[Federal Register Volume 69, Number 72 (Wednesday, April 14, 2004)]
[Proposed Rules]
[Pages 19779-19805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8260]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 04-73; FCC 04-66]


Assessment and Collection of Regulatory Fees for Fiscal Year 2004

AGENCY: Federal Communications Commission.

ACTION: Notice of Proposed Rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Commission will revise its Schedule of Regulatory Fees in 
order to recover the amount of regulatory fees that Congress has 
required it to collect for fiscal year 2004. Section 9 of the 
Communications Act of 1934, as amended, provides for the annual 
assessment and collection of regulatory fees under sections 9(b)(2) and 
9(b)(3), respectively, for annual ``Mandatory Adjustments'' and 
``Permitted Amendments'' to the Schedule of Regulatory Fees.

DATES: Comments are due April 21, 2004, and reply comments are due 
April 30, 2004.

ADDRESSES: Federal Communications Commission, 445 12th St. SW., 
Washington, DC 20554.
    See paragraphs 30 through 33 of the SUPPLEMENTARY INFORMATION for 
specific filing instructions.

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

SUPPLEMENTARY INFORMATION:
Adopted: March 17, 2004.
Released: March 29, 2004.
By the Commission:

1. Table of Contents

I. Introduction
II. Discussion
    A. Development of FY 2004 Fees
    1. Calculation of Revenue and Fee Requirements
    2. Additional Adjustments to Payment Units
    3. Local Multipoint Distribution Service (LMDS)
    B. Commercial Mobile Radio Service (CMRS)
    Messaging
    C. Proposed Procedural Changes for Notification, Assessment and 
Collection of Regulatory Fees
    1. Media Services Licensees
    2. Satellite Space Station Licensees
    3. Interstate Telecommunications Service Providers
    4. Cable Television System Operators
    5. Commercial Mobile Radio Service Operators
    D. Future Streamlining of the Regulatory Fee Assessment and 
Collection Process
    E. Procedures for Payment of Regulatory Fees
    1. De Minimis Fee Payment Liability
    2. Standard Fee Calculations and Payment Dates
    F. Enforcement
III. Procedural Matters
    A. Comment Period and Procedures
    B. Ex Parte Rules
    C. Initial Regulatory Flexibility Analysis
    D. Authority and Further Information
Attachment A--Initial Regulatory Flexibility Analysis
Attachment B--Sources of Payment Unit Estimates for FY 2004
Attachment C--Calculation of Revenue Requirements and Pro-Rata Fees
Attachment D--FY 2004 Schedule of Regulatory Fees
Attachment E--Factors, Measurements, and Calculations That Determine 
Station Contours and Population Coverages
Attachment F--FY 2003 Schedule of Regulatory Fees

I. Introduction

    1. In this Notice of Proposed Rulemaking, we propose to collect 
$272,958,000 in regulatory fees for Fiscal Year (FY) 2004. These fees 
are mandated by Congress and are collected to recover the regulatory 
costs associated with the Commission's

[[Page 19780]]

enforcement, policy and rulemaking, user information, and international 
activities.\1\
---------------------------------------------------------------------------

    \1\ 47 U.S.C. 159(a).
---------------------------------------------------------------------------

II. Discussion

A. Development of FY 2004 Fees

1. Calculation of Revenue and Fee Requirements
    2. Each fiscal year, the Commission proportionally allocates the 
total amount that must be collected via regulatory fees (Attachment 
C).\2\ For FY 2004, this allocation was done using FY 2003 revenues as 
a base. From this base, a revenue amount for each fee category was 
calculated. Each fee category was then adjusted upward by 1.5 percent 
to reflect the increase in regulatory fees from FY 2003 to FY 2004. 
These FY 2004 amounts were then divided by the number of payment units 
in each fee category to determine the unit fee.\3\ In instances of 
small fees, such as licenses that are renewed over a multiyear term, 
the resulting unit fee was also divided by the term of the license. 
These unit fees were then rounded in accordance with 47 U.S.C. 
159(b)(2).
---------------------------------------------------------------------------

    \2\ The costs assigned to each service category are based upon 
the regulatory activities (enforcement, policy and rulemaking, user 
information, and international activities) undertaken by the 
Commission on behalf of units in each service category. It is 
important to note that the required increase in regulatory fee 
payments of aproximately 1.5 percent in FY 2004 is reflected in the 
revenue that is expected to be collected from each service category. 
Because this expected revenue is adjusted each year by the number of 
units in a service category, the actual fee itself is sometimes 
increased by a number other than 1.5 percent. For example, in 
industries where the number of units is declining and the expected 
revenue is increasing, the impact of the fee increase may be 
greater.
    \3\ In most instances, the fire amount is a flat fee per 
licensee or regulatee. However, in some instances the fee amount 
represents a unit subscriber fee (such as for Cable, Commercial 
Mobile Radio Service (CMRS) Cellular/Mobile and CMRS Messaging), a 
per unit fee (such as for International Bearer Circuits), or a fee 
factor per revenue dollar (Interstate Telecommunications Service 
Provider fee).
---------------------------------------------------------------------------

2. Additional Adjustments to Payment Units
    3. In calculating the FY 2004 regulatory fees proposed in 
Attachment D, we further adjusted the FY 2003 list of payment units 
(Attachment B) based upon licensee databases and industry and trade 
group projections. Whenever possible, we verified these estimates from 
multiple sources to ensure accuracy of these estimates. In some 
instances, Commission licensee databases were used, while in other 
instances, actual prior year payment records and/or industry and trade 
association projections were used in determining the payment unit 
counts.\4\ Where appropriate, we adjusted and/or rounded our final 
estimates to take into consideration variables that may impact the 
number of payment units, such as waivers and/or exemptions that may be 
filed in FY 2004, and fluctuations in the number of licensees or 
station operators due to economic, technical or other reasons. 
Therefore, for example, when we note that our estimated FY 2004 payment 
units are based on FY 2003 actual payment units, we do not necessarily 
imply that our FY 2004 projection is exactly the same number as in FY 
2003, but that we have either rounded the FY 2004 number or adjusted it 
slightly to account for these variables.
---------------------------------------------------------------------------

    \4\ The databases we consulted include, but are not limited to, 
the Commission's Universal Licensing System (ULS), International 
Bureau Filing System (IBFS), and Consolidated Database System 
(CDBS). We also consulted industry sources including but not limited 
to Television & Cable Factbook by Warren Publishing, Inc. and the 
Broadcasting and Cable Yearbook by Reed Elsevier, Inc., as well as 
reports generated within the Commission such as the Wireline 
Competition Bureau's Trends in Telephone Service and the Wireless 
Telecommunications Bureau's Numbering Resource Utilization Forecast. 
For additional information on source material, see Attachment B.
---------------------------------------------------------------------------

    4. With regards to regulatory fees for AM and FM radio stations, 
additional factors are considered in determining the fees paid by these 
stations. These factors are facility attributes and the population 
served by the radio station. The calculation of the population served 
is determined by coupling current U.S. Census Bureau data with 
technical and engineering data, as detailed in Attachment E. 
Consequently, the population served, as well as the class and type of 
service (AM or FM), determines the regulatory fee amount to be paid.
3. Local Multipoint Distribution Service (LMDS)
    5. In both 2001,\5\ and in 2002,\6\ the Commission denied requests 
to move the Local Multipoint Distribution Service (LMDS) from the 
Multipoint Distribution Service (MDS) fee category to the microwave fee 
category. In our FY 2003 Notice of Proposed Rulemaking,\7\ we sought 
comment on the appropriate fee classification of LMDS. Parties 
commenting on this issue suggested that LMDS be classified in the 
microwave fee category because LMDS was more similar to services in the 
microwave fee category than MDS.\8\ We noted certain distinctions 
between MDS and LMDS, and we declined to place LMDS in the microwave 
fee category because recent technological developments and emerging 
commercial applications suggested that LMDS may develop on a different 
track than other microwave services.\9\ To better track the development 
of LMDS, therefore, we created a separate LMDS fee category.\10\ We 
note that we still have under advisement a broader proceeding that 
addresses the policies and fee structures governing LMDS and other 
wireless services. Therefore, we again seek comment on the appropriate 
fee classification of LMDS.
---------------------------------------------------------------------------

    \5\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2001, Report and Order, 16 FCC Rcd 13525 (2001).
    \6\ See Assessment and Collection of Regulatory Fees for Fiscal 
year 2001, Memorandum Opinion and Order, 17 FCC Rcd 24920 (2002).
    \7\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2003, Notice of Proposed Rulemaking, 18 FCC Rcd 6088-89 
paragraphs 6-9 (2003) (FY 2003 Notice of Proposed Rulemaking).
    \8\ The Commission recently initiated a proceeding to facilitate 
the provision of high-speed mobile and fixed broadband and other 
advanced wireless services and to consider the possibility of 
merging MDS and the Instructional Television Fixed Service (ITFS) 
into a single Broadband Communications Service. See Amendment of 
Parts 1, 21, 73, 74 and 101 of the Commission's Rules to Facilitate 
the Provision of Fixed and Mobile Broadband Access, Educational and 
Other Advanced Services in the 2150-2162 and 2500-2690 MHz Bands, 
Notice of Proposed Rule Making and Memorandum Opinion and Order. 18 
FCC Rcd 6722, 6797 (2003).
    \9\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2003, Report and Order, 18 FCC Rcd 15988 paragraph 9 (2003) (FY 
2003 Report and Order).
    \10\ Id.
---------------------------------------------------------------------------

B. Commercial Mobile Radio Service (CMRS) Messaging

    6. In our FY 2003 Report & Order,\11\ we noted that there has been 
a significant decline in CMRS Messaging units--from 40.8 million in FY 
1997 to 19.7 million in FY 2003--a decline of 51.7 percent. In fact, in 
the FY 2003 regulatory fee cycle, the number of CMRS Messaging units 
that paid regulatory fees declined to less than 16 million. This is 
consistent with our Eighth Annual CMRS Competition Report, which 
estimates the number of paging-only subscribers at the end of 2002 to 
be 14.1 million units.\12\ In addition, between the FY 2003 and FY 2004 
regulatory fee cycle, there were no significant changes in the level of 
regulatory oversight for this fee category. Therefore, for the reasons 
outlined in our FY 2003 Report and

[[Page 19781]]

Order\13\, and because the level of regulatory oversight remained 
relatively the same between FY 2003 and FY 2004, we propose to maintain 
the CMRS Messaging subscriber regulatory fee rate at the FY 2003 level 
to avoid further contributing to the financial hardships associated 
with a declining subscriber base.
---------------------------------------------------------------------------

    \11\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2003, Report and Order, 18 FCC Rcd 15985 paragraph 21 (2003).
    \12\ Implementation of Section 6002(b) of the Omnibus Budget 
Reconciliation Act of 1993, Annual Report and Analysis of 
Competitive Market Conditions with Respect to Commercial Mobile 
Services, Eighth Report. 18 FCC Rcd 14783 paragraph 151 (2003) 
(Eighth Annual CMRS Competition Report).
    \13\ See FY 2003 Report and Order, 18 FCC Rcd 15985 paragraph 21 
(2003).
---------------------------------------------------------------------------

C. Proposed Procedural Changes for Notification, Assessment and 
Collection of Regulatory Fees

    7. As was the case last year, we again propose that we will not 
disseminate public notices to regulatees through surface mail informing 
them of when regulatory fees are due. With the widespread use of the 
Internet, we believe we can better serve the public by providing the 
necessary information on its Web site. To that end, we propose to 
provide public notices, fact sheets and all necessary regulatory fee 
payment procedure information on our Web site at http://www.fcc.gov/fees as we have for the past several years. In the event that 
regulatees do not have access to the Internet, hardcopies of public 
notices and other relevant materials will be mailed upon request to 
anyone who contacts the FCC Consumer Center at (888) 225-5322. We also 
will continue to publish official notice of regulatory fee assessments 
in the Federal Register.
    8. While we propose to make general regulatory fee information 
available at our Web site, rather than disseminating it to all 
licensees through surface mail, we propose to disseminate fee-
assessment notifications to licensees in five categories through 
surface mail. We propose to notify the following five categories of 
licensees by surface mail because these licensees experienced confusion 
about fees and the fee-collection process in the past, or are likely to 
need to respond to changed collection practices in the future.
    1. Media Services Licensees
    9. In FY2003, the Commission mailed fee assessment notifications to 
media services licensees for the first time.\14\ We propose to repeat 
this endeavor this year in a similar fashion. At this time, we are 
unsure of the exact postcard or letter format for assessment 
notifications. However, regardless of format, the content of each 
assessment notification would identify each licensed facility by its 
facility identification number, station call sign, station type and 
class, regulatory fee amount owed, licensee contact information and 
licensee federal registration number.
---------------------------------------------------------------------------

    \14\ Fee assessments were issued for AM and FM Radio Stations, 
AM and FM Construction Permits, FM Translators/Booster, VHF and UHF 
Television Stations, VHF and UHF Television Construction Permits, 
Satellite Television Stations, Low Power Television (LPTV) Stations, 
and LPTV Translators/Boosters. We did not issue fee assessments for 
broadcast auxiliary stations in FY2003, nor will we do so this year.
---------------------------------------------------------------------------

    10. We emphasize that media services licensees would still be 
required to complete the Remittance Advice FCC Form 159 when submitting 
their fee payment. Last year, many media services licensees erroneously 
submitted their fee payments with an attached copy of the assessment 
notification that they received, rather than a completed FCC Form 159. 
Many licensees also submitted their payment to FCC Headquarters in 
Washington, DC rather than to the Mellon Bank in Pittsburgh, PA. These 
mistakes resulted in the delayed processing of payments and hence some 
became subject to the Commission's 25 percent late-payment penalty. 
Therefore, on this year's fee assessment notifications, we propose to 
include a specific notice that payments submitted to the wrong address 
or submitted without an FCC Form 159 will likely incur a 25 percent 
late-payment penalty.
2. Satellite Space Station Licensees
    11. In FY 2003, the Commission mailed regulatory fee assessment 
letters for the first time to satellite space station licensees. We 
propose to repeat this endeavor this year in an identical or similar 
fashion. As with media services licensees, we reiterate that satellite 
space station licensees are still required to complete a Remittance 
Advice FCC Form 159 and submit their payment to the appropriate Mellon 
Bank Pittsburgh, PA mailing address.
3. Interstate Telecommunications Service Providers
    12. As in previous years, we propose to continue to generate and 
mail customized Interstate Telecommunications Service Provider 
Worksheets (FCC Form 159-W) to Interstate Telecommunications Service 
Providers (``ITSPs''). The customized FCC Form 159-W serves as a 
regulatory fee assessment for ITSPs. Recipients of the customized FCC 
Form 159-W would need only sign the form and submit it along with 
payment to the appropriate Mellon Bank Pittsburgh, PA mailing address, 
in lieu of the FCC Form 159. Recipients who disagree with the assessed 
fee amount or other information relating to the calculation of the 
assessment on their customized FCC Form 159-W would complete a blank 
FCC Form 159-W and complete a FCC Form 159, and then submit both of 
these forms along with payment to the appropriate Mellon Bank 
Pittsburgh, PA mailing address.
4. Cable Television System Operators
    13. Beginning this year, we propose to modify our payment unit 
assessment methodology and our fee collection procedures for the cable 
industry by assessing regulatory fees for individual cable operators 
based on cable subscriber counts that the operators themselves have 
reported in publicly available data sources. The primary data sources 
we propose to reference this year are the Broadcasting and Cable 
Yearbook 2003-2004 (``Yearbook'')\15\ and industry statistics 
publicized by the National Cable and Telecommunications Association 
(``NCTA'').\16\
---------------------------------------------------------------------------

    \15\ Broadcasting and Cable Yearbook 2003-2004, by Reed 
Elsevier, Inc., Newton, MA, 2003. Subscriber counts reported in 
Seciton C, ``Multiple System Operators, Independent Owners and Cable 
Systems,'' page C-3.
    \16\ NCTA maintains an updated list of the 25 largest multiple-
system operators at its web site located at http://www.ncta.com.
---------------------------------------------------------------------------

    14. Under this methodology, cable operators and multiple system 
operators (``MSOs'') would simply base their regulatory fee obligations 
upon their respective basic subscriber counts as reported in the data 
sources. Cable operators and MSOs would still be required to complete a 
Remittance Advice FCC Form 159 and submit their payment to the 
appropriate Mellon Bank Pittsburgh, PA mailing address; but they would 
only have to report their aggregate subscriber count on a single line 
entry on FCC Form 159, rather than report the counts for every 
community unit identifier (``CUID'') that they serve.
    15. In using the data sources, we propose that cable operators 
would first refer to NCTA's list of the 25 largest multiple-system 
operators (``MSOs''). Entities appearing on the list would base their 
fee obligations on their subscriber counts as reported on the list. 
MSOs and other cable operators not listed by NCTA next would refer to 
the Yearbook and base their fee obligations upon their aggregate 
system(s) basic subscriber counts as reported in the Yearbook. Any MSOs 
and operators not appearing on the NCTA list or in the Yearbook would 
then certify their aggregate basic subscriber counts as of December 31, 
2003 on the Remittance Advice FCC Form 159 with the understanding that 
we would corroborate the certified counts with other publicly available 
data sources.\17\

[[Page 19782]]

Cable operators that do not have access to the Internet to obtain the 
NCTA list or have access to the Yearbook would be able to contact the 
FCC Consumer Center at (888) 225-5322 to obtain their publicized 
subscriber count, if available in either data source.
---------------------------------------------------------------------------

    \17\ Sources consulted by the Commission may include but not be 
limited to Cable TV Investor by Kagan World Media and Television and 
Cable Factbook by Warren Communications.
---------------------------------------------------------------------------

    16. Under this assessment methodology, the per-subscriber 
regulatory fee would be the same for all cable operators, regardless of 
company or system size, as is presently the case. Beginning this year, 
we would also set a de minimis payment exemption for operators serving 
less than 250 basic service subscribers throughout their entire 
system(s). Operators fitting into this category would not be required 
to submit payment, but would still be required to submit a Remittance 
Advice FCC Form 159 on which they certify their aggregate subscriber 
count.
    17. We also note that beginning this year we propose to mail 
assessment letters to all of the MSOs and cable operators in the 
Yearbook or on the NCTA list of 25 largest MSOs. Operators not 
appearing in either data source would not receive an assessment; 
however, they would still expected to make a fee payment based on their 
certified basic cable subscriber counts.
    18. Our proposed assessment methodology for the cable subscriber 
service category reduces administrative burdens for cable operators and 
the Commission. Each cable operator would only have to provide one 
payment line on FCC Form 159 rather than the dozens or even hundreds 
that currently must be provided by some of the larger MSOs when 
reporting subscriber counts for each CUID that they serve. This year's 
assessment model would also provide predictability for cable operators 
and the Commission. The precise fee obligations of cable operators and 
MSOs would be easily determined and would be known well in advance by 
both the regulatees and the Commission.
    19. We solicit comment on the feasibility of this assessment 
proposal. Specifically, we seek comment regarding the accuracy of basic 
subscriber counts as furnished by NCTA and as reported in the Yearbook 
and other publicly available data sources. If the number of basic 
subscribers certified to be served by operators differs considerably 
with the numbers reported in publicly available data sources, we invite 
comment that would provide possible explanations for any such 
discrepancies. We also seek recommendations for alternative data 
sources that the Commission could consult with a high degree of 
reliability.
5. Commercial Mobile Radio Service Operators
    20. Beginning this year, we propose to mail assessments to 
Commercial Mobile Radio Services (CMRS) cellular and mobile service 
providers using information provided in the Numbering Resource 
Utilization Forecast (NRUF) report.\18\ Data from the NRUF report would 
be used to determine the amount of each regulatory fee obligation, and 
assessments would be mailed accordingly to cellular and other mobile 
service providers. The providers would still be required to submit 
their payment with Remittance Advice FCC Form 159 to the designated 
address in Pittsburgh, PA. We solicit comment on the feasibility of 
this assessment proposal. Specifically, we seek comment regarding the 
use of NRUF data as it relates to the subscriber basis upon which 
wireless cellular/mobile regulatory fees are calculated. We also seek 
comment on other data sources that would be pertinent for us to consult 
for calculating wireless cellular/mobile regulatory fees.
---------------------------------------------------------------------------

    \18\ Numbering Resource Utilization in the United States as of 
June 30, 2003, prepared by the Industry Analysis and Technology 
Division, Federal Communications Commission (December 2003).
---------------------------------------------------------------------------

    21. With the exception of the changes noted in the preceding 
sections, we propose to retain the procedures that we have established 
for the payment of regulatory fees.\19\
---------------------------------------------------------------------------

    \19\ See 47 U.S.C. 159(f).
---------------------------------------------------------------------------

D. Future Streamlining of the Regulatory Fee Assessment and Collection 
Process

    22. As an agency, we are committed to reviewing, streamlining and 
modernizing our statutorily required fee-assessment and collection 
procedures. We welcome comments on a broad range of options in this 
regard. As discussed briefly below, our areas of particular interest 
include: (1) The process for notifying licensees about changes in the 
annual regulatory fee schedule and how it can be improved; (2) the most 
effective way to disseminate regulatory fee assessments and bills, i.e. 
through surface mail, email, or some other mechanism; (3) the fee 
payment process, including how the agency's electronic payment system 
can be improved; and (4) the timing of fee payments, including whether 
we should alter the existing fee payment ``window'' in any way. 
Commenters should bear in mind that proposed improvements must comport 
with the provisions of section 9 of the Communications Act of 1934, as 
amended.\20\
---------------------------------------------------------------------------

    \20\ See id. 159.
---------------------------------------------------------------------------

    23. With respect to disseminating assessments or bills through 
surface mail, we note that many licensees have multiple mailing 
addresses on file in the Commission's licensing databases and our 
Commission Registration System (CORES). We seek comment regarding to 
which address licensees would prefer to have bills or assessments 
mailed.
    24. With respect to the fee payment process, we seek comment on 
migrating licensees to the Commission's electronic payment process 
known as Fee Filer, particularly in instances by which slow mail 
delivery may result in receiving the payment beyond the fee due date, 
thereby resulting in a 25 percent late-payment penalty. Should the 
Commission make use of Fee Filer mandatory for fees over a certain 
monetary level, or for licensees holding a certain number of licenses? 
For licensees who choose to continue to submit fee payments through 
surface mail to Mellon Bank in Pittsburgh, PA, we seek comment on ways 
to streamline the Remittance Advice Form 159. We also seek comment on 
ways in which we could employ information technology on the fee 
assessments or bills that we generate so as to enable licensees to 
submit their fee payments with a copy of their fee assessment or bill, 
in lieu of a Remittance Advice Form 159.
    25. With respect to the current filing-fee window, we seek comment 
on whether the current time period for filing regulatory fee payments 
provides licensees with sufficient time to submit their filings to the 
Commission. In particular, we seek comment on the public benefits that 
might accrue from lengthening the time period for filing fee payments.

E. Procedures for Payment of Regulatory Fees

1. De Minimis Fee Payment Liability
    26. As in the past, we propose that regulatees whose total 
regulatory fee liability, including all categories of fees for which 
payment is due by an entity, amounts to less than $10 will be exempted 
from fee payment in FY 2003. Also, per the terms of the revised cable 
subscriber fee assessment methodology proposed above, cable television 
operators serving in the aggregate less than 250 basic service 
subscribers would be exempted from fee payment in the cable subscriber 
service category.

[[Page 19783]]

2. Standard Fee Calculations and Payment Dates
    27. Consistent with past practice, the specific time for payment of 
standard fees will be announced in the Report and Order terminating 
this proceeding and will be published in the Federal Register. 
Licensees are reminded that, under our current rules, the 
responsibility for payment of fees by service category is as follows:
    (a) Media Services: The responsibility for the payment of 
regulatory fees rests with the holder of the permit or license on 
October 1, 2003. However, in instances where a license or permit is 
transferred or assigned after October 1, 2003, responsibility for 
payment rests with the holder of the license or permit at the time 
payment is due.
    (b) Wireline (Common Carrier) Services: Fees are not based on a 
subscriber, unit, or circuit count. Fees must be paid for any 
authorization issued on or before October 1, 2003.
    (c) Wireless Services: Commercial Mobile Radio Service (CMRS) 
cellular, mobile, and messaging services (fees based upon a subscriber, 
unit or circuit count): The number of subscribers, units or circuits on 
December 31, 2003 will be used as the basis from which to calculate the 
fee payment. For small multi-year wireless services, the regulatory fee 
will be due at the time of authorization or renewal of the license, 
which is generally for a period of five or ten-years and paid 
throughout the year.
    (d) Cable Services (fees based upon a subscriber count): To 
coincide with this year's proposed assessment methodology, the basic 
subscriber counts in NCTA's list of Top 25 MSO or in the Broadcasting 
and Cable Yearbook 2003-2004 will be used as the basis from which to 
calculate the fee payment. For operators not on the NCTA list and not 
appearing in the Yearbook, the number of subscribers, units or circuits 
on December 31, 2003 will be used as the basis from which to calculate 
the fee payment.\21\ CARS licensees: Fees must be paid for any 
authorization issued on or before October 1, 2003.
---------------------------------------------------------------------------

    \21\ Cable system operators and MSOs that are not listed in any 
of the data sources indicated in this item are to compute their 
subscribers as follows: Number of single family dwellings + number 
of individual households in multiple dwelling unit (apartments, 
condominiums, mobile home parks, etc.) paying at the basic 
subscriber rate + bulk rate customers + courtesy and free service. 
Note: Bulk-Rate Customers = Total annual bulk-rate charge divided by 
basic annual subscription rate for individual households. Operators 
may base their count on ``a typical day in the last full week'' of 
December 2003, rather than on a count as of December 31, 2003.
---------------------------------------------------------------------------

    (e) International Services: Earth stations, geostationary orbit 
space stations, international public fixed radio services and 
international broadcast stations: Payment is calculated per operational 
station. Non-geostationary orbit satellite systems: Payment is 
calculated per operational system. The responsibility for the payment 
of regulatory fees rests with the holder of the permit or license on 
October 1, 2003. However, in instances where a license or permit is 
transferred or assigned after October 1, 2003, responsibility for 
payment rests with the holder of the license or permit at the time 
payment is due. International bearer circuits: Payment is calculated 
per active circuit as of December 31, 2003.
    28. We strongly recommend that entities submitting more than 
twenty-five (25) Form 159-Cs use the electronic-fee-filer program when 
submitting their regulatory fee payment. We will accept fee payments 
made in advance of the normal formal window for the payment of 
regulatory fees for the convenience of payers.

F. Enforcement

    29. Finally, as a reminder to all licensees, section 159(c) of the 
Communications Act requires us to impose an additional charge as a 
penalty for late payment of any regulatory fee. As in years past, a 
late payment penalty of 25 percent of the amount of the required 
regulatory fee will be assessed on the first day following the deadline 
date for filing of these fees. Failure to pay regulatory fees and/or 
any late penalty will subject regulatees to sanctions, including the 
provisions set forth in the Debt Collection Improvement Act of 1996 
(``DCIA''). We also assess administrative processing charges on 
delinquent debts to recover additional costs incurred in processing and 
handling the related debt pursuant to the DCIA and section 1.1940(d) of 
the Commission's rules. These administrative processing charges will be 
assessed on any delinquent regulatory fee, in addition to the 25 
percent late charge penalty. Partial underpayments of regulatory fees 
are treated in the following manner. The licensee will be given credit 
for the amount paid, but if it is later determined that the fee paid is 
incorrect or was submitted after the deadline date, the 25 percent late 
charge penalty will be assessed on the portion that is submitted after 
the filing window. Failure to pay regulatory fees can result in the 
initiation of a proceeding to revoke any and all authorizations held by 
the delinquent payer.\22\
---------------------------------------------------------------------------

    \22\ See 47 CFR 1.1164.
---------------------------------------------------------------------------

III. Procedural Matters

A. Comment Period and Procedures

    30. Pursuant to 47 CFR 1.415, 1.419, interested parties may file 
comments on or before April 21, 2004, and reply comments on or before 
April 30, 2004. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies.\23\
---------------------------------------------------------------------------

    \23\ See Electronic Filing of Documents in Rulemaking 
Proceedings, 63 FR 24121, May 1, 1998, available at http://www.fcc.gov/Bureaus/OGC/Orders/1998/fcc98056.pdf.
---------------------------------------------------------------------------

    31. Comments filed through the ECFS are sent as an electronic file 
via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, 
only one copy of an electronic submission must be filed. If multiple 
docket or rulemaking numbers appear in the caption of this proceeding, 
however, commenters must submit one electronic copy of the comments to 
each docket or rulemaking number referenced in the caption. In 
completing the transmittal screen, commenters should include their full 
name, U.S. Postal Service mailing address, and the applicable docket or 
rulemaking number. Parties may also submit an electronic comment by 
Internet e-mail. To receive filing instructions for e-mail comments, 
commenters should send an e-mail to [email protected], and should include 
the following words in the body of the message, ``get form '' A sample form and directions will be sent in 
reply.
    32. Parties who choose to file by paper must file an original and 
four copies of each filing. If more than one docket or rulemaking 
number appear in the caption of this proceeding, commenters must submit 
two additional copies for each additional docket or rulemaking number. 
Filings can be hand delivered or by messenger delivery, sent by 
commercial overnight courier, or mailed by first-class mail through the 
U.S. Postal Service (please note that the Commission continues to 
experience delays in receiving U.S. Postal Service mail). The 
Commission's contractor, Natek, Inc., will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building. Commercial

[[Page 19784]]

overnight mail (other than U.S. Postal Service Express Mail and 
Priority Mail) must be sent to 9300 East Hampton Drive, Capitol 
Heights, MD 20743. U.S. Postal Service first-class mail, Express Mail, 
and Priority Mail should be addressed to 445 12th Street, SW., 
Washington, DC 20554. All filings must be addressed to the Commission's 
Secretary, Marlene H. Dortch, Office of the Secretary, Federal 
Communications Commission.
    33. Parties who choose to file by paper must also submit their 
comments on diskette. Two copies of the diskettes must be submitted. 
One copy is to be sent to Qualex International, 445 12th Street, SW., 
Room CY-B402, Washington, DC 20554. The other copy is to be sent to 
Office of Managing Director, Federal Communications Commission, 445 
12th Street, SW., 1-C848, Washington, DC 20554. These submissions must 
be in a Microsoft WindowsTM-compatible format on a 3.5'' 
floppy diskette. The diskette should be clearly labeled with the 
commenter's name, proceeding (including the lead docket number MD 
Docket No. 04-73), type of pleading (comment or reply comment), date of 
submission, and the name of the electronic file on the diskette. The 
label should also include the following phrase ``Copy--Not an 
Original.'' Each diskette should contain only one party's pleadings, 
preferably in a single electronic file.
    34. The public may view the documents filed in this proceeding 
during regular business hours in the FCC Reference Center, Federal 
Communications Commission, Room CY-A257, 445 12th Street, SW., 
Washington, DC 20554, and through the Commission's Electronic Comment 
Filing System (ECFS) http://www.gullfoss2.fcc.gov/prod/ecfs/comsrch_v2.cgi. Those seeking materials in alternative formats (computer 
diskette, large print, audio recording, and Braille) should contact 
Brian Millin at (202) 418-7426 voice, (202) 418-7365 TTY, or 
[email protected].

B. Ex Parte Rules

    35. This is a permit-but-disclose notice and comment rulemaking 
proceeding. Ex Parte presentations are permitted, except during the 
Sunshine Agenda period, provided they are disclosed pursuant to the 
Commission's rules.\24\
---------------------------------------------------------------------------

    \24\ 47 CFR 1.1203 and 1.1206(b).
---------------------------------------------------------------------------

C. Initial Regulatory Flexibility Analysis

    36. As required by the Regulatory Flexibility Act,\25\ we have 
prepared an Initial Regulatory Flexibility Analysis (IRFA) of the 
possible impact on small entities of the proposals suggested in this 
document. The IRFA is set forth as Attachment A. Written public 
comments are requested with respect to the IRFA. These comments must be 
filed in accordance with the same filing deadlines for comments on the 
rest of the NPRM, and must have a separate and distinct heading, 
designating the comments as responses to the IRFA. The Consumer 
Information Bureau, Reference Information Center, shall send a copy of 
this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration, in accordance with the Regulatory 
Flexibility Act.
---------------------------------------------------------------------------

    \25\ See 5 U.S.C. 603.
---------------------------------------------------------------------------

D. Authority and Further Information

    37. Authority for this proceeding is contained in section 4(i) and 
(j), 8, 9, and 303(r) of the Communications Act of 1934, as amended. It 
is ordered that this NPRM is adopted.\26\ It is further ordered that 
the Commission's Consumer Information Bureau, Reference Information 
Center, shall send a copy of this NPRM, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration. Further information about this 
proceeding may be obtained by contacting the FCC Consumer Center at 
(888) 225-5322.
---------------------------------------------------------------------------

    \26\ 47 U.S.C. 154(i)-(j), 159, and 303(r).

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Attachment A--Initial Regulatory Flexibility Analysis

    1. As required by the Regulatory Flexibility Act (RFA),\27\ the 
Commission prepared an Initial Regulatory Flexibility Analysis (IRFA) 
of the possible significant economic impact on small entities by the 
policies and rules in the present Notice of Proposed Rulemaking, In the 
Matter of Assessment and Collection of Regulatory Fees for Fiscal Year 
2004. Written public comments are requested on this IRFA. Comments must 
be identified as responses to the IRFA and must be filed by the 
deadlines for comments on the IRFA provided in paragraph 30. The 
Commission will send a copy of the NPRM, including the IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration.\28\ In 
addition, the NPRM and IRFA (or summaries thereof) will be published in 
the Federal Register.\29\
---------------------------------------------------------------------------

    \27\ 5 U.S.C. 603. The RFA, 5 U.S.C. 601-612 has been amended by 
the Contract With America Advancement Act of 1996, Pub. L. 104-121, 
110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
    \28\ 5 U.S.C. 603(a).
    \29\ Id.
---------------------------------------------------------------------------

I. Need for, and Objectives of, the Proposed Rules

    2. This rulemaking proceeding is initiated to obtain comments 
concerning the Commission's proposed amendment of its Schedule of 
Regulatory Fees in the amount of $272,958,000, the amount that Congress 
has required the Commission to recover. The Commission seeks to collect 
the necessary amount through its proposed Schedule of Regulatory Fees 
in the most efficient manner possible and without undue public burden.

II. Legal Basis

    3. This action, including publication of proposed rules, is 
authorized under sections (4)(i) and (j), 9, and 303(r) of the 
Communications Act of 1934, as amended.\30\
---------------------------------------------------------------------------

    \30\ 47 U.S.C 154(i) and (j), 159, and 303(r).
---------------------------------------------------------------------------

III. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    4. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted.\31\ The RFA defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.''\32\ In addition, the term ``small business'' has the 
same meaning as the term ``small business concern'' under the Small 
Business Act.\33\ 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).\34\ Nationwide, there are 
approximately 22.4 million small organizations.\35\ In addition, a 
small organization is generally ``any not-for-profit enterprise which 
is independently owned and operated and

[[Page 19785]]

is not dominant in its field.''\36\ Nationwide, as of 1992, there were 
approximately 275,801 small organizations.\37\ The term ``small 
governmental jurisdiction'' is defined as ``governments of cities, 
towns, townships, villages, school districts, or special districts, 
with a population of less than fifty thousand.''\38\ As of 1997, there 
were about 87,453 governmental jurisdictions in the United States.\39\ 
This number includes 39,044 county governments, municipalities, and 
townships, of which 37,546 (approximately 96.2%) have populations of 
fewer than 50,000, and of which 1,498 have populations of 50,000 or 
more. Thus, we estimate the number of small governmental jurisdictions 
overall to be 84,098 or fewer.
---------------------------------------------------------------------------

    \31\ 5 U.S.C. 603(b)(3).
    \32\ U.S.C. 601(6).
    \33\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small business concern'' in 15 U.S.C. 632). Pursuant to the 
RFA, the statutory definition of a small business applies ``unless 
an agency, after consultation with the Office of Advocacy of the 
Small Business Administration and after opportunity for public 
comment, establishes one or more definitions of such term which are 
appropriate to the activities of the agency and publishes such 
definition(s) in the Federal Register.'' 5 U.S.C. 601(3).
    \34\ Small Business Act, 15 U.S.C. 632 (1996).
    \35\ See SBA, Programs and Services, SBA Pamphlet No. CO-0028, 
at page 40 (July 2002).
    \36\ 5 U.S.C. 601(4).
    \37\ U.S. Bureau of the Census, 1992 Economic Census, Table 6 
(special tabulation of data under contract to Office of Advocacy of 
the U.S. Small Business Administration).
    \38\ 5 U.S.C. 601(5).
    \39\ U.S. Census Bureau, Statistical Abstract of the United 
States: 2000, section 9, pages 299-300, Tables 490 and 492.
---------------------------------------------------------------------------

Cable Services or Systems

    5. Cable and Other Program Distribution. The SBA has developed a 
small business size standard for cable and other program distribution 
services, which includes all such companies generating $12.5 million or 
less in revenue annually.\40\ This category includes, among others, 
cable operators, direct broadcast satellite (``DBS'') services, home 
satellite dish (``HSD'') services, multipoint distribution services 
(``MDS''), multichannel multipoint distribution service (``MMDS''), 
Instructional Television Fixed Service (``ITFS''), local multipoint 
distribution service (``LMDS''), satellite master antenna television 
(``SMATV'') systems, and open video systems (``OVS''). According to the 
Census Bureau data, there are 1,311 total cable and other pay 
television service firms that operate throughout the year of which 
1,180 have less than $10 million in revenue.\41\ We address below each 
service individually to provide a more precise estimate of small 
entities.
---------------------------------------------------------------------------

    \40\ 13 CFR 121.201, NAICS code 517510 (formerly 513220). This 
NAICS code applies to all services listed in this paragraph.
    \41\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, 1997 Economic Census, Subject Series--
Establishment and Firm Size, Information Sector 51, Table 4 at 50 
(2000). The amount of $10 million was used to estimate the number of 
small business firms because the relevant Census categories stopped 
at $9,999,999 and began at $10,000,000. No category for $12.5 
million existed. Thus, the number is as accurate as it is possible 
to calculate with the available information.
---------------------------------------------------------------------------

    6. Cable Operators. The Commission has developed, with SBA's 
approval, our own definition of a small cable system operator for the 
purposes of rate regulation. Under the Commission's rules, a ``small 
cable company'' is one serving fewer than 400,000 subscribers 
nationwide.\42\ We last estimated that there were 1,439 cable operators 
that qualified as small cable companies.\43\ 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. Consequently, we estimate that there are 
fewer than 1,439 small entity cable system operators that may be 
affected by our action.
---------------------------------------------------------------------------

    \42\ 47 CFR 76.901(e). The Commission developed this definition 
based on its determinations that a small cable system operator is 
one with annual revenues of $100 million or less. Sixth Report and 
Order and Eleventh Order on Reconsideration, 10 FCC Rcd. 7393 
(1995).
    \43\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 
1996 (based on figures for Dec. 30, 1995).
---------------------------------------------------------------------------

    7. 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% 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.''\44\ The Commission has determined that 
there are 65,000,000 subscribers in the United States. Therefore, an 
operator serving fewer than 650,000 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.\45\ Based on available data, we find that the number of 
cable operators serving 650,000 subscribers or less totals 
approximately 1,450.\46\ 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.
---------------------------------------------------------------------------

    \44\ 47 U.S.C. 543(m)(2).
    \45\ 47 CFR 76.1403(b).
    \46\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 
1996 (based on figures for Dec. 30, 1995).
---------------------------------------------------------------------------

    8. Direct Broadcast Satellite (``DBS'') Service. Because DBS 
provides subscription services, DBS falls within the SBA-recognized 
definition of cable and other program distribution services.\47\ This 
definition provides that a small entity is one with $12.5 million or 
less in annual receipts.\48\ There are four licensees of DBS services 
under part 100 of the Commission's rules. Three of those licensees are 
currently operational. Two of the licensees that are operational have 
annual revenues that may be in excess of the threshold for a small 
business.\49\ The Commission, however, does not collect annual revenue 
data for DBS and, therefore, is unable to ascertain the number of small 
DBS licensees that could be impacted by these proposed rules. DBS 
service requires a great investment of capital for operation, and we 
acknowledge, despite the absence of specific data on this point, that 
there are entrants in this field that may not yet have generated $12.5 
million in annual receipts, and therefore may be categorized as a small 
business, if independently owned and operated.
---------------------------------------------------------------------------

    \47\ 13 CFR 121.201, NAICS code 517510 (formerly 513220).
    \48\ Id.
    \49\ Id.
---------------------------------------------------------------------------

    9. Home Satellite Dish (``HSD'') Service. Because HSD provides 
subscription services, HSD falls within the SBA-recognized definition 
of cable and other program distribution services.\50\ This definition 
provides that a small entity is one with $12.5 million or less in 
annual receipts.\51\ The market for HSD service is difficult to 
quantify.\52\ Indeed, the service itself bears little resemblance to 
other MVPDs. HSD owners have access to more than 265 channels of 
programming placed on C-band satellites by programmers for receipt and 
distribution by MVPDs, of which 115 channels are scrambled and 
approximately 150 are unscrambled.\53\ HSD owners can watch unscrambled 
channels without paying a subscription fee. To receive scrambled 
channels, however, an HSD owner must purchase an integrated receiver-
decoder from an equipment dealer and pay a subscription fee to an HSD 
programming package. Thus, HSD users include: (1) Viewers who subscribe 
to a packaged programming service, which affords them access to most of 
the same programming provided to subscribers of other MVPDs; (2) 
viewers who receive only non-subscription programming; and (3) viewers 
who receive satellite programming services illegally without 
subscribing. Because scrambled packages of programming are most 
specifically intended for retail

[[Page 19786]]

consumers, these are the services most relevant to this discussion.\54\
---------------------------------------------------------------------------

    \50\ 13 CFR 121.201, NAICS code 517510 (formerly 513220).
    \51\ Id.
    \52\ See, however, the census data for Cable and Other Program 
Distribution, supra.
    \53\ Annual Assessment of the Status of Competition in Markets 
for the Delivery of Video Programming, 12 FCC Rcd 4358, 4385 (1996) 
(``Third Annual Report'').
    \54\ Id. at 4385.
---------------------------------------------------------------------------

    10. Satellite Master Antenna Television (``SMATV'') Systems. The 
SBA definition of small entities for cable and other program 
distribution services includes SMATV services and, thus, small entities 
are defined as all such companies generating $12.5 million or less in 
annual receipts.\55\ Industry sources estimate that approximately 5,200 
SMATV operators were providing service as of December 1995.\56\56 Other 
estimates indicate that SMATV operators serve approximately 1.5 million 
residential subscribers as of July 2001.\57\ The best available 
estimates indicate that the largest SMATV operators serve between 
15,000 and 55,000 subscribers each. Most SMATV operators serve 
approximately 3,000-4,000 customers. Because these operators are not 
rate regulated, they are not required to file financial data with the 
Commission. Furthermore, we are not aware of any privately published 
financial information regarding these operators. Based on the estimated 
number of operators and the estimated number of units served by the 
largest ten SMATVs, we believe that a substantial number of SMATV 
operators qualify as small entities.
---------------------------------------------------------------------------

    \55\ 13 CFR 121.201, NAICS code 517510 (formerly 513220).
    \56\ See Third Annual Report, 12 FCC Rcd at 4403-4.
    \57\ See Annual Assessment of the Status of Competition in 
Markets for the Delivery of Video Programming, 17 FCC Rcd 1244, 1281 
(2001) (``Eighth Annual Report'').
---------------------------------------------------------------------------

    11. Open Video Systems (``OVS''). Because OVS operators provide 
subscription services,\58\ OVS falls within the SBA-recognized 
definition of cable and other program distribution services.\59\ This 
definition provides that a small entity is one with $12.5 million or 
less in annual receipts.\60\ The Commission has certified 25 OVS 
operators with some now providing service. Affiliates of Residential 
Communications Network, Inc. (``RCN'') received approval to operate OVS 
systems in New York City, Boston, Washington, DC and other areas. RCN 
has sufficient revenues to assure us that they do not qualify as small 
business entities. Little financial information is available for the 
other entities authorized to provide OVS that are not yet operational. 
Given that other entities have been authorized to provide OVS service 
but have not yet begun to generate revenues, we conclude that at least 
some of the OVS operators qualify as small entities.
---------------------------------------------------------------------------

    \58\ 58 See 47 U.S.C. 573.
    \59\ 59 13 CFR 121.201, NAICS code 517510 (formerly 513220).
    \60\ Id.
---------------------------------------------------------------------------

    12. Electronics Equipment Manufacturers. Rules adopted in this 
proceeding could apply to manufacturers of DTV receiving equipment and 
other types of consumer electronics equipment. The SBA has developed 
definitions of small entity for manufacturers of audio and video 
equipment \61\ as well as radio and television broadcasting and 
wireless communications equipment.\62\ These categories both include 
all such companies employing 750 or fewer employees. The Commission has 
not developed a definition of small entities applicable to 
manufacturers of electronic equipment used by consumers, as compared to 
industrial use by television licensees and related businesses. 
Therefore, we will utilize the SBA definitions applicable to 
manufacturers of audio and visual equipment and radio and television 
broadcasting and wireless communications equipment, since these are the 
two closest NAICS Codes applicable to the consumer electronics 
equipment manufacturing industry. However, these NAICS categories are 
broad and specific figures are not available as to how many of these 
establishments manufacture consumer equipment. According to the SBA's 
regulations, an audio and visual equipment manufacturer must have 750 
or fewer employees in order to qualify as a small business concern.\63\ 
Census Bureau data indicates that there are 554 U.S. establishments 
that manufacture audio and visual equipment, and that 542 of these 
establishments have fewer than 500 employees and would be classified as 
small entities.\64\ The remaining 12 establishments have 500 or more 
employees; however, we are unable to determine how many of those have 
fewer than 750 employees and therefore, also qualify as small entities 
under the SBA definition. Under the SBA's regulations, a radio and 
television broadcasting and wireless communications equipment 
manufacturer must also have 750 or fewer employees in order to qualify 
as a small business concern.\65\ Census Bureau data indicates that 
there 1,215 U.S. establishments that manufacture radio and television 
broadcasting and wireless communications equipment, and that 1,150 of 
these establishments have fewer than 500 employees and would be 
classified as small entities.\66\ The remaining 65 establishments have 
500 or more employees; however, we are unable to determine how many of 
those have fewer than 750 employees and therefore, also qualify as 
small entities under the SBA definition. We therefore conclude that 
there are no more than 542 small manufacturers of audio and visual 
electronics equipment and no more than 1,150 small manufacturers of 
radio and television broadcasting and wireless communications equipment 
for consumer/household use.
---------------------------------------------------------------------------

    \61\ 13 CFR 121.201, NAICS code 334310.
    \62\ 13 CFR 121.201, NAICS code 334220.
    \63\ 13 CFR 121.201, NAICS code 334310.
    \64\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, 1997 Economic Census, Industry Series--
Manufacturing, Audio and Video Equipment Manufacturing, Table 4 at 9 
(1999). The amount of 500 employees was used to estimate the number 
of small business firms because the relevant Census categories 
stopped at 499 employees and began at 500 employees. No category for 
750 employees existed. Thus, the number is as accurate as it is 
possible to calculate with the available information.
    \65\ 13 CFR 121.201, NAICS code 334220.
    \66\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, 1997 Economic Census, Industry Series--
Manufacturing, Radio and Television Broadcasting and Wireless 
Communications Equipment Manufacturing, Table 4 at 9 (1999). The 
amount of 500 employees was used to estimate the number of small 
business firms because the relevant Census categories stopped at 499 
employees and began at 500 employees. No category for 750 employees 
existed. Thus, the number is as accurate as it is possible to 
calculate with the available information.
---------------------------------------------------------------------------

Wireline Competition Services and Related Entities

    13. In this section, we further describe and estimate the number of 
small entity licensees and regulatees that may be affected by rules 
adopted herein. The most reliable source of information regarding the 
total number of certain common carriers and related providers 
nationwide, as well as the number of commercial wireless entities, 
appears to be the data that the Commission publishes in its Trends in 
Telephone Service report.\67\ The SBA has developed small business size 
standards for wireline and wireless small businesses with three 
commercial census categories of Wired Telecommunications Carriers,\68\ 
Paging,\69\ and Cellular and Other Wireless Telecommunications.\70\ 
Under these categories, a business is small if it has 1,500 or fewer 
employees. Below, using the above size standards and others, we discuss 
the total estimate

[[Page 19787]]

numbers of small businesses that might be affected by our actions.
---------------------------------------------------------------------------

    \67\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, Trends in Telephone Service, Table 5.3 (August 
2003) (hereinafter Telephone Trends Report).
    \68\ 13 CFR 121.201, North American Industry Classification 
System (NAICS) code 513310 (changed to 517110 in October of 2002).
    \69\ 13 CFR 121.201, NAICS code 513321 (changed to 517211 in 
October of 2002).
    \70\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
---------------------------------------------------------------------------

    14. We have included small incumbent local exchange carriers (LECs) 
in this present RFA analysis. As noted above, a ``small business'' 
under the RFA is one that, inter alia, meets the pertinent small 
business size standard (e.g., a telephone communications business 
having 1,500 or fewer employees), and ``is not dominant in its field of 
operation.'' \71\ The SBA's Office of Advocacy contends that, for RFA 
purposes, small incumbent LECs are not dominant in their field of 
operation because any such dominance is not ``national'' in scope.\72\ 
We have therefore included small incumbent LECs in this present RFA 
analysis, although we emphasize that this RFA action has no effect on 
the Commission's analyses and determinations in other, non-RFA 
contexts.
---------------------------------------------------------------------------

    \71\ 5 U.S.C. 601(3).
    \72\ See Letter from Jere W. Glover, Chief Counsel for Advocacy, 
SBA, to Chairman William E. Kennard, FCC (May 27, 1999). The Small 
Business Act contains a definition of ``small business concern,'' 
which the RFA incorporates into its own definition of ``small 
business.'' See 5 U.S.C. 632(a) (Small Business Act); 5 U.S.C. 
601(3) (RFA). SBA regulations interpret ``small business concern'' 
to include the concept of dominance on a national basis. 13 CFR 
121.102(b).
---------------------------------------------------------------------------

    15. Wired Telecommunications Carriers. The SBA has developed a 
small business size standard for Wired Telecommunications Carriers, 
which consists of all such companies having 1,500 or fewer 
employees.\73\ According to Census Bureau data for 1997, there were 
2,225 firms in this category, total, that operated for the entire 
year.\74\ Of this total, 2,201 firms had employment of 999 or fewer 
employees, and an additional 24 firms had employment of 1,000 employees 
or more.\75\ Thus, under this size standard, the majority of firms can 
be considered small.
---------------------------------------------------------------------------

    \73\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October 2002).
    \74\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 5, NAICS code 513310 (issued October 2000).
    \75\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1,000 
employees or more.''
---------------------------------------------------------------------------

    16. Incumbent Local Exchange Carriers (ILECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to incumbent local exchange 
services. The closest applicable size standard under the SBA rules is 
for Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees.\76\ According to 
Commission data, 1,337 carriers reported that they were engaged in the 
provision of local exchange services.\77\ Of these 1,337 carriers, an 
estimated 1,032 have 1,500 or fewer employees and 305 have more than 
1,500 employees.\78\ Consequently, the Commission estimates that most 
providers of local exchange service are small businesses that may be 
affected by the rules and policies adopted herein.
---------------------------------------------------------------------------

    \76\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October of 2002).
    \77\ Telephone Trends Report at Table 5.3.
    \78\ Id.
---------------------------------------------------------------------------

    17. Competitive Local Exchange Carriers (CLECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to providers of competitive local 
exchange services or to competitive access providers or to ``Other 
Local Exchange Carriers,'' all of which are discrete categories under 
which Telecommunications Relay Service (TRS) data are collected. The 
closest applicable size standard under SBA rules is for Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees.\79\ According to 
Commission data,\80\ 609 companies reported that they were engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 609 companies, an 
estimated 458 have 1,500 or fewer employees and 151 have more than 
1,500 employees.\81\ In addition, 51 carriers reported that they were 
``Other Local Exchange Carriers.'' Of the 51 ``Other Local Exchange 
Carriers,'' an estimated 50 have 1,500 or fewer employees and one has 
more than 1.500 employees.\82\ Consequently, the Commission estimates 
that most providers of competitive local exchange service, competitive 
access providers, and ``Other Local Exchange Carriers'' are small 
entities that may be affected by the rules and policies adopted herein.
---------------------------------------------------------------------------

    \79\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October of 2002).
    \80\ Telephone Trends Report at Table 5.3.
    \81\ Id.
    \82\ Id.
---------------------------------------------------------------------------

    18. Local Resellers. The SBA has developed a size standard for 
small businesses within the category of Telecommunications Resellers. 
Under that SBA size standard, such a business is small if it has 1,500 
or fewer employees.\83\ According to Commission data, 133 companies 
reported that they were engaged in the provision of local resale 
services.\84\ Of these 133 companies, an estimated 127 have 1,500 or 
fewer employees and six, alone or in combination with affiliates, have 
more than 1,500 employees.\85\ Consequently, the Commission estimates 
that there are 127 or fewer local resellers that are small entities 
that may be affected by the rules and policies proposed herein.
---------------------------------------------------------------------------

    \83\ 13 CFR 121.201, NAICS code 513330 (changed to 517310 in 
October of 2002).
    \84\ Telephone Trends Report at Table 5.3.
    \85\ Id.
---------------------------------------------------------------------------

    19. Toll Resellers. The SBA has developed a size standard for small 
businesses within the category of Telecommunications Resellers. Under 
that SBA size standard, such a business is small if it has 1,500 or 
fewer employees.\86\ According to Commission data, 625 companies 
reported that they were engaged in the provision of toll resale 
services.\87\ Of these 625 companies, an estimated 590 have 1,500 or 
fewer employees and 35, alone or in combination with affiliates, have 
more than 1,500 employees.\88\ Consequently, the Commission estimates 
that there are 590 or fewer toll resellers that are small entities that 
may be affected by the rules and policies proposed herein.
---------------------------------------------------------------------------

    \86\ 13 CFR 121.201, NAICS code 513330 (changed to 517310 in 
October of 2002).
    \87\ Telephone Trends Report at Table 5.3.
    \88\ Id.
---------------------------------------------------------------------------

    20. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to interexchange services. The closest applicable size 
standard under the SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees.\89\ According to Commission data, 261 companies 
reported that their primary telecommunications service activity was the 
provision of interexchange services.\90\ Of these 261 companies, an 
estimated 223 have 1,500 or fewer employees and 38 have more than 1,500 
employees.\91\ Consequently, the Commission estimates that the majority 
of interexchange carriers are small entities that may be affected by 
the rules and policies adopted herein.
---------------------------------------------------------------------------

    \89\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October of 2002).
    \90\ Telephone Trends Report at Table 5.3.
    \91\ Id.
---------------------------------------------------------------------------

    21. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a size standard for small businesses specifically 
applicable to payphone service providers. The closest applicable size 
standard under the SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer

[[Page 19788]]

employees.\92\ According to Commission data, 761 companies reported 
that they were engaged in the provision of payphone services.\93\ Of 
these 761 payphone service providers, an estimated 757 have 1,500 or 
fewer employees and four have more than 1,500 employees.\94\ 
Consequently, the Commission estimates that the majority of payphone 
service providers are small entities that may be affected by the rules 
and policies adopted herein.
---------------------------------------------------------------------------

    \92\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October of 2002).
    \93\ Telephone Trends Report at Table 5.3.
    \94\ Id.
---------------------------------------------------------------------------

    22. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a size standard for small businesses specifically 
applicable to operator service providers. The closest applicable size 
standard under the SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees.\95\ According to Commission data, 23 companies 
reported that they were engaged in the provision of operator 
services.\96\ Of these 23 companies, an estimated 22 have 1,500 or 
fewer employees and one has more than 1,500 employees.\97\ 
Consequently, the Commission estimates that the majority of operator 
service providers are small entities that may be affected by the rules 
and policies adopted herein.
---------------------------------------------------------------------------

    \95\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October of 2002).
    \96\ Telephone Trends Report at Table 5.3.
    \97\ Id.
---------------------------------------------------------------------------

    23. Prepaid Calling Card Providers. The SBA has developed a size 
standard for a small business within the category of Telecommunications 
Resellers. Under that SBA size standard, such a business is small if it 
has 1,500 or fewer employees.\98\ According to Commission data, 37 
companies reported that they were engaged in the provision of prepaid 
calling cards.\99\ Of these 37 companies, an estimated 36 have 1,500 or 
fewer employees and one had more than 1,500 employees.\100\ 
Consequently, the Commission estimates that the majority of prepaid 
calling card providers are small entities that may be affected by the 
rules and policies adopted herein.
---------------------------------------------------------------------------

    \98\ 13 CFR 121.201, NAICS code 513330 (changed to 517310 in 
October of 2002).
    \99\ Telephone Trends Report at Table 5.3.
    \100\ Id.
---------------------------------------------------------------------------

    24. Satellite Service Carriers. The SBA has developed a size 
standard for small businesses within the category of Satellite 
Telecommunications. Under that SBA size standard, such a business is 
small if it has 1,500 or fewer employees.\101\ According to Commission 
data, 34 carriers reported that they were engaged in the provision of 
satellite services.\102\ Of these 34 carriers, an estimated 29 have 
1,500 or fewer employees and five, alone or in combination with 
affiliates, have more than 1,500 employees.\103\ Consequently, the 
Commission estimates that there are 34 or fewer satellite service 
carriers which are small businesses that may be affected by the rules 
and policies proposed herein.
---------------------------------------------------------------------------

    \101\ CFR 121.201, NAICS code 513340 (changed to 517410 in 
October of 2002).
    \102\ Telephone Trends Report at Table 5.3.
    \103\ Id.
---------------------------------------------------------------------------

    25. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to ``Other Toll Carriers.'' This category includes toll carriers that 
do not fall within the categories of interexchange carriers, operator 
service providers, prepaid calling card providers, satellite service 
carriers, or toll resellers. The closest applicable size standard under 
the SBA rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer 
employees.\104\ According to Commission data, 92 companies reported 
that their primary telecommunications service activity was the 
provision of ``Other Toll Services.''\105\ Of these 92 companies, an 
estimated 82 have 1,500 or fewer employees and two have more than 1,500 
employees.\106\ Consequently, the Commission estimates that most 
``Other Toll Carriers'' are small entities that may be affected by the 
rules and policies adopted herein.
---------------------------------------------------------------------------

    \104\ 13 CFR 121.201, NAICS code 513310 (changed to 517110 in 
October of 2002).
    \105\ Telephone Trends Report at Table 5.3.
    \106\ Id.
---------------------------------------------------------------------------

International Services

    26. The Commission has not developed a definition of small entities 
applicable to licensees in the international services. Therefore, the 
applicable definition of small entity is generally the definition under 
the SBA rules applicable to Communications Services, Not Elsewhere 
Classified (NEC).\107\ This definition provides that a small entity is 
expressed as one with $11.0 million or less in annual receipts.\108\ 
According to the Census Bureau, there were a total of 848 
communications services providers, NEC, in operation in 1992, and a 
total of 775 had annual receipts of less than $10.0 million.\109\ The 
Census report does not provide more precise data.
---------------------------------------------------------------------------

    \107\ An exception is the Direct Broadcast Satellite (DBS) 
Service, infra.
    \108\ 13 CFR 121.201, NAICS codes 48531, 513322, 51334, and 
51339.
    \109\ 1992 Economic Census Industry and Enterprise Receipts Size 
Report, Table 2D, NAICS codes 48531, 513322, 51334, and 513391 (U.S. 
Bureau of the Census data under contract to the Office of Advocacy 
of the U.S. Small Business Administration).
---------------------------------------------------------------------------

    27. International Broadcast Stations. Commission records show that 
there are approximately 19 international high frequency broadcast 
station authorizations. We do not request nor collect annual revenue 
information, and are unable to estimate the number of international 
high frequency broadcast stations that would constitute a small 
business under the SBA definition. However, the Commission estimates 
that only six international high frequency broadcast stations are 
subject to regulatory fee payments.
    28. International Public Fixed Radio (Public and Control Stations). 
There is one licensee in this service subject to payment of regulatory 
fees, and the licensee does not constitute a small business under the 
SBA definition.
    29. Fixed Satellite Transmit/Receive Earth Stations. There are 
approximately 3,400 earth station authorizations, a portion of which 
are Fixed Satellite Transmit/Receive Earth Stations. We do not request 
nor collect annual revenue information, and are unable to estimate the 
number of the earth stations that would constitute a small business 
under the SBA definition.
    30. Fixed Satellite Small Transmit/Receive Earth Stations. There 
are approximately 3,400 earth station authorizations, a portion of 
which are Fixed Satellite Small Transmit/Receive Earth Stations. We do 
not request nor collect annual revenue information, and are unable to 
estimate the number of fixed small satellite transmit/receive earth 
stations that would constitute a small business under the SBA 
definition.
    31. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems. 
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. There are 485 current VSAT 
System authorizations. We do not request nor collect annual revenue 
information, and are unable to estimate the number of VSAT systems that 
would constitute a small business under the SBA definition.
    32. Mobile Satellite Earth Stations. There are 21 licensees. We do 
not

[[Page 19789]]

request nor collect annual revenue information, and are unable to 
estimate the number of mobile satellite earth stations that would 
constitute a small business under the SBA definition.
    33. Radio Determination Satellite Earth Stations. 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 stations that would constitute a small business under the SBA 
definition.
    34. Space Stations (Geostationary). There are presently an 
estimated 77 Geostationary Space Station authorizations. We do not 
request nor collect annual revenue information, and are unable to 
estimate the number of geostationary space stations that would 
constitute a small business under the SBA definition.
    35. Space Stations (Non-Geostationary). There are presently five 
Non-Geostationary Space Station authorizations. We do not request nor 
collect annual revenue information, and are unable to estimate the 
number of non-geostationary space stations that would constitute a 
small business under the SBA definition.
    36. Direct Broadcast Satellites. Because DBS provides subscription 
services, DBS falls within the SBA-recognized definition of ``Cable and 
Other Pay Television Services.'' \110\ This definition provides that a 
small entity is one with $11.0 million or less in annual receipts.\111\ 
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 under the SBA definition.
---------------------------------------------------------------------------

    \110\ 13 CFR 121.201, NAICS codes 51321 and 51322.
    \111\ Id.
---------------------------------------------------------------------------

Media Services

    37. Television Broadcasting. The Small Business Administration 
defines a television broadcasting station that has no more than $12 
million in annual receipts as a small business.\112\ Business concerns 
included in this industry are those ``primarily engaged in broadcasting 
images together with sound.'' \113\ According to Commission staff 
review of the BIA Publications, Inc. Master Access Television Analyzer 
Database as of May 16, 2003, about 814 of the 1,220 commercial 
television stations in the United States have revenues of $12 million 
or less. We note, however, that, in assessing whether a business 
concern qualifies as small under the above definition, business 
(control) affiliations \114\ must be included. Our estimate, therefore, 
likely overstates the number of small entities that might be affected 
by our action, because the revenue figure on which it is based does not 
include or aggregate revenues from affiliated companies. There are also 
2,127 low power television stations (LPTV).\115\ Given the nature of 
this service, we will presume that all LPTV licensees qualify as small 
entities under the SBA definition.
---------------------------------------------------------------------------

    \112\ See OMB, North American Industry Classification System: 
United States, 1997 at 509 (1997) (NAICS code 513120, which was 
changed to code 515120 in October 2002).
    \113\ OMB, North American Industry Classification System: United 
States, 1997, at 509 (1997) (NAICS code 513120, which was changed to 
code 51520 in October 2002). This category description continues, 
``These establishments operate television broadcasting studios and 
facilities for the programming and transmission of programs to the 
public. These establishments also produce or transmit visual 
programming to affiliated broadcast television stations, which in 
turn broadcast the programs to the public on a predetermined 
schedule. Programming may originate in their own studios, from an 
affiliated network, or from external sources.'' Separate census 
categories pertain to businesses primarily engaged in producing 
programming. See id. at 502-05, NAICS code 51210. Motion Picture and 
Video Production: code 512120, Motion Picture and Video 
Distribution, code 512191, Teleproduction and Other Post-Production 
Services, and code 512199, Other Motion Picture and Video 
Industries.
    \114\ ``Concerns are affiliates of each other when one concern 
controls or has the power to control the other or a third party or 
parties controls or has the power to control both.'' 13 CFR 
121.103(a)(1).
    \115\ FCC News Release, ``Broadcast Station Totals as of 
September 30, 2002.''
---------------------------------------------------------------------------

    38. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. We are 
unable at this time to define or quantify the criteria that would 
establish whether a specific television station is dominant in its 
field of operation. Accordingly, the estimate of small businesses to 
which rules may apply do not exclude any television station from the 
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also as noted, an additional element of the 
definition of ``small business'' is that the entity must be 
independently owned and operated. We note that it is difficult at times 
to assess these criteria in the context of media entities and our 
estimates of small businesses to which they apply may be over-inclusive 
to this extent.
    39. Radio Broadcasting. The SBA defines a radio broadcast entity 
that has $6 million or less in annual receipts as a small 
business.\116\ Business concerns included in this industry are those 
``primarily engaged in broadcasting aural programs by radio to the 
public.\117\ According to Commission staff review of the BIA 
Publications, Inc., Master Access Radio Analyzer Database, as of May 
16, 2003, about 10,427 of the 10,945 commercial radio stations in the 
United States have revenue of $6 million or less. We note, however, 
that many radio stations are affiliated with much larger corporations 
with much higher revenue, and that in assessing whether a business 
concern qualifies as small under the above definition, such business 
(control) affiliations \118\ are included.\119\ Our estimate, therefore 
likely overstates the number of small businesses that might be affected 
by our action.
---------------------------------------------------------------------------

    \116\ See OMB, North American Industry Classification System: 
United States, 1997, at 509 (1997) (Radio Stations) (NAICS code 
513111, which was changed to code 515112 in October 2002).
    \117\ Id.
    \118\ ``Concerns are affiliates of each other when one concern 
controls or has the power to control the other, or a third party or 
parties controls or has the power to control both.'' 13 CFR 
121.103(a)(1).
    \119\ ``SBA counts the receipts or employees of the concern 
whose size is at issue and those of all its domestic and foreign 
affiliates, regardless of whether the affiliates are organized for 
profit, in determining the concern's size.'' 13 CFR 121(a)(4).
---------------------------------------------------------------------------

    40. Auxiliary, Special Broadcast and Other Program Distribution 
Services. This service involves a variety of transmitters, generally 
used to relay broadcast programming to the public (through translator 
and booster stations) or within the program distribution chain (from a 
remote news gathering unit back to the station). The Commission has not 
developed a definition of small entities applicable to broadcast 
auxiliary licensees. The applicable definitions of small entities are 
those, noted previously, under the SBA rules applicable to radio 
broadcasting stations and television broadcasting stations.\120\
---------------------------------------------------------------------------

    \120\ 13 CFR 121.201, NAICS codes 513111 and 513112.
---------------------------------------------------------------------------

    41. The Commission estimates that there are approximately 3,790 
translators and boosters. The Commission does not collect financial 
information on any broadcast facility, and the Department of Commerce 
does not collect financial information on these auxiliary broadcast 
facilities. We believe that most, if not all, of these auxiliary 
facilities could be classified as small businesses by themselves. We 
also recognize that most commercial translators and boosters are owned 
by a parent station which, in some cases, would be covered by the 
revenue definition of small business entity discussed above. These 
stations would likely have annual revenues that exceed the SBA maximum 
to be designated as a small business ($5 million for a radio

[[Page 19790]]

station or $10.5 million for a TV station). Furthermore, they do not 
meet the Small Business Act's definition of a ``small business 
concern'' because they are not independently owned and operated.\121\
---------------------------------------------------------------------------

    \121\ 15 U.S.C. 632.
---------------------------------------------------------------------------

Wireless and Commercial Mobile Services

    42. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of Paging \122\ or Cellular and Other Wireless 
Telecommunications.\123\ Under both of those SBA size standards, such a 
business is small if it has 1,500 or fewer employees.\124\ For the 
census category of Paging, Census Bureau data for 1997 show that there 
were 1,320 firms in this category, total, that operated for the entire 
year.\125\ Of this total, 1,303 firms had employment of 999 or fewer 
employees, and an additional 17 firms had employment of 1,000 employees 
or more.\126\ Thus, under this category and associated small business 
size standard, the great majority of firms can be considered small. For 
the census category of Cellular and Other Wireless Telecommunications 
firms, Census Bureau data for 1997 show that there were 977 firms in 
this category, total, that operated for the entire year.\127\ Of this 
total, 965 firms had employment of 999 or fewer employees, and an 
additional 12 firms had employment of 1,000 employees or more.\128\ 
Thus, under this second category and size standard, the great majority 
of firms can, again, be considered small.
---------------------------------------------------------------------------

    \122\ 13 CFR 121.201, NAICS code 513321 (changed to 517211 in 
October of 2002).
    \122\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
    \124\ Id.
    \125\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Employment Size of Firms Subject to Federal Income 
Tax: 1997,'' Table 5, NAICS code 513321 (issued Oct. 2000).
    \126\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1,000 
employees or more.''
    \127\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Employment Size of Firms Subject to Federal Income 
Tax: 1997,'' Table 5, NAICS code 513322 (issued Oct. 2000).
    \128\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1,000 
employees or more.''
---------------------------------------------------------------------------

    43. Broadband Personal Communications Service. The Broadband 
Personal Communications Service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years.\129\ For Block F, 
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.\130\ These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA.\131\ 
No small businesses within the SBA-approved small business size 
standard 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.\132\ On March 23, 1999, the Commission re-auctioned 347 C, D, E, and 
F Block licenses. There were 48 small business winning bidders. On 
January 26, 2001, the Commission completed the auction of 422 C and F 
Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in 
this auction, 29 qualified as ``small'' or ``very small'' businesses. 
Based on this information, the Commission concludes that the number of 
small broadband PCS licensees will include the 90 winning C Block 
bidders, the 93 qualifying bidders in the D, E, and F Block auctions, 
the 48 winning bidders in the 1999 re-auction, and the 29 winning 
bidders in the 2001 re-auction, for a total of 260 small entity 
broadband PCS providers, as defined by the SBA small business size 
standards and the Commission's auction rules. Consequently, the 
Commission estimates that 260 broadband PCS providers are small 
entities that may be affected by the rules and policies adopted herein.
---------------------------------------------------------------------------

    \129\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap, WT Docket No. 96-59, Report and Order, 
11 FCC Rcd 7824 paragraphs 57-60 (1996); See also 47 CFR 24.720(b).
    \130\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap, WT Docket No. 96-59, Report and Order, 
11 FCC Rcd 7824 paragraphs 57-60 (1996).
    \131\ See, e.g., Implementation of Section 309(j) of the 
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth 
Report and Order, 9 FCC Rcd 5532, 5581-84 paragraphs 115-17 (1994), 
59 FR 37566 (July 22, 1994).
    \132\ FCC News, Broadband PCS, D, E and F Block Auction Closes, 
No. 71744 (rel. Jan. 14, 1997). See also Amendment of the 
Commission's Rules Regarding Installment Payment Financing for 
Personal Communications Services (PCS) Licenses, WT Docket No. 97-
82, Second Report and Order, 12 FCC Rcd 16436 (1997), 62 FR 55348 
(Oct. 24,1997).
---------------------------------------------------------------------------

    44. Narrowband Personal Communications Services. To date, five 
auctions of narrowband personal communications services (PCS) licenses 
have been conducted. The first two auctions, Auction No. 1 
(``Nationwide Narrowband PCS Auction'') and Auction No. 3 (``Regional 
Narrowband PCS Auction''), were held in 1994 and had only a one-tiered 
small business size standard. ``Small businesses'' were entities with 
average gross revenues for the prior three calendar years of $40 
million or less. Through these first two auctions, the Commission 
awarded 40 licenses,\133\ of which 11 were obtained by small 
businesses. To ensure meaningful participation of small business 
entities in future auctions, the Commission adopted a two-tiered small 
business size standard in the Narrowband PCS Second Report and 
Order.\134\ A ``small business'' is an entity that, together with 
affiliates and controlling interests, has average annual 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 annual gross revenues for the three 
preceding years of not more than $15 million. In 1998, the SBA approved 
these small business size standards.\135\ In October of 2001, the 
Commission held a narrowband PCS auction, Auction No. 41, and in 
September of 2003, the Commission held two narrowband PCS auctions, 
Auction No. 50 and Auction No. 51. Through these three auctions, 370 
licenses were won, of which 364 were won by very small businesses. 
Twelve of the 25 winning bidders in the five auctions were either small 
or very small businesses (four of the fifteen winning bidders in the 
two narrowband PCS auctions held in 1994 were small businesses, and 
eight of the ten winning bidders in the three narrowband PCS auctions 
held after 1998 were very small

[[Page 19791]]

businesses, as those terms were defined under the Commission's Rules).
---------------------------------------------------------------------------

    \133\ An additional nationwide narrowband PCS license was 
awarded pursuant to the Commission's pioneer's preference program, 
which has expired. See In re Application of Nationwide Wireless 
Network Corporation, 13 FCC Rcd 12914 (1998); In re Application of 
Nationwide Wireless Network Corp., Memorandum Opinion and Order, 9 
FCC Rcd 3635 (1994).
    \134\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, Docket No. ET 92-
100, Docket No. PP 93-253, Second Report and Order and Second 
Further Notice of Proposed Rulemaking, 15 FCC RCD 10456 (2000), 65 
FR 35875 (June 6, 2000).
    \135\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, FCC, from 
Aida Alvarez, Administrator, SBA (Dec. 2, 1998).
---------------------------------------------------------------------------

    45. 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 
small business size standard for 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 standard provides that 
such a company is small if it employs no more than 1,500 persons.\136\ 
According to Census Bureau data for 1997, there were 977 firms in this 
category, total, that operated for the entire year.\137\ Of this total, 
965 firms had employment of 999 or fewer employees, and an additional 
12 firms had employment of 1,000 employees or more.\138\ 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 size standard.
---------------------------------------------------------------------------

    \136\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
    \137\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Employment Size of Firms Subject to Federal Income 
Tax: 1997,'' Table 5, NAICS code 513322 (issued Oct. 2000).
    \138\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1,000 
employees or more.''
---------------------------------------------------------------------------

    46. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. The Phase II 220 MHz service is 
a new service, and is subject to spectrum auctions. In the 220 MHz 
Third Report and Order, we adopted a small business size standard for 
``small'' and ``very small'' businesses for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments.\139\ This small business size 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.\140\ A ``very 
small business'' is 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 business size standards.\141\ Auctions of Phase II licenses 
commenced on September 15, 1998, and closed on October 22, 1998.\142\ 
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 
licenses in the first 220 MHz auction. The second auction included 225 
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies 
claiming small business status won 158 licenses.\143\
---------------------------------------------------------------------------

    \139\ 220 MHz Third Report and Order, 12 FCC Rcd 10943, 11068-
70, at paragraphs 291-295 (1997), 62 FR 16004 (Apr. 3, 1997).
    \140\ Id., 12 FCC Rcd 10943, 11068-70, at paragraphs 291.
    \141\ See letter to D. Phythyon, Chief, Wireless 
Telecommunications Bureau, FCC, from Aida Alvarez, Administrator, 
SBA (Jan. 6, 1998).
    \142\ See generally Public Notice, ``220 MHz Service Auction 
Closes,'' 14 FCC Rcd 605 (1998).
    \143\ Public Notice, ``Phase II 220 MHz Service Spectrum Auction 
Closes,'' 14 FCC Red 11218 (1999).
---------------------------------------------------------------------------

    47. 800 MHz and 900 MHz Specialized Mobile Radio Licensees. The 
Commission awards ``small entity'' and ``very 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, 
or that had revenues of no more than $3 million in each of the previous 
calendar years, respectively.\144\ These bidding credits apply to SMR 
providers in the 800 MHz and 900 MHz bands that either hold geographic 
area licenses or have obtained extended implementation authorizations. 
The Commission does not know how many firms provide 800 MHz or 900 MHz 
geographic area SMR service pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. 
The Commission assumes, for purposes here, that all of the remaining 
existing extended implementation authorizations are held by small 
entities, as that term is defined by the SBA. The Commission has held 
auctions for geographic area licenses in the 800 MHz and 900 MHz SMR 
bands. There were 60 winning bidders that qualified as small or very 
small entities in the 900 MHz SMR auctions. Of the 1,020 licenses won 
in the 900 MHz auction, bidders qualifying as small or very small 
entities won 263 licenses. In the 800 MHz auction, 38 of the 524 
licenses won were won by small and very small entities. Consequently, 
the Commission estimates that there are 301 or fewer small entity SMR 
licensees in the 800 MHz and 900 MHz bands that may be affected by the 
rules and policies adopted.
---------------------------------------------------------------------------

    \144\ 47 CFR 90.814(b)(1).
---------------------------------------------------------------------------

    48. Common Carrier Paging. In the Paging Third Report and Order, we 
developed a small business size standard for ``small businesses'' and 
``very small businesses'' for purposes of determining their eligibility 
for special provisions such as bidding credits and installment 
payments.\145\ 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. 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 $3 million for the preceding three years. An auction 
of Metropolitan Economic Area licenses commenced on February 24, 2000, 
and closed on March 2, 2000.\146\ Of the 985 licenses auctioned, 440 
were sold. Fifty-seven companies claiming small business status won. At 
present, there are approximately 24,000 Private-Paging site-specific 
licenses and 74,000 Common Carrier Paging licenses. According to 
Commission data, 433 carriers reported that they were engaged in the 
provision of either paging and messaging services or other mobile 
services.\147\ Of those, the Commission estimates that 423 are small, 
under the SBA business size standard specifying that firms are small if 
they have 1,500 or fewer employees.\148\
---------------------------------------------------------------------------

    \145\ 220 MHz Third Report and Order, 12 FCC Rcd 10943, 11068-
70, at paragraphs 291-295 (1997).
    \146\ Revision of Part 22 and Part 90 of the Commission's Rules 
to Facilitate Future Development of Paging Systems, WT Docket No. 
96-18, Memorandum Opinion and Order on Reconsideration and Third 
Report and Order, 14 FCC Rcd 10030, at paragraphs 98 (1999).
    \147\ Trends in Telephone Service at Table 5.3.
    \148\ Id. The SBA size standard is that of Paging, 13 CFR 
121.201, NAICS code 517211.
---------------------------------------------------------------------------

    49. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order, 
we adopted a small business size standard for ``small businesses'' and 
``very small businesses'' for purposes of determining their eligibility 
for special provisions such as bidding credits and installment 
payments.\149\ A ``small business'' is an

[[Page 19792]]

entity that, together with its affiliates and controlling principals, 
has average gross revenues not exceeding $15 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 $3 million for the preceding 
three years. An auction of 52 Major Economic Area (MEA) licenses 
commenced on September 6, 2000, and closed on September 21, 2000.\150\ 
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.\151\
---------------------------------------------------------------------------

    \149\ See Service Rules for the 746-764 MHz Bands, and Revisions 
to part 27 of the Commission's rules, WT Docket No. 99-168, Second 
Report and Order, 15 FCC Rcd 5299 (2000), 65 FR 17599, April 4, 
2000.
    \150\ See generally Public Notice, ``220 MHz Service Auction 
Closes,'' Report No. WT 98-36 (Wireless Telecommunications Bureau, 
Oct. 23, 1998).
    \151\ Public Notice, ``700 MHz Guard Band Auction Closes,'' DA 
01-478 (released Feb. 22, 2001).
---------------------------------------------------------------------------

    50. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small entities specific to the Rural Radiotelephone 
Service.\152\ A significant subset of the Rural Radiotelephone Service 
is the Basic Exchange Telephone Radio Systems (BETRS).\153\ The 
Commission uses the SBA's size standard applicable to ``Cellular and 
Other Wireless Telecommunications,'' i.e., an entity employing no more 
than 1,500 persons.\154\ There are approximately 1,000 licensees in the 
Rural Radiotelephone Service, and the Commission estimates that almost 
all of them qualify as small entities under the SBA's size standard. 
Consequently, we estimate 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.
---------------------------------------------------------------------------

    \152\ The service is defined in section 22.99 of the 
Commission's rules, 47 CFR 22.99.
    \153\ BETRS is defined at 47 CFR 22.757, 22.759.
    \154\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
---------------------------------------------------------------------------

    51. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service.\155\ We will use SBA's small business size 
standard applicable to ``Cellular and Other Wireless 
Telecommunications,'' i.e., an entity employing no more than 1,500 
persons.\156\ There are approximately 100 licensees in the Air-Ground 
Radiotelephone Service, and we estimate that almost all of them qualify 
as small under the SBA small business size standard.
---------------------------------------------------------------------------

    \155\ The service is defined in section 22.99 of the 
Commission's rules, 47 CFR 22.99.
    \156\ 13 CFR 121.201, NAICS codes 513322 (changed to 517212 in 
October of 2002).
---------------------------------------------------------------------------

    52. Aviation and Marine Radio Services. Small businesses in the 
aviation and 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.\157\ 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.\158\ 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.
---------------------------------------------------------------------------

    \157\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
    \158\ Amendment of the Commission's rules Concerning Maritime 
Communications, PR Docket No. 92-257, Third Report and Order and 
Memorandum Opinion and Order, 13 FCC Rcd 19853 (1998).
---------------------------------------------------------------------------

    53. Fixed Microwave Services. Microwave services include common 
carrier,\159\ private-operational fixed,\160\ and broadcast auxiliary 
radio services.\161\ At present, 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 created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the SBA size standard for the 
category ``Cellular and Other Telecommunications,'' which is 1,500 or 
fewer employees.\162\ 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 up to 22,015 common carrier 
fixed microwave licensees and up to 61,670 private operational-fixed 
microwave licensees and broadcast auxiliary radio licensees in the 
microwave services that may be small and may be affected by the rules 
and policies adopted herein. We note, however, that the common carrier 
microwave fixed licensee category includes some large entities.
---------------------------------------------------------------------------

    \159\ See 47 CFR 101, et seq. (formerly Part 21 of the 
Commission's Rules) for common carrier fixed microwave services 
(except Multipoint Distribution Service).
    \160\ Persons eligible under parts 80 and 90 of the Commission's 
rules can use Private Operational-Fixed Microwave services. See 47 
CFR parts 80 and 90. Stations in this service are called 
operational-fixed to distinguish them from common carrier and public 
fixed stations. Only the licensee may use the operational-fixed 
station, and only for communications related to the licensee's 
commercial, industrial, or safety operations.
    \161\ Auxiliary Microwave Service is governed by 47 CFR part 74. 
This service is available to licensees of broadcast stations and to 
broadcast and cable network entities. Broadcast auxiliary microwave 
stations are used for relaying broadcast television signals from the 
studio to the transmitter, or between two points such as a main 
studio and an auxiliary studio. The service also includes mobile 
television pickups, which relay signals from a remote location back 
to the studio.
    \162\ 13 CFR 121.201, NAICS codes 513322 (changed to 517212 in 
October of 2002).
---------------------------------------------------------------------------

    54. Offshore Radiotelephone Service. This service operates on 
several UHF television broadcast channels that are not used for 
television broadcasting in the coastal areas of states bordering the 
Gulf of Mexico.\163\ There are presently approximately 55 licensees in 
this service. We are unable to estimate at this time the number of 
licensees that

[[Page 19793]]

would qualify as small under the SBA's small business size standard for 
``Cellular and Other Wireless Telecommunications'' services.\164\ Under 
that SBA small business size standard, a business is small if it has 
1,500 or fewer employees.\165\
---------------------------------------------------------------------------

    \163\ This service is governed by 47 CFR 22.1001-22.1037.
    \164\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
    \165\ Id.
---------------------------------------------------------------------------

    55. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission established small business size standards for the 
wireless communications services (WCS) auction. A ``small business'' is 
an entity with average gross revenues of $40 million for each of the 
three preceding years, and a ``very small business'' is an entity with 
average gross revenues of $15 million for each of the three preceding 
years. The SBA has approved these small business size standards.\166\
---------------------------------------------------------------------------

    \166\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, FCC, from 
Aida Alvarez, Administrator, SBA (Dec. 2, 1998).
---------------------------------------------------------------------------

    The Commission auctioned geographic area licenses in the WCS 
service. In the auction, there were seven winning bidders that 
qualified as ``very small business'' entities, and one that qualified 
as a ``small business'' entity. We conclude that the number of 
geographic area WCS licensees affected by this analysis includes these 
eight entities.
    56. 39 GHz Service. The Commission created a special small business 
size standard for 39 GHz licenses--an entity that has average gross 
revenues of $40 million or less in the three previous calendar 
years.\167\ An additional size standard for ``very small business'' is: 
An entity that, together with affiliates, has average gross revenues of 
not more than $15 million for the preceding three calendar years.\168\ 
The SBA has approved these small business size standards.\169\ 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. Consequently, the Commission estimates that 18 or fewer 
39 GHz licensees are small entities that may be affected by the rules 
and polices adopted herein.
---------------------------------------------------------------------------

    \167\ See Amendment of the Commission's Rules Regarding the 
37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket No. 95-183, Report 
and Order, 12 FCC Rcd 18600 (1997).
    \168\ Id.
    \169\ See Letter to Kathleen O'Brien Ham, Chief, Auctions and 
Industry Analysis Division, Wireless Telecommunications Bureau, FCC, 
from Aida Alvarez, Administrator, SBA (Feb. 4, 1998).
---------------------------------------------------------------------------

    57. Multipoint Distribution Service and Instructional Television 
Fixed Service. Multipoint Distribution Service (MDS) 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).\170\ In connection with the 1996 MDS auction, the Commission 
established a small business size standard as an entity that had annual 
average gross revenues of less than $40 million in the previous three 
calendar years.\171\ The MDS auctions resulted in 67 successful bidders 
obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). 
Of the 67 auction winners, 61 met the definition of a small business. 
MDS also includes licensees of stations authorized prior to the 
auction. 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.\172\ 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.\173\ 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 adopted 
herein. This SBA small business size standard also appears applicable 
to ITFS. There are presently 2,032 ITFS licensees. All but 100 of these 
licenses are held by educational institutions. Educational institutions 
are included in this analysis as small entities.\174\ Thus, we 
tentatively conclude that at least 1,932 licensees are small 
businesses.
---------------------------------------------------------------------------

    \170\ Amendment of parts 21 and 74 of the Commission's Rules 
with Regard to Filing Procedures in the Multipoint Distribution 
Service and in the Instructional Television Fixed Service and 
Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, MM Docket No. 94-131 and PP Docket No. 93-253, 
Report and Order, 10 FCC Rcd 9589, 9593 paragraph 7 (1995).
    \171\ 47 CFR 21.961(b)(1).
    \172\ 13 CFR 121.201, NAICS code 513220 (changed to 517510 in 
October of 2002).
    \173\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization)'', Table 4, NAICS code 513220 (issued October 2000).
    \174\ In addition, the term ``small entity'' within SBREFA 
applies to small organizations (nonprofits) and to small 
governmental jurisdictions (cities, counties, towns, townships, 
villages, school districts, and special districts with populations 
of less than 50,000). 5 U.S.C. 601(4)-(6). We do not collect annual 
revenue data on ITFS licensees.
---------------------------------------------------------------------------

    58. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (LMDS) is a fixed broadband point-to-multipoint 
microwave service that provides for two-way video 
telecommunications.\175\ The auction of the 1,030 Local Multipoint 
Distribution Service (LMDS) licenses began on February 18, 1998 and 
closed on March 25, 1998. The Commission established a small business 
size standard for LMDS licenses as an entity that has average gross 
revenues of less than $40 million in the three previous calendar 
years.\176\ An additional small business size standard for ``very small 
business'' was added as an entity that, together with its affiliates, 
has average gross revenues of not more than $15 million for the 
preceding three calendar years.\177\ The SBA has approved these small 
business size standards in the context of LMDS auctions.\178\ 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 40 
winning bidders. Based on this information, we conclude that the number 
of small LMDS licenses consists of the 93 winning bidders in the first 
auction and the 40 winning bidders in the re-auction, for a total of 
133 small entity LMDS providers.
---------------------------------------------------------------------------

    \175\ See Local Multipoint Distribution Service, Second Report 
and Order, 12 FCC Rcd 12545 (1997).
    \176\ Id.
    \177\ Id.
    \178\ See Letter to Dan Phythyon, Chief, Wireless 
Telecommunications Bureau, FCC, from Aida Alvarez, Administrator, 
SBA (Jan. 6, 1998).
---------------------------------------------------------------------------

    59. 218-219 MHz Service. The first auction of 218-219 MHz spectrum 
resulted in 170 entities winning licenses for 594 Metropolitan 
Statistical Area (MSA) licenses. Of the 594 licenses, 557 were won by 
entities qualifying as a small business. For that auction, the small 
business size standard was 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.\179\ In 
the 218-219 MHz Report and Order and Memorandum Opinion and Order, we 
established a small business size standard for a ``small business'' as 
an entity that, together with its affiliates

[[Page 19794]]

and persons or entities that hold interests in such an entity and their 
affiliates, has average annual gross revenues not to exceed $15 million 
for the preceding three years.\180\ 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 to exceed $3 million for the 
preceding three years.\181\ We cannot estimate, however, 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.
---------------------------------------------------------------------------

    \179\ Implementation of section 309(j) of the Communications 
Act--Competitive Bidding, PP Docket No. 93-253, Fourth Report and 
Order, 9 FCC Rcd 2330 (1994), 59 FR 24947 (May 13, 1994).
    \180\ Amendment of part 95 of the Commission's rules to Provide 
Regulatory Flexibility in the 218-219 MHz Service, WT Docket No. 98-
169, Report and Order and Memorandum Opinion and Order, 15 FCC Rcd 
1497 (1999), 64 FR 59656 (Nov. 3, 1999).
    \181\ Id.
---------------------------------------------------------------------------

    60. 24 GHz--Incumbent Licensees. This analysis may 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 
applicable SBA small business size standard is that of ``Cellular and 
Other Wireless Telecommunications'' companies. This category provides 
that such a company is small if it employs no more than 1,500 
persons.\182\ According to Census Bureau data for 1997, there were 977 
firms in this category, total, that operated for the entire year.\183\ 
Of this total, 965 firms had employment of 999 or fewer employees, and 
an additional 12 firms had employment of 1,000 employees or more.\184\ 
Thus, under this size standard, the great majority of firms can be 
considered small. These broader census data notwithstanding, we believe 
that there are only two licensees in the 24 GHz band that were 
relocated from the 18 GHz band, Teligent \185\ 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.
---------------------------------------------------------------------------

    \182\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October of 2002).
    \183\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Employment Size of Firms Subject to Federal Income 
Tax: 1997,'' Table 5, NAICS code 513322 (issued Oct. 2000).
    \184\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1,000 
employees or more.''
    \185\ Teligent acquired the DEMS licenses of FirstMark, the only 
licensee other than TRW in the 24 GHz band whose license has been 
modified to require relocation to the 24 GHz band.
---------------------------------------------------------------------------

    61. 24 GHz--Future Licensees. With respect to new applicants in the 
24 GHz band, the small business size standard for ``small business'' is 
an entity that, together with controlling interests and affiliates, has 
average annual gross revenues for the three preceding years not in 
excess of $15 million.\186\ ``Very small business'' in the 24 GHz band 
is an entity that, together with controlling interests and affiliates, 
has average gross revenues not exceeding $3 million for the preceding 
three years.\187\ The SBA has approved these small business size 
standards.\188\ These size standards will apply to the future auction, 
if held.
---------------------------------------------------------------------------

    \186\ Amendments to parts 1, 2, 87 and 1001 of the Commission's 
rules to License Fixed Services at 24 GHz, Report and Order, 15 FCC 
Rcd 16934, 16967 (2000), 65 FR 59350 (Oct. 5, 2000); see also 47 CFR 
101.538(a)(2).
    \187\ Id.
    \188\ See Letter to Margaret W. Wiener, Deputy Chief, Auctions 
and Industry Analysis Division, Wireless Telecommunications Bureau, 
FCC, from Gary M. Jackson, Assistant Administrator, SBA (July 28, 
2000).
---------------------------------------------------------------------------

    62. Internet Service Providers. While internet service providers 
(ISPs) are only indirectly affected by our present actions, and ISPs 
are therefore not formally included within this present RFA, we have 
addressed them informally to create a fuller record and to recognize 
their participation in this proceeding. The SBA has developed a small 
business size standard for Online Information Services, which consists 
of all such companies having $21 million or less in annual 
receipts.\189\ According to Census Bureau data for 1997, there were 
2,751 firms in this category, total, that operated for the entire 
year.\190\ Of this total, 2,659 firms had annual receipts of $9,999,999 
or less, and an additional 67 had receipts of $10 million to 
$24,999,999.\191\ Thus, under this size standard, the great majority of 
firms can be considered small.
---------------------------------------------------------------------------

    \189\ 13 CFR 121.201, NAICS code 514191 (changed to 518111 in 
October of 2002).
    \190\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Receipts Size of Firms Subject to Federal Income Tax: 
1997,'' Table 4, NAICS code 514191 (issued October 2000).
    \191\ Id.
---------------------------------------------------------------------------

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

    63. With certain exceptions, the Commission's Schedule of 
Regulatory Fees applies to all Commission licensees and regulatees. 
Most licensees will be required to count the number of licenses or call 
signs authorized, complete and submit an FCC Form 159 (``FCC Remittance 
Advice''), and pay a regulatory fee based on the number of licenses or 
call signs.\192\ Interstate telephone service providers must compute 
their annual regulatory fee based on their interstate and international 
end-user revenue using information they already supply to the 
Commission in compliance with the Form 499-A, Telecommunications 
Reporting Worksheet, and they must complete and submit the FCC Form 
159. Compliance with the fee schedule will require some licensees to 
tabulate the number of units (e.g., cellular telephones, pagers, cable 
TV subscribers) they have in service, and complete and submit an FCC 
Form 159. Licensees ordinarily will keep a list of the number of units 
they have in service as part of their normal business practices. No 
additional outside professional skills are required to complete the FCC 
Form 159, and it can be completed by the employees responsible for an 
entity's business records.
---------------------------------------------------------------------------

    \192\ The following categories are exempt from the Commission's 
Schedule of Regulatory Fees: Amateur radio licensees (except 
applicants for vanity call signs) and operators in other non-
licensed services (e.g., Personal Radio, part 15, ship and 
aircraft). Governments and non-profit (exempt under section 501(c) 
of the Internal Revenue Code) entities are exempt from payment of 
regulatory fees and need not submit payment. Non-commercial 
educational broadcast licensees are exempt from regulatory fees as 
are licensees of auxiliary broadcast services such as low power 
auxiliary stations, television auxiliary service stations, remote 
pickup stations and aural broadcast auxiliary stations where such 
licenses are used in conjunction with commonly owned non-commercial 
educational stations. Emergency Alert System licenses for auxiliary 
service facilities are also exempt as are instructional television 
fixed service licensees. Regulatory fees are automatically waived 
for the licensee of any translator station that: (1) Is not licensed 
to, in whole or in part, and does not have common ownership with, 
the licensee of a commercial broadcast station; (2) does not derive 
income from advertising; and (3) is dependent on subscriptions or 
contributions from members of the community served for support. 
Receive only earth station permittees are exempt from payment of 
regulatory fees. A regulatee will be relieved of its fee payment 
requirement if its total fee due, including all categories of fees 
for which payment is due by the entity, amounts to less than $10.
---------------------------------------------------------------------------

    64. Each licensee must submit the FCC Form 159 to the Commission's 
lockbox bank after computing the number of units subject to the fee. 
Licensees may also file electronically to minimize the burden of 
submitting multiple copies of the FCC Form 159. Applicants who pay 
small fees in advance and provide fee information as part of their 
application must use FCC Form 159.
    65. Licensees and regulatees are advised that failure to submit the 
required regulatory fee in a timely manner will subject the licensee or 
regulatee to a late payment penalty of 25

[[Page 19795]]

percent in addition to the required fee.\193\ If payment is not 
received, new or pending applications may be dismissed, and existing 
authorizations may be subject to rescission.\194\ Further, in 
accordance with the Debt Collection Improvement Act of 1996, federal 
agencies may bar a person or entity from obtaining a federal loan or 
loan insurance guarantee if that person or entity fails to pay a 
delinquent debt owed to any federal agency.\195\ Nonpayment of 
regulatory fees is a debt owed the United States pursuant to 31 U.S.C. 
3711 et seq., and the Debt Collection Improvement Act of 1996, Public 
Law 194-134. Appropriate enforcement measures as well as administrative 
and judicial remedies, may be exercised by the Commission. Debts owed 
to the Commission may result in a person or entity being denied a 
federal loan or loan guarantee pending before another federal agency 
until such obligations are paid.\196\
---------------------------------------------------------------------------

    \193\ 47 CFR 1.1164.
    \194\ 47 CFR 1.1164(c).
    \195\ Public Law 104-134, 110 Stat. 1321 (1996).
    \196\ 31 U.S.C. 7701(c)(2)(B).
---------------------------------------------------------------------------

    66. The Commission's rules currently provide for relief in 
exceptional circumstances. Persons or entities may request a waiver, 
reduction or deferment of payment of the regulatory fee.\197\ However, 
timely submission of the required regulatory fee must accompany 
requests for waivers or reductions. This will avoid any late payment 
penalty if the request is denied. The fee will be refunded if the 
request is granted. In exceptional and compelling instances (where 
payment of the regulatory fee along with the waiver or reduction 
request could result in reduction of service to a community or other 
financial hardship to the licensee), the Commission will defer payment 
in response to a request filed with the appropriate supporting 
documentation.
---------------------------------------------------------------------------

    \197\ 47 CFR 1.1166.
---------------------------------------------------------------------------

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

    67. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives: (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. As described in Section III of this FRFA, supra, we have 
created procedures in which all fee-filing licensees and regulatees use 
a single form, FCC Form 159, and have described in plain language the 
general filing requirements. We have sought comment on other 
alternatives that might simplify our fee procedures or otherwise 
benefit small entities, while remaining consistent with our statutory 
responsibilities in this proceeding.
    68. The Omnibus Appropriations Act for FY 2003, Public Law 108-7, 
requires the Commission to revise its Schedule of Regulatory Fees in 
order to recover the amount of regulatory fees that Congress, pursuant 
to section 9(a) of the Communications Act, as amended, has required the 
Commission to collect for Fiscal Year (FY) 2004.\198\ As noted, we seek 
comment on the proposed methodology for implementing these statutory 
requirements and any other potential impact of these proposals on small 
entities.
---------------------------------------------------------------------------

    \198\ 47 U.S.C. 159(a).
---------------------------------------------------------------------------

    69. We have previously used cost accounting data for computation of 
regulatory fees, but found that some fees which were very small in 
previous years would have increased dramatically and would have a 
disproportionate impact on smaller entities. The methodology we are 
proposing in this Notice of Proposed Rulemaking minimizes this impact 
by limiting the amount of increase and shifting costs to other services 
which, for the most part, are larger entities.
    70. Several categories of licensees and regulatees are exempt from 
payment of regulatory fees. See, e.g., footnote 199, supra.

VI. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    71. None.

Attachment B--Sources of Payment Unit Estimates for FY 2004

    In order to calculate individual service fees for FY 2004, we 
adjusted FY 2003 payment units for each service to more accurately 
reflect expected FY 2004 payment liabilities. We obtained our updated 
estimates through a variety of means. For example, we used Commission 
licensee data bases, actual prior year payment records and industry and 
trade association projections when available. The databases we 
consulted include the Commission's Universal Licensing System (ULS), 
International Bureau Filing System (IBFS), and Consolidated Database 
System. The industry sources we consulted include, but are not limited 
to, Television & Cable Factbook by Warren Publishing, Inc. and the 
Broadcasting and Cable Yearbook by Reed Elsevier, Inc, as well as 
reports generated within the Commission such as the Wireline 
Competition Bureau's Trends in Telephone Service and the Wireless 
Telecommunications Bureau's Numbering Resource Utilization Forecast.
    We tried to obtain verification for these estimates from multiple 
sources and, in all cases; we compared FY 2004 estimates with actual FY 
2003 payment units to ensure that our revised estimates were 
reasonable. Where appropriate, we adjusted and/or rounded our final 
estimates to take into consideration the fact that certain variables 
that impact on the number of payment units cannot yet be estimated 
exactly. These include an unknown number of waivers and/or exemptions 
that may occur in FY 2004 and the fact that, in many services, the 
number of actual licensees or station operators fluctuates from time to 
time due to economic, technical or other reasons. Therefore, when we 
note, for example, that our estimated FY 2004 payment units are based 
on FY 2003 actual payment units, it does not necessarily mean that our 
FY 2004 projection is exactly the same number as FY 2003. It means that 
we have either rounded the FY 2004 number or adjusted it slightly to 
account for these variables.

BILLING CODE 6712-04-P

[[Page 19796]]

[GRAPHIC] [TIFF OMITTED] TP14AP04.000


[[Page 19797]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.001


[[Page 19798]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.002


[[Page 19799]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.003


[[Page 19800]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.004


[[Page 19801]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.005


[[Page 19802]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.006

Attachment E--Factors, Measurements and Calculations That Go Into 
Determining Station Signal Contours and Associated Population Coverages

AM Stations

    For stations with nondirectional daytime antennas, the theoretical 
radiation was used at all azimuths. For stations with directional 
daytime antennas, specific information on each day tower, including 
field ratio, phasing, spacing and orientation was retrieved, as well as 
the theoretical pattern root-mean-square of the radiation in all 
directions in the horizontal plane (RMS) figure milliVolt per meter 
(mV/m) @ 1 km) for the antenna system. The standard, or modified 
standard if pertinent, horizontal plane radiation pattern was 
calculated using techniques and methods specified in sections 73.150 
and 73.152 of the Commission's rules.\199\ Radiation values were 
calculated for each of 360 radials around the transmitter site. Next, 
estimated soil conductivity data was retrieved from a database 
representing the information in FCC Figure R3.\200\ Using the 
calculated horizontal radiation values, and the retrieved soil 
conductivity data, the distance to the city grade (5 mV/m) contour was 
predicted for each of the 360 radials. The resulting distance to city 
grade contours were used to form a geographical polygon. Population 
counting was accomplished by determining which 2000 block centroids 
were contained in the polygon. (A block centroid is the center point of 
a small area containing population as computed by the U.S. Census 
Bureau.) The sum of the population figures for all enclosed blocks 
represents the total population for the predicted city grade coverage 
area.
---------------------------------------------------------------------------

    \199\ 47 CFR 73.150 and 73.152.
    \200\ See Map of Estimated Effective Ground Conductivity in the 
United States, 47 CFR 73.190 Figure R3.
---------------------------------------------------------------------------

FM Stations

    The greater of the horizontal or vertical effective radiated power 
(ERP) (kW) and respective height above average terrain (HAAT) (m) 
combination was used. Where the antenna height above mean sea level 
(HAMSL) was available, it was used in lieu of the average HAAT figure 
to calculate specific HAAT figures for each of 360 radials under study. 
Any available directional pattern information was applied as well, to 
produce a radial-specific ERP figure. The HAAT and ERP figures were 
used in conjunction with the Field Strength (50-50) propagation curves 
specified in 47 CFR 73.313 of the Commission's rules to predict the 
distance to the city grade (70 dBu (decibel above 1 microVolt per 
meter) or 3.17 mV/m) contour for each of the 360 radials.\201\ The 
resulting distance to city grade contours were used to form a 
geographical polygon. Population counting was accomplished by 
determining which 2000 block centroids were contained in the polygon. 
The sum of the population figures for all enclosed blocks represents 
the total population for the predicted city grade coverage area.
---------------------------------------------------------------------------

    \201\ 47 CFR 73.313.
---------------------------------------------------------------------------

Attachment F--FY 2003 Schedule of Regulatory Fees

[[Page 19803]]

[GRAPHIC] [TIFF OMITTED] TP14AP04.007


[[Page 19804]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.008


[[Page 19805]]


[GRAPHIC] [TIFF OMITTED] TP14AP04.009

[FR Doc. 04-8260 Filed 4-13-04; 8:45 am]
BILLING CODE 6712-04-C