either the 
SBA's or the Commission's rules. Some of those 440 small business 
licensees may be affected by the proposals in the Further NPRM.
    131. In addition, the SBA has developed a small business size 
standard for Cable and Other Program Distribution, which includes all 
such companies generating $12.5 million or less in annual receipts. 
According to Census Bureau data for 1997, there were a total of 1,311 
firms in this category, total, that had operated for the entire year. 
Of this total, 1,180 firms had annual receipts of under $10 million, 
and an additional 52 firms had receipts of $10 million or more but less 
than $25 million. Consequently, we estimate that the majority of 
providers in this service category are small businesses that may be 
affected by the rules and policies proposed in the Further NPRM.
    132. Finally, while SBA approval for a Commission-defined small 
business size standard applicable to ITFS is pending, educational 
institutions are included in this analysis as small entities. There are 
currently 2,032 ITFS licensees, and all but 100 of these licenses are 
held by educational institutions. Thus, we tentatively conclude that at 
least 1,932 ITFS licensees are small businesses.
    133. Cable Television Relay Service. This service includes 
transmitters generally used to relay cable programming within cable 
television system distribution systems. The SBA has defined a small 
business size standard for Cable and other Program Distribution, 
consisting of all such companies having annual receipts of no more than 
$12.5 million. According to Census Bureau data for 1997, there were 
1,311 firms in the industry category Cable and Other Program 
Distribution, total, that operated for the entire year. Of this total, 
1,180 firms had annual receipts of $10 million or less, and an 
additional 52 firms had receipts of $10 million or more but less than 
$25 million. Thus, under this standard, we estimate that the majority 
of providers in this service category are small businesses that may be 
affected by the rules and policies proposed in the Further NPRM.
    134. Cable System Operators (Rate Regulation Standard). The 
Commission has developed, with SBA approval, its own definition of a 
small cable system operator for purposes of rate regulation. Under the 
Commission's rules, a ``small cable company'' is one serving fewer than 
400,000 subscribers nationwide. Based on our most recent information, 
we estimate that there were 1,439 cable operators that qualified as 
small cable companies at the end of 1995. Since then, some of those 
companies may have grown to serve over 400,000 subscribers, and others 
may have been involved in transactions that caused them to be combined 
with other cable operators. The Commission's rules define a ``small 
system,'' for purposes of rate regulation, as a cable system with 
15,000 or fewer subscribers. The Commission does not request nor does 
the Commission collect information concerning cable systems serving 
15,000 or fewer subscribers, and thus is unable to estimate, at this 
time, the number of small cable systems nationwide.
    135. Cable System Operators (Telecom Act Standard). The 
Communications Act, as amended, also contains a size standard for a 
small cable system operator, which is ``a cable operator that, directly 
or through an affiliate, serves in the aggregate fewer than 1 percent 
of all subscribers in the United States and is not affiliated with any 
entity or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that there are 68,500,000 
subscribers in the United States. Therefore, an operator serving fewer 
than 685,000 subscribers shall be deemed a small operator if its annual 
revenues, when combined with the total annual revenues of all of its 
affiliates, do not exceed $250 million in the aggregate. Based on 
available data, we find that the number of cable operators serving 
685,000 subscribers or less totals approximately 1,450. Although it 
seems certain that some of these cable system operators are affiliated 
with entities whose gross annual revenues exceed $250,000,000, we are 
unable at this time to estimate with greater precision the number of 
cable system operators that would qualify as small cable operators 
under the definition in the Communications Act.
    136. Multichannel Video Distribution and Data Service. MVDDS is a 
terrestrial fixed microwave service operating in the 12.2-12.7 GHz 
band. No auction has yet been held in this service, although an action 
has been scheduled for January 14, 2004. Accordingly, there are no 
licensees in this service.
b. Private Wireless Radio Services
    137. Amateur Radio Service. These licensees are believed to be 
individuals, and therefore are not small entities.
    138. Aviation and Marine Services. Small businesses in the aviation 
and

[[Page 66248]]

marine radio services use a very high frequency (VHF) marine or 
aircraft radio and, as appropriate, an emergency position-indicating 
radio beacon (and/or radar) or an emergency locator transmitter. The 
Commission has not developed a small business size standard 
specifically applicable to these small businesses. For purposes of this 
analysis, the Commission uses the SBA small business size standard for 
the category ``Cellular and Other Telecommunications,'' which is 1,500 
or fewer employees. Most applicants for recreational licenses are 
individuals. Approximately 581,000 ship station licensees and 131,000 
aircraft station licensees operate domestically and are not subject to 
the radio carriage requirements of any statute or treaty. For purposes 
of our evaluations in this analysis, we estimate that there are up to 
approximately 712,000 licensees that are small businesses (or 
individuals) under the SBA standard. In addition, between December 3, 
1998 and December 14, 1998, the Commission held an auction of 42 VHF 
Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and 
161.775-162.0125 MHz (coast transmit) bands. For purposes of the 
auction, the Commission defined a ``small'' business as an entity that, 
together with controlling interests and affiliates, has average gross 
revenues for the preceding three years not to exceed $15 million 
dollars. In addition, a ``very small'' business is one that, together 
with controlling interests and affiliates, has average gross revenues 
for the preceding three years not to exceed $3 million dollars. There 
are approximately 10,672 licensees in the Marine Coast Service, and the 
Commission estimates that almost all of them qualify as ``small'' 
businesses under the above special small business size standards.
    139. Personal Radio Services. Personal radio services provide 
short-range, low power radio for personal communications, radio 
signaling, and business communications not provided for in other 
services. The Personal Radio Services include spectrum licensed under 
part 95 of our rules. These services include Citizen Band Radio Service 
(CB), General Mobile Radio Service (GMRS), Radio Control Radio Service 
(R/C), Family Radio Service (FRS), Wireless Medical Telemetry Service 
(WMTS), Medical Implant Communications Service (MICS), Low Power Radio 
Service (LPRS), and Multi-Use Radio Service (MURS). There are a variety 
of methods used to license the spectrum in these rule parts, from 
licensing by rule, to conditioning operation on successful completion 
of a required test, to site-based licensing, to geographic area 
licensing. Under the RFA, the Commission is required to make a 
determination of which small entities are directly affected by the 
rules being adopted. Since all such entities are wireless, we apply the 
definition of cellular and other wireless telecommunications, pursuant 
to which a small entity is defined as employing 1,500 or fewer persons. 
Many of the licensees in these services are individuals, and thus are 
not small entities. In addition, due to the mostly unlicensed and 
shared nature of the spectrum utilized in many of these services, the 
Commission lacks direct information upon which to base an estimation of 
the number of small entities under an SBA definition that might be 
directly affected by the proposed rules.
    140. Despite the paucity, or in some instances, total absence, of 
information about their status as licensees or regulatees or the number 
of operators in each such service, users of spectrum in these services 
are listed here as a matter of Commission discretion in order to 
fulfill the mandate imposed on the Commission by the Regulatory 
Flexibility Act to regulate small business entities with an 
understanding towards preventing the possible differential and adverse 
impact of the Commission's rules on smaller entities. Further, the 
listing of such entities, despite their indeterminate status, should 
provide them with fair and adequate notice of the possible impact of 
the proposals contained in the Further NPRM.
    141. Public Safety Radio Services. Public Safety radio services 
include police, fire, local government, forestry conservation, highway 
maintenance, and emergency medical services. There are a total of 
approximately 127,540 licensees in these services. Governmental 
entities as well as private businesses comprise the licensees for these 
services. All governmental entities with populations of less than 
50,000 fall within the definition of a small entity.
c. Satellite-Related Services
    142. Fixed Satellite Transmit/Receive Earth Stations. The most 
recent Commission data shows that there are approximately 3,149 earth 
station authorizations, a portion of which are Fixed Satellite 
Transmit/Receive Earth Stations. We do not request nor collect annual 
revenue information from these licensees, and are unable to estimate 
the number of earth station licensees that are small business entities 
under SBA definitions.
    143. Fixed Satellite Small Transmit/Receive Earth Stations. The 
most recent Commission data shows that there are approximately 3,149 
earth station authorizations, a portion of which are Fixed Satellite 
Small Transmit/Receive Earth Stations. We do not request nor collect 
annual revenue information from these licensees, and are unable to 
estimate the number of fixed satellite small transmit/receive earth 
station licensees that are small business entities under SBA 
definitions.
    144. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems 
(14 GHz). These stations operate on a primary basis, and frequency 
coordination with terrestrial microwave systems is not required. Thus, 
a single ``blanket'' application may be filed for a specified number of 
small antennas and one or more hub stations. The most recent Commission 
data shows that there are 485 current VSAT System authorizations. We do 
not request nor collect annual revenue information from these 
licensees, and are unable to estimate the number of VSAT system 
licensees that are small business entities under SBA definitions.
    145. Mobile Satellite Earth Stations. The most recent Commission 
data shows that there are 21 licensees. We do not request nor collect 
annual revenue information from these licensees, and are unable to 
estimate the number of mobile satellite earth station licensees that 
are small business entities under SBA definitions.
    146. Radio Determination Satellite Earth Stations. The most recent 
Commission data shows that there are four licensees. We do not request 
nor collect annual revenue information, and are unable to estimate the 
number of radio determination satellite earth station licensees that 
are small business entities under SBA definitions.
    147. Space Stations (Geostationary). The most recent Commission 
data shows that there currently are an estimated 75 Geostationary Space 
Station authorizations. We do not request nor collect annual revenue 
information from these licensees, and are unable to estimate the number 
of geostationary space station licensees that are small business 
entities under SBA definitions.
    148. Space Stations (Non-Geostationary). The most recent Commission 
data shows that there currently are seven Non-Geostationary Space 
Station authorizations. We do not request nor collect annual revenue 
information from these licensees, and are unable to estimate the number 
of non-geostationary space station

[[Page 66249]]

licensees that are small business entities under SBA definitions.
    149. Direct Broadcast Satellites. Because DBS provides subscription 
services, DBS falls within the SBA-recognized definition of ``Cable and 
Other Program Distribution.'' This definition provides that a small 
entity is one with $12.5 million or less in annual receipts. Currently, 
there are nine DBS authorizations, though there are only two DBS 
companies in operation at this time. We do not request nor collect 
annual revenue information for DBS services, and are unable to 
determine the number of DBS operators that would constitute a small 
business entity under SBA definitions.
    150. Digital Audio Radio Services (DARS). Commission records show 
that there are two Digital Audio Radio Services authorizations. We do 
not request nor collect annual revenue information from these 
licensees, and are unable to estimate the number of DARS licensees that 
are small business entities under SBA definitions.
4. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements
    151. The policies and proposals in the Further NPRM could apply to 
a significant number of Commission licensees and spectrum lessees in a 
range of wireless services. The Further NPRM explores possible steps to 
allow certain spectrum leasing arrangements, and possibly license 
assignments and transfers of control, to be implemented without prior 
individualized Commission approval, using forms similar to those used 
at present for obtaining prior Commission approval of these types of 
transactions. At most, the Further NPRM proposals would shift the 
timing of filing of forms for certain of the transactions. In addition, 
the Further NPRM inquires about extending to additional services the 
spectrum leasing procedures adopted in the Report and Order for 
spectrum manager leasing arrangements and de facto transfer leasing 
arrangements. Licensees otherwise would have to obtain prior Commission 
consent to transfers of control or license assignments on similar 
forms.
    152. Consideration of extending the spectrum leasing policies 
adopted in the Report and Order to additional services specified in the 
Further NPRM implicates potential reporting, recordkeeping and 
compliance requirements for licensees and spectrum lessees in these 
additional services, including: (1) Retention of lease agreements; (2) 
reporting of spectrum leasing terms to the Commission; (3) licensee and 
lessee compliance with the Commission's technical and service rules; 
(4) licensee filings with the Commission on behalf of the lessee; (5) 
licensee verification of lessee compliance with Commission rules; (6) 
licensee supervision of a lessee's adherence to the Commission's rules 
and policies; and (7) the leasing of spectrum by entities designated as 
``small business'' or ``very small business'' under the Commission's 
rules. Licensees and lessees may retain or hire outside professionals 
(e.g., legal and engineering staff) to draft lease agreements, provide 
consulting services, maintain records, and comply with applicable 
Commission rules. They also may employ existing or new employees to be 
responsible for reporting, recordkeeping, and other compliance 
requirements.
    153. The Further NPRM also explores what steps the Commission 
should take, possibly including additional information submissions, to 
promote effective functioning of secondary markets in spectrum usage 
rights. The Further NPRM does not, however, propose any specific 
reporting, recordkeeping or compliance requirements in this regard. We 
seek comment on what, if any, requirements we should impose if we adopt 
the proposals set forth in the Further NPRM.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    154. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) the establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use 
of performance, rather than design, standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for small entities.''
    155. Regarding our inquiry in the Further NPRM about how to 
facilitate increased access to spectrum usage information, we do not 
anticipate any adverse impact on small entities. In fact, small (and 
large) entities should benefit by obtaining access to information that 
would enable their acquisition of spectrum that suits particular 
business needs. In addition, we note that we are encouraging parties to 
comment on whether we should develop an on-line information database, 
require more detailed operational information from licensees/lessees, 
create additional information services, encourage private sector 
collection and distribution of information, or allow independent third 
parties to act as ``market makers.'' Although certain information 
collection requirements might impact entities, including small 
entities, due to increased reporting requirements, the Further NPRM and 
this IRFA provide interested parties with an opportunity to comment on 
the possible burdens associated with each of the possible steps.
    156. We also seek comment in the Further NPRM as to whether there 
are any additional steps that could be taken to further an efficient 
secondary marketplace through technological advances, opportunistic 
spectrum users, or other mechanisms (e.g., spectrum managers). We do 
not anticipate that any rules we decide to adopt in this area would 
adversely impact small entities. We believe that small (and large) 
entities will benefit from removing any unnecessary regulatory barriers 
to efficient spectrum usage.
    157. Regarding our proposal in the Further NPRM to forbear from 
individual prior review and approval by the Commission for certain 
categories of leasing arrangements involving a transfer of de facto 
control, we do not anticipate any adverse impact on small entities. In 
this connection, while we believe that lessening regulatory 
requirements would facilitate leasing arrangements entered into by all 
entities, including both small and large entities, we are mindful that 
forbearance must also be in the public interest. Consequently, we seek 
comment on various aspects of this proposal and specifically request 
commenters, including small entities, to comment on the eligibility 
criteria for forbearance set forth in the Further NPRM. We realize that 
although some of the specific criteria could impact small entities, 
overall small entities should benefit from a more streamlined approach. 
Moreover, these specific criteria affect all entities, whether large or 
small entities. For example, lessees will need to comply with our 
foreign ownership restrictions before forbearance would apply. This 
requirement would be equitably applied to all entities seeking to 
obtain spectrum through a spectrum leasing arrangement. Moreover, even 
where possible spectrum lessees may not take advantage of entering into 
spectrum leasing arrangements without individualized prior Commission 
approval, such entities (again, whether large or small entities) would 
be able to

[[Page 66250]]

seek approval by means of our prior approval procedures for spectrum 
leasing arrangements.
    158. Similarly, regarding our possible forbearance from individual 
prior review and approval by the Commission for transfer and assignment 
transactions, as proposed in the Further NPRM, it seems unlikely that 
small entities would suffer any adverse impact. Nonetheless, we seek 
comment on the various eligibility criteria that might be employed and, 
in particular, we encourage small entities to comment on the impact 
that our unjust enrichment and installment payment policies might have 
on this proposal.
    159. Regarding the possible extension of the spectrum leasing 
policies adopted in the Report and Order to a number of excluded 
wireless services, as proposed in the Further NPRM, we anticipate 
generally that there would be no adverse impact on small entities. 
Because there are substantial numbers of small entities in all the 
wireless services, small entities could be significantly affected by 
our extension of leasing policies to the wireless services excluded by 
the Report and Order. We believe, however, that these small entities 
would likely benefit from the increased flexibility that leasing 
arrangements will offer in meeting their particular spectrum needs.
    160. Regarding the possibility of extending our decision to 
streamline the application processing for transfer and assignment 
applications to other wireless services, as proposed in the Further 
NPRM, we anticipate no adverse impact to small entities. The 
information that would be collected under a more streamlined approach 
is similar to what is currently required under our transfer and 
assignment rules and should facilitate spectrum leasing by reducing 
transaction costs, uncertainty, and delay. While an alternative would 
be to require no approval, we believe that this would run counter to 
our statutory responsibilities under section 310(d) of the 
Communications Act.
    161. Regarding our analysis in the Further NPRM of the question of 
whether to apply our new de facto control standard to regulatory 
contexts other than leasing, we cannot determine at this time what the 
impact on small entities might be. Should we move away from the 
facilities-based approach of our Intermountain Microwave standard, it 
may be presumed that small entities would have more flexibility to 
enter into certain types of management agreements. On the other hand, 
such an approach might not be warranted in connection with our 
designated entity and entrepreneur eligibility rules and policies. We 
thus encourage small entities to comment on the various issues raised 
in the Further NPRM regarding an appropriate standard for defining de 
facto control.
    162. Finally, regarding our inquiry in the Further NPRM into 
whether the restrictions adopted for designated entity leasing should 
be altered, we believe that small entities would likely benefit from 
the removal of certain restrictions. But as noted above, there is a 
balance of competing considerations taking place here. We hope that 
small entities in particular will comment on what approach best 
promotes an efficient secondary spectrum market, provides benefits to 
small entities, and considers our statutory and public interest 
obligations.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    163. None.

B. Initial Paperwork Reduction Act of 1995 Analysis Regarding the 
Further NPRM

    164. In the Further NPRM, this document seeks comment on a proposed 
information collection As part of the Commission's continuing effort to 
reduce paperwork burdens, we invite the general public and the Office 
of Management and Budget (OMB) to take this opportunity to comment on 
the information collections contained in this document, as required by 
the Paperwork Reduction Act of 1995, Public Law 104-13. Public and 
agency comments are due at the same time as other comments on this 
document and must have a separate heading designating them as responses 
to the Initial Paperwork Reduction Analysis (IPRA). OMB comments are 
due January 26, 2004. Comments should address: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.

C. Comment Dates Regarding the Further NPRM

    165. Pursuant to applicable procedures set forth in sections 1.415 
and 1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments on the Further NPRM on or before December 5, 
2003 and reply comments on or before January 5, 2004. Comments and 
reply comments should be filed in WT Docket No. 00-230. All relevant 
and timely comments will be considered by the Commission before final 
action is taken in this proceeding.
    166. Comments may be filed either by filing electronically, such as 
by using the Commission's Electronic Comment Filing System (ECFS), or 
by filing paper copies. Parties are strongly urged file their comments 
using ECFS (given recent changes in the Commission's mail delivery 
system). Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/e-file/ecfs.html. Only one 
copy of an electronic submission must be filed. In completing the 
transmittal screen, the electronic filer should include its full name, 
Postal Service mailing address, and the applicable docket or rulemaking 
number, WT Docket No. 00-230. Parties also may submit comments 
electronically 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 (your e-mail address).'' A sample form and directions will be sent 
in reply.
    167. Parties who choose to file by paper may submit such filings by 
hand or messenger delivery, by U.S. Postal Service mail (First Class, 
Priority, or Express Mail), or by commercial overnight courier. Parties 
must file an original and four copies of each filing in WT Docket No. 
00-230. Parties that want each Commissioner to receive a personal copy 
of their comments must file an original plus nine copies. If paper 
filings are hand-delivered or messenger-delivered for the Commission's 
Secretary, they must be delivered to the Commission's contractor, 
Natek, Inc., at 236 Massachusetts Avenue, NE., Suite 110, Washington, 
DC 20002-4913. To receive an official ``Office of the Secretary'' date 
stamp, documents must be addressed to Marlene H. Dortch, Secretary, 
Federal Communications Commission. (The filing hours at this facility 
are 8 a.m. to 7 p.m.) If paper filings are submitted by mail though the 
U.S. Postal Service (First Class mail, Priority Mail, and Express 
Mail), they must be sent to the Commission's Secretary, Marlene H. 
Dortch, Federal Communications Commission, Office of the Secretary, 445 
12th Street, SW., Washington, DC 20554. If paper filings are submitted 
by commercial overnight courier (i.e., by overnight delivery other

[[Page 66251]]

than through the U.S. Postal Service), such as by Federal Express or 
United Parcel Service, they must be sent to the Commission's Secretary, 
Marlene H. Dortch, Federal Communications Commission, Office of the 
Secretary, 9300 East Hampton Drive, Capitol Heights, MD 20743. (The 
filing hours at this facility are 8 a.m. to 5:30 p.m.)
    168. Parties may also file with the Commission some form of 
electronic media submission (e.g., diskettes, CDs, tapes, etc.) as part 
of their filings. In order to avoid possible adverse affects on such 
media submissions (potentially caused by irradiation techniques used to 
ensure that mail is not contaminated), the Commission advises that they 
should not be sent through the U.S. Postal Service. Hand-delivered or 
messenger-delivered electronic media submissions should be delivered to 
the Commission's contractor, Natek, Inc., at 236 Massachusetts Avenue, 
NE., Suite 110, Washington, DC 20002-4913. Electronic media sent by 
commercial overnight courier should be sent to the Commission's 
Secretary, Marlene H. Dortch, Federal Communications Commission, Office 
of the Secretary, 9300 East Hampton Drive, Capitol Heights, MD 20743.
    169. Regardless of whether parties choose to file electronically or 
by paper, they should also send one copy of any documents filed, either 
by paper or by e-mail, to each of the following: (1) Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, facsimile (202) 863-2898, or e-mail at 
[email protected]; and (2) Paul Murray, Commercial Wireless Division, 
Wireless Telecommunications Bureau, 445 12th Street, SW., Washington, 
DC 20554, or e-mail at [email protected].
    170. Comments, reply comments, and ex parte submissions will be 
available for public inspection during regular business hours in the 
FCC Reference Information Center, Federal Communications Commission, 
445 12th Street, SW., Room CY-A257, Washington, DC 20554. These 
documents also will be available electronically at the Commission's 
Disabilities Issues Task Force Web site, www.fcc.gov/dtf, and from the 
Commission's Electronic Comment Filing System. Documents are available 
electronically in ASCII text, Word 97, and Adobe Acrobat. Copies of 
filings in this proceeding may be obtained from 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 at 
[email protected]. This document is also available in alternative 
formats (computer diskette, large print, audio cassette, and Braille). 
Persons who need documents in such formats may contact Brian Millin at 
(202) 418-7426, TTY (202) 418-7365, [email protected], or send an e-
mail to [email protected].

D. Ex Parte Rules Regarding the Further NPRM--Permit-But-Disclose 
Proceeding

    171. With regard to the Further NPRM, this is a permit-but-disclose 
notice and comment rule making 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.

V. Ordering Clauses

    172. Pursuant to the authority contained in sections 1, 4(i), and 
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
154(i), and 303(r), the Further NPRM is adopted.
    173. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of the Report and Order and the 
Further NPRM 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. 03-29193 Filed 11-24-03; 8:45 am]
BILLING CODE 6712-01-P