[Federal Register Volume 70, Number 38 (Monday, February 28, 2005)]
[Proposed Rules]
[Pages 9575-9606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-3822]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 05-59; FCC 05-35]


Assessment and Collection of Regulatory Fees for Fiscal Year 2005

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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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 2005. 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 March 8, 2005, and reply comments are due March 
18, 2005. Written comments on the Paperwork Reduction Act proposed 
information collection requirements must be submitted by the public, 
Office of Management and Budget (OMB), and other interested parties on 
or before April 29, 2005.

ADDRESSES: In addition to filing comments with the Secretary, a copy of 
any comments on the Paperwork Reduction Act information collection 
requirements contained herein should be submitted to Judith B. Herman, 
Federal Communications Commission, Room 1-C804, 445 12th Street, SW., 
Washington, DC 20554, or via the Internet to [email protected], 
and to Kristy L. LaLonde, OMB Desk Officer, Room 10234 NEOB, 725 17th 
Street, NW., Washington, DC 20503, via the Internet to Kristy--L. 
[email protected], or via fax at 202-395-5167.

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. For additional information concerning the Paperwork 
Reduction Act information collection requirements contained in this 
document, contact Judith B. Herman at 202-418-0214, or via the Internet 
at [email protected].

SUPPLEMENTARY INFORMATION: Initial Paperwork Reduction Act of 1995 
Analysis: This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due April 29, 2005. Comments should address: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the Commission, including whether the 
information shall have practical utility; (b) the accuracy of the 
Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.''
    OMB Control Number: 3060-1064.
    Title: Regulatory Fee Assessment True-Ups.
    Form No.: Not applicable.
    Type of Review: Revision of currently approved collection.
    Respondents: Businesses or other for-profit entities.
    Estimated Number of Respondents: 1,650.
    Estimated Time Per Response: .25 hours.
    Frequency of Response: Annually.
    Estimated Total Annual Burden: 413 hours.
    Estimated Total Annual Costs: $0.
    Privacy Act Impact Assessment: This information collection does not 
affect individuals or households; thus, there is no impact under the 
Privacy Act.
    Needs and Uses: The Commission collects Congressionally-mandated 
regulatory fees from its regulatees based upon a schedule of fees that 
it establishes each year in an annual rulemaking proceeding. As part of 
our modernization efforts, we are able to provide regulatory fee 
assessments to select categories of regulatees: (1) Cable television 
operators, (2) media services licensees and (3) commercial mobile radio 
service (CMRS) licensees. Along with the fee assessment notices that we 
intend to send to these three categories of regulatees, we will provide 
them with a ``true-up'' opportunity to correct, update or otherwise 
rectify their assessed fee amounts well before the actual due date for 
payment of regulatory fees. This ``true-up'' collection of information 
is necessary because it enables regulatees to confirm for themselves 
what their regulatory fee payment obligations will be, well before 
their fees are due. The ``true-up'' opportunity also serves to provide 
the Commission with a higher degree of certainty in its regulatory fee 
payment expectations for the fiscal year.
    Adopted: February 11, 2005; Released: February 15, 2005.
    By the Commission:

Table of Contents

I. Introduction
II. Discussion
    A. Development of FY2005 Fees
    1. Calculation of Revenue and Fee Requirements
    2. Additional Adjustments to Payment Units
    B. Commercial Mobile Radio Service (CMRS) Messaging Service
    C. Local Multipoint Distribution Service (LMDS)
    D. International Bearer Circuits
    E. Multichannel Video Distribution and Data Service (MVDDS)
    F. Broadband Radio Service (BRS) / Educational Broadband Service 
(EBS), (formerly MDS/MMDS and ITFS)
    G. Regulatory Fees for AM and FM Construction Permits
    H. Clarification of Policies and Procedures
    1. Ad Hoc Issues Concerning Our Regulatory Fee Exemption 
Policies
    2. Regulatory Fee Obligations for Digital Broadcasters
    3. Regulatory Fee Obligations for AM Expanded Band Broadcasters
    4. Effective Date of Payment of Multi-Year Wireless Fees
    I. Proposals for Notification, Assessment and Collection of 
Regulatory Fees
    1. Interstate Telecommunications Service Providers (ITSPs)
    2. Satellite Space Station Licensees
    3. Media Services Licensees
    4. Commercial Mobile Radio Service (CMRS) Cellular and Mobile 
Services
    5. Cable Television Subscribers
    J. Future Streamlining of the Regulatory Fee Assessment and 
Collection Process
III. Procedural Matters
    A. Payment of Regulatory Fees
    1. De Minimis Fee Payment Liability

[[Page 9576]]

    2. Standard Fee Calculations and Payment Dates
    B. Enforcement
    C. Comment Period and Procedures
    D. Ex Parte Rules
    E. Paperwork Reduction Act Analysis
    F. Initial Regulatory Flexibility Analysis
    G. Authority and Further Information
Attachments
    Attachment A Initial Regulatory Flexibility Analysis
    Attachment B Sources of Payment Unit Estimates for FY2005
    Attachment C Calculation of Revenue Requirements and Pro-Rata 
Fees
    Attachment D FY 2005 Schedule of Regulatory Fees
    Attachment E Factors, Measurements, and Calculations that 
Determine Station Contours and Population Coverages
    Attachment F FY 2004 Schedule of Regulatory Fees

I. Introduction

    1. In this Notice of Proposed Rulemaking (NPRM), we propose to 
collect $280,098,000 in regulatory fees for Fiscal Year (FY) 2005. 
These fees are mandated by Congress and are collected to recover the 
regulatory costs associated with the Commission's enforcement, policy 
and rulemaking, user information, and international activities.\1\
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    \1\ 47 U.S.C. 159(a).
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II. Discussion

A. Development of FY2005 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 2005, this allocation was done using FY 2004 revenues as 
a base. From this base, a revenue amount for each fee category was 
calculated. Each fee category was then adjusted upward by 2.6 percent 
to reflect the increase in regulatory fees from FY 2004 to FY 2005. 
These FY 2005 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).
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    \2\ It is important to note that the required increase in 
regulatory fee payments of approximately 2.6 percent in FY 2005 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 estimated payment units in a service category, 
the actual fee itself is sometimes increased by a number other than 
2.6 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 fee 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). 
The payment unit is the measure upon which the fee is based, such as 
a licensee, regulatee, subscriber fee, etc.
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2. Additional Adjustments to Payment Units
    3. In calculating the FY 2005 regulatory fees proposed in 
Attachment D, we further adjusted the FY2004 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 the 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 2005, and fluctuations in the number of licensees or 
station operators due to economic, technical or other reasons. 
Therefore, when we note that our estimated FY 2005 payment units are 
based on FY 2004 actual payment units, we may have rounded the number 
for FY 2005 or adjusted it slightly to account for these variables.
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    \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 
and Annual CMRS Competition Report. For additional information on 
source material, see Attachment B.
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    4. Additional factors are considered in determining regulatory fees 
for AM and FM radio 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.

B. Commercial Mobile Radio Service (CMRS) Messaging Service

    5. In our FY 2003 Report & Order (68 FR 48445, August 13, 2003), we 
noted that in recent years there has been a significant decline in the 
number of CMRS Messaging units--from 40.8 million in FY 1997 to 19.7 
million in FY 2003--a decline of 51.7 percent.\5\ This trend is 
continuing. For example, in the FY 2004 regulatory fee cycle, the 
number of CMRS Messaging units for which regulatory fees were paid 
declined to 13.5 million. This is consistent with our Ninth Annual CMRS 
Competition Report, which estimates the number of paging-only 
subscribers at the end of 2003 to be 11.2 million units.\6\ We also 
note that in recent years there have been no significant changes in the 
level of regulatory oversight for this fee category. For these reasons, 
we propose to continue our policy of maintaining the CMRS Messaging 
subscriber regulatory fee at the rate calculated in FY 2003 and FY 2004 
to avoid further contributing to the financial hardships associated 
with a declining subscriber base.
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    \5\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2003, Report and Order, 18 FCC Rcd 15985, 15992, at paragraph 
21 (2003) (FY 2003 Report and Order).
    \6\ 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, Ninth Report, FCC 04-216, released Sept. 28, 2004, at 
paragraph 177 (Ninth Annual CMRS Competition Report).
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C. Local Multipoint Distribution Service (LMDS)

    6. In the FY 2004 NPRM,\7\ we again sought comment on the 
appropriate fee classification for LMDS.\8\ Commenters urged the 
Commission to classify LMDS as a microwave service, arguing that LMDS 
is operationally, functionally, and legally similar to 24 and 39 GHz 
services in the microwave fee category. We rejected this argument 
because

[[Page 9577]]

LMDS licenses are, as a factual matter, quite different than other Part 
101 fixed microwave services in the upper frequency bands (above 15 
GHz). While these three services are licensed on a geographic basis 
allowing licensees to place multiple stations within the authorized 
service areas, most microwave stations are currently licensed on a 
site-by-site basis thereby requiring, depending on the frequency band, 
multiple individual licenses to serve a particular geographic area or 
multiple points therein.\9\ Even when the fees for LMDS licensees are 
compared with the fees for licensees in the 24 and 39 GHz bands, we did 
not find current fee assessments to impose a disproportionate burden on 
LMDS licensees.
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    \7\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2004, Notice of Proposed Rulemaking, 19 FCC Rcd 5795, 5797-8, 
at paragraph 5 (2004) (FY 2004 NPRM).
    \8\ In the FY 2003 NPRM, we sought comment on the appropriate 
fee classification of the Local Multipoint Distribution Service 
(LMDS). Some commenters urged that LMDS be classified in the 
microwave fee category. We declined to do so because technological 
developments and emerging commercial applications suggested that 
usage of LMDS could evolve differently than services in the 
microwave fee category. We recognized, however, that ``substantive 
distinctions did exist between MDS and LMDS, and that they should 
not be placed in the same fee category.'' Therefore, we created a 
separate LMDS fee category and stated that we would ``initiate a 
specific proceeding that addresses the policies and fee structure 
governing LMDS and other wireless services.'' See FY 2003 Report and 
Order, 18 FCC Rcd 15985, 15988-9, at paragraphs 6-10 (2003).
    \9\ Id.
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    7. However, we did identify an anomaly in FY 2004 between LMDS 
Block A and LMDS Block B licenses. Block A licenses are authorized for 
1150 MHz of spectrum, more than seven times the amount of spectrum 
authorized for Block B licenses (150 MHz). Currently, LMDS regulatory 
fees are assessed on a per-license basis. Using the authorized 
bandwidth for each license as the basis for comparison, we noted that 
the LMDS fee for Block A licenses in FY2004 was significantly lower on 
a per megahertz basis than the fee for Block B licenses. For example, 
on a per MHz basis, Block B licenses, which are authorized for 150 MHz 
in the 31,000-31,075/31,225-31,300 MHz bands, paid $1.80 per MHz in 
FY2004, whereas Block A licenses authorized for 1150 MHz of spectrum 
paid $0.24 per MHz. Because this anomaly appears to create a 
disproportionate fee obligation on LMDS Block B licenses, on our own 
motion we propose in FY 2005 to exercise our authority pursuant to 
section 9(b)(3) and amend the fee schedule to assess LMDS regulatory 
fees on a per megahertz basis. This proposed action would thereby place 
fee assessments on Block A and Block B licenses more in line with the 
benefits received under the respective licenses in terms of their 
authorized bandwidth, which varies substantially, as noted above.
    8. Following auctions 17 and 23, half of all of the licenses were 
Block A licenses and half were Block B licenses. Since then, some of 
the original licenses have been divided among other licensees pursuant 
to the Commission's license disaggregation and partitioning policies 
and procedures and others have been surrendered back to the FCC. Based 
on the FY 2005 revenue amount to be collected from the LMDS fee 
category ($94,050),\10\ the per megahertz per unit fee is $0.44, which 
is based on a total authorized bandwidth of 1,300 MHz and estimated 
units of 165 Block A units and 165 Block B units.\11\ This methodology 
of calculating LMDS regulatory fees incorporates the differences in 
bandwidth use between Block A and Block B licenses, as well as 
differences in the number of units between Block A and Block B 
licenses. Using the per MHz per unit fee of $0.44, the regulatory fee 
for LMDS Block A licenses is calculated to be $505 per license, and the 
regulatory fee for LMDS Block B licenses is calculated to be $65 per 
license.\12\
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    \10\ See Attachment C.
    \11\ The per megahertz per unit fee is calculated as follows:
    165 Block A units times 1,150 MHz used = 189,750 (total MHz used 
by Block A licensees).
    165 Block B units times 150 MHz used = 24,750 (total MHz used by 
Block B licensees).
    Total = 214,500 (total MHz used by Block A & B licensees).
    Per MHz Per Unit Fee = $94,050 divided by 214,500 = $0.44.
    \12\ LMDS Block A Licenses: $0.44 per MHz per unit times 1,150 
MHz bandwidth = $506, rounded to $505. LMDS Block B Licenses: $0.44 
per MHz per unit times 150 MHz bandwidth = $66, rounded to $65.
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    9. We seek comment on our proposal to use the above methodology for 
calculating regulatory fees for LMDS. We are aware of the dramatic one-
year increase in regulatory fees that would result for Block A 
licensees if we were to adopt the above per-MHz methodology. Therefore, 
so as to minimize the impact of the fee increase, we seek comment on 
whether we should graduate the increase in increments over a brief 
period of years.
    10. Additionally, we seek general comment on applying the per-MHz 
methodology to LMDS Block A and Block B licenses that have been 
partitioned and disaggregated. We also seek comment on whether to 
continue to use a fee calculation process that does not distinguish 
between LMDS Block A and LMDS Block B licenses. A fee calculation 
process that does not distinguish between Block A and Block B licenses 
would result in a regulatory fee of $285 per LMDS license.\13\ Finally, 
we seek comment on other proposals to address the assessment of 
regulatory fees for LMDS.
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    \13\ A regulatory fee that does not distinguish between Block A 
and Block B LMDS licenses is calculated as follows: $94,050 (total 
expected FY 2005 revenue) divided by 330 (estimated units) = $285 
per license.
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D. International Bearer Circuits

    11. The Commission currently assesses regulatory fees on 
international carriers based on the number of active international 
bearer circuits the carrier had the previous year.\14\ In response to 
our FY 2004 NPRM, several commenters requested that the Commission 
change the regulatory fee regime for international carriers.\15\ In the 
FY 2004 Report and Order we found that we needed a more complete record 
on these issues and stated that we would seek comment on them in our 
2005 regulatory fees proceeding.
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    \14\ Regulatory fees for International Bearer Circuits are to be 
paid by facilities-based common carriers for active international 
bearer circuits in any transmission facility for the provision of 
service to an end user or resale carrier, and also including active 
circuits to themselves or their affiliates. In addition, non-common 
carrier satellite operators must pay a fee for each circuit sold or 
leased to any customer, including themselves or their affiliates, 
other than an international common carrier authorized by the 
Commission to provide U.S. international common carrier services. 
Non-common carrier submarine cable operators are also to pay fees 
for any and all international bearer circuits sold on an 
indefeasible right of use (IRU) basis or leased to any customer, 
including themselves or their affiliates, other than an 
international common carrier authorized by the Commission to provide 
U.S. international common carrier services. See Assessment and 
Collection of Regulatory Fees for Fiscal Year 2001, MD Docket No. 
01-76, Report and Order, 16 FCC Rcd 13525, 13593 (2001); Regulatory 
Fees Fact Sheet: What You Owe--International and Satellite Services 
Licensees for FY 2004 at 3 (released July 2004) (the fact sheet is 
available on the FCC web-site at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-249904A4.pdf).
    \15\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2004, Report and Order, 19 FCC Rcd 11662, 11671-72, at 
paragraphs 26-30 (2004) (FY 2004 Report and Order).
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    12. In this proceeding we seek comment on possible changes to the 
regulatory fees assessed on international carriers. Specifically we 
seek comment on possible bases, other than active circuits, for 
assessing regulatory fees on international carriers.\16\
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    \16\ Because of the complexity of this issue, we will review the 
comments and reply comments, but we will not implement any action in 
FY 2005.
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    13. Several carriers raised concerns with the use of international 
bearer circuits as the basis for assessing regulatory fees in the 2004 
regulatory fee proceeding. They argued that basing fees on the number 
of active circuits an international carrier has favors older, lower-
capacity systems to the detriment of newer, higher-capacity systems. 
Specifically the commenters argued that (1) the Commission's present 
methodology does not take into account the reduced regulation of non-
common carrier (also known as ``private'') submarine cable operators, 
and (2) imposing fees based on a company's ``lit and sold'' (also known 
as ``active'') bearer circuit capacity is at odds with how non-common 
carrier submarine cable operators actually sell capacity, thereby 
requiring operators to spend

[[Page 9578]]

time determining if regulatory fees are applicable based on the 
Commission's definition of ``active.''
    14. Tyco proposed the following changes be made to the regulatory 
regime: (1) Separate the non-common carrier submarine cable operator 
subcategory from the existing international bearer circuit fee category 
by creating a new non-common carrier submarine cable operator category; 
(2) allocate the current revenue requirement for the bearer circuit fee 
category between two new fee categories based on the regulatory burden 
of each new category; and (3) adopt a flat, per-cable-landing-license 
fee for non-common carrier submarine cable operators. Several 
commenters supported Tyco's position. Several commenters also noted 
that satellite operators provide international bearer circuits on a 
non-common carrier basis, and that circuit fees should include both 
non-common carriers as well as private submarine cable providers.
    15. The Commission concluded in the FY 2004 Report and Order that 
these arguments warranted further consideration, and that a fee system 
based on cable landing licenses and international section 214 
authorizations, rather than international bearer circuits, would be 
administratively simpler for both the Commission and carriers.\17\ The 
Commission also noted that a fee system based on licenses/
authorizations could provide an incentive for carriers to initiate new 
services and to use new facilities more efficiently.\18\
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    \17\ FY 2004 Report and Order at paragraph 29.
    \18\ Id.
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    16. The assessment of regulatory fees on international carriers 
based on active international circuits is set out in the fee schedule 
in section 9 of the Communications Act.\19\ The statute provides the 
Commission with the authority to amend the fee schedule. 47 U.S.C. 
159(b)(3). Section 9(b)(3) requires the Commission to amend the 
schedule if the Commission determines that amendment is necessary to 
comply with the general fee authority set forth in section 9(b)(1)(A) 
of the Communications Act. Section 9(b)(3) also grants the Commission 
authority to ``add, delete, or reclassify service in the Schedule to 
reflect additions, deletions, or changes in the nature of its services 
as a consequence of Commission rulemaking proceedings or changes in the 
law.'' \20\ We seek comment on whether a change to the computation of 
fees for the international bearer circuit category or a 
reclassification of the category is warranted in light of the 
Commission's authority to amend the fee schedule.\21\ If a 
reclassification of the category is proposed, commenters should 
specifically address the Commission rulemakings or changes in law that 
justify the reclassification.
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    \19\ 47 U.S.C. 159(g).
    \20\ 47 U.S.C. 159(b)(3).
    \21\ On December 15, 2004, counsel for Tyco Telecommunications 
(US) Inc. submitted a letter addressing the Commission's legal 
authority to amend the schedule of regulatory fees pursuant to 
section 9(b)(3), 47 U.S.C. 159(b)(3). Letter from Kent D. Bressie, 
Harris, Wiltshire & Grannis, to David Krech, FCC, dated December 15, 
2004. A copy of the letter has been placed in the record for this 
proceeding. We seek comment on the analysis presented in the letter.
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    17. Commenters should address possible alternative methods of 
assessing regulatory fees on international carriers, for example 
whether regulatory fees should be assessed based on the holding of an 
international section 214 authorization or a cable landing license. As 
noted above, Tyco proposed to separate the non-common carrier submarine 
cable operator subcategory from the existing international bearer 
circuit fee category, thereby creating a new non-common carrier 
submarine cable operator category. We seek comment on the Tyco 
proposal. Commenters should address how to allocate the current 
international bearer circuit revenue requirement between non-common 
carrier submarine cable operators and the remaining circuit fee 
category.

E. Multichannel Video Distribution and Data Service (MVDDS)

    18. In 2002 the Commission established the Multichannel Video 
Distribution and Data Service (MVDDS) in the 12.2-12.7 GHz band (12 GHz 
band),\22\ totaling 500 megahertz of contiguous spectrum that is 
licensed by 214 service areas (``MVDs''). MVDDS spectrum is used to 
facilitate the delivery of new video and broadband communications 
services, such as local television programming and high-speed Internet 
access.\23\ The technical rules reflect a carefully crafted balance in 
which the Commission affords protection to the Direct Broadcast 
Satellite (DBS) service and the non-geostationary satellite orbit 
(NGSO) fixed-satellite service (FSS) while allowing the entrance of 
MVDDS.\24\
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    \22\ Amendment of Parts 2 and 25 of the Commission's Rules to 
Permit Operation of NGSO FSS Systems Co-Frequency with GSO and 
Terrestrial Systems in the Ku-Band Frequency Range; Amendment of the 
Commission's Rules to Authorize Subsidiary Terrestrial Use of the 
12.2-12.7 GHz Band by Direct Broadcast Satellite Licensees and Their 
Affiliates; and Applications of Broadwave USA, PDC Broadband 
Corporation, and Satellite Receivers, Ltd. to Provide a Fixed 
Service in the 12.2-12.7 GHz Band, ET Docket No. 98-206, Memorandum 
Opinion and Order and Second Report and Order, 17 FCC Rcd 9614, 9680 
(2002) (MVDDS Second R&O).
    \23\ MVDDS licensees may use the 12.2-12.7 GHz band for any 
digital fixed non-broadcast service (broadcast services are intended 
for reception of the general public and not on a subscribership 
basis) including one-way direct-to-home/office wireless service. See 
47 CFR 101.1407 (Permissible operations for MVDDS).
    \24\ See generally subpart P of 47 CFR Part 101.
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    19. The Commission established MVDDS because it had concluded that 
a fourth provider in the MVPD marketplace would generate significant 
public interest benefits, such as lower prices, improved service 
quality, increased innovation, and increased service to unserved or 
underserved rural areas.\25\ However, the Commission found that ``open 
eligibility for in-region cable operators [would] pose a significant 
likelihood of substantial competitive harm'' because ``cable operators 
have a strong incentive to prevent entry by new MVPD providers.''\26\ 
Therefore, cable operators and entities holding attributable interests 
in cable operators must divest these interests within ninety days of 
being granted an MVDDS license whose geographic service area 
significantly overlaps the cable operator's service area.\27\
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    \25\ 25 MVDDS Second R&O, 17 FCC Rcd at 9680.
    \26\ 26 Id.
    \27\ 47 CFR 101.1412(a). ``Cable operator'' means a company that 
is franchised to provide cable service, as defined in 47 CFR 
76.1000(e), in all or part of the MVDDS license area, id. Sec.  
101.1412(b). ``Significant overlap'' occurs when a cable operator's 
subscribers in the MVDDS license area make up 35 percent or more of 
the households in that MVDDS license area which subscribe to one or 
more Multichannel Video Program Distributors (MVPDs), as defined in 
47 CFR 76.1000(e). See 47 CFR 101.1412(c) and (e). The winning 
bidder for the MVDDS license of the New York service area (MVD001), 
inter alia, requested and received a 270-day extension of the 90-day 
divestiture deadline, see 47 CFR 101.1412(g)(4), of the Commission's 
MVDDS/cable cross-ownership rule. See DTV Norwich, LLC, Application 
for Multichannel Video Distribution and Data Service License, 
MVD001-New York, Request for Waiver of Section 101.1412(g)(4) of the 
Commission's Rules, Order, File No. 0001618606-MVD001, DA 04-3044 
(released September 23, 2004) (DTV Norwich Waiver Order).
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    20. On January 27, 2004, the Commission completed the auction of 
the 214 MVDDS licenses (``Auction No. 53''), raising (in net bids) a 
total of $118,721,835. In this auction, ten winning bidders won a total 
of 192 MVDDS licenses, which the Commission issued later in 2004.\28\

[[Page 9579]]

MVDDS licenses are issued for a ten-year term beginning on the date the 
initial authorization is granted.\29\ Licensees must provide 
``substantial service'' within five years of the grant, which must be 
documented at license renewal time.\30\ As of the third quarter 2004, 
MVDDS equipment was still under development. Because MVDDS spectrum can 
be used to provide non-video, i.e., broadband data services,\31\ the 
Commission concluded that MVDDS does not fall within the Cable 
Television and DBS Subscribers regulatory fee category, which raises 
the question of whether MVDDS should be established as a new regulatory 
fee category.
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    \28\ See Wireless Telecommunications Bureau Grants Multichannel 
Video Distribution and Data Service Licenses, Public Notice, DA 04-
2331 (released July 27, 2004) (granting 154 licenses); Wireless 
Telecommunications Bureau Grants Multichannel Video Distribution and 
Data Service Licenses to South.Com LLC, DA 04-2547, Public Notice, 
(released August 18, 2004) (granting 37 licenses); and DTV Norwich 
Waiver Order (granting license for MVD001). All of the grants are 
subject to conditions.
    \29\ 47 CFR 101.1413(a).
    \30\ 30 47 CFR 101.1413(b) and (c).
    \31\ MVDDS licensees may use this spectrum for any digital fixed 
non-broadcast Service (broadcast services are intended for reception 
of the general public and not on a subscribership basis) including 
one-way direct-to-home/office wireless service. Licensees are 
permitted to provide one-way video programming and data services on 
a non-common carrier and/or on a common carrier basis. Mobile and 
aeronautical services are not authorized. Two-way services may be 
provided by using other spectrum or media for the return or upstream 
path. See 47 CFR 101.1407.
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    21. Since MVDDS equipment is still under development, we propose to 
not establish regulatory fees for MVDDS as a new regulatory fee 
category in FY 2005. We seek comment on this proposal. In the 
alternative, if the Commission were to establish regulatory fees for 
MVDDS in FY 2005, we seek comment on equitable ways to assess fees for 
MVDDS based on the nature of this service, such as whether the fee 
should be flat or be set on a per-MHz basis. We also seek comment on 
whether the Commission should collect the fee on an annual basis, or 
whether we should collect it in advance to cover the term of the 
license fee when the application for license is filed.

F. Broadband Radio Service (BRS)/Educational Broadband Service (EBS), 
(Formerly MDS/MMDS and ITFS)

    22. On June 10, 2004, we adopted a Report & Order and Further 
Notice of Proposed Rulemaking (R&O and FNPRM), 69 FR 72048 (December 
10, 2004), and also referred to as the BRS/EBS proceeding) \32\ that 
takes important steps to transform our rules and policies governing the 
licensing of the Instructional Television Fixed Service (ITFS), the 
Multipoint Distribution Service (MDS), and the Multichannel Multipoint 
Distribution Service (MMDS) in the 2500-2690 MHz band.\33\ The actions 
taken in this proceeding initiated a fundamental restructuring of the 
band that will provide both existing ITFS and MDS licensees and 
potential new entrants with greatly enhanced flexibility in order to 
encourage the highest and best use of spectrum domestically and 
internationally, and the growth and rapid deployment of innovative and 
efficient communications technologies and services.\34\ The R&O renamed 
the MDS service as the ``Broadband Radio Service'' (BRS). This new 
designation connotes a more accurate description of the services we 
anticipate will develop in the band.The R&O also renamed the ITFS 
service as the Educational Broadband Service'' (EBS), which more 
accurately describes the kinds of the services that we anticipate will 
develop in the band.\35\ The R&O, among other things, implemented 
geographic area licensing for all licensees in the band, which gives 
licensees increased flexibility while greatly reducing administrative 
burdens on both licensees and the Commission. We note that geographic 
area licensing will reduce the total number of BRS licenses because, in 
most cases, separate licenses will no longer be necessary for each 
transmitter a licensee places in service.
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    \32\ 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 et al, Report & Order and Further 
Notice of Proposed Rulemaking, 19 FCC Rcd 14165 (2004) (R&O and 
FNPRM).
    \33\ The terms MDS and MMDS are often used interchangeably. The 
Commission coined the term ``MDS'' at a time when it was making only 
two channels available for the service, at 2150-2162 MHz. The 
Commission began using the term ``MMDS'' when formulating rules 
making additional channels for the service available in the 2500-
2690 MHz band. In discussing this Report & Order and Further Notice 
of Proposed Rulemaking, we will use the term ``MDS'' to signify both 
services.
    \34\ Federal Communications Commission, Strategic Plan FY 2003-
FY 2008 at 5 (2002) (Strategic Plan).
    \35\ Federal Communications Commission, Strategic Plan FY 2003-
FY 2008 at 5 (2002) (Strategic Plan).
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    23. In the FNPRM, we sought comment on issues relating to 
regulatory fees.\36\ We note that, other than renaming our MDS/MMDS 
regulatory fee category to BRS and adjusting its estimated number of 
payment units, any other changes to the regulatory fee rules we adopt 
in the BRS/EBS proceeding will not be adopted in time to take effect in 
FY 2005. If new regulatory fee rules are adopted in the BRS/EBS 
proceeding, the Commission will make appropriate adjustments in the 
appropriate regulatory fee cycle, which will presumably be the cycle 
for FY 2006 or beyond.
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    \36\ See R&O and FNPRM, 19 FCC Rcd at 14293-97 paragraphs 351-
359.
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G. Regulatory Fees for AM and FM Construction Permits

    24. At the inception of our regulatory fee program in FY 1994, the 
regulatory fee amount for construction permits was set at an amount 
that, when compared to licensed stations, was commensurate to the 
limited nature of station operations under the terms of a construction 
permit. Each year since FY 1994, the unit fee for AM, FM, and full-
service VHF and UHF television construction permits was calculated by 
determining the proportion of the amount to be collected by each 
respective fee category, divided by the number of estimated units, as 
illustrated in Attachment C. However, since the inception of the 
program in FY 1994, the amount of fees that we have been directed to 
collect each year has steadily increased, while the number of estimated 
payment units for these construction permits has steadily decreased. 
This combination of increasing expected revenue and decreasing payment 
units for these construction permits has resulted in a regulatory unit 
fee that is higher than that of some licensed stations.
    25. To rectify this situation, we propose beginning in FY 2005 to 
set the AM, FM, VHF, and UHF construction permit fee to be no higher 
than the regulatory fee associated with the lowest licensed station for 
that fee category. Because there are unit and revenue variables in 
assessing the per-unit regulatory fee, thereby causing the fee to 
change each fiscal year, it may be necessary to make revenue 
adjustments each fiscal year to keep the per unit regulatory fee for 
construction permits at the level of the lowest licensed fee for AM, 
FM, VHF, and UHF stations. We seek comment on whether construction 
permit fees should be held at the level of the lowest licensed fee for 
their respective fee categories (e.g. AM, FM, VHF, and UHF stations), 
and whether any adjustments that have to be made to hold the 
construction permit fee at the level of the lowest respective licensed 
fee should be spread across only a narrow group of fee categories, such 
as AM, FM, VHF, and UHF stations, or across all fee categories.

H. Clarification of Policies and Procedures

1. Ad Hoc Issues Concerning Our Regulatory Fee Exemption Policies
    26. Pursuant to 47 CFR 1.1162, the Commission does not establish 
regulatory fees for applicants, permittees and licensees who qualify as 
government entities or non-profit entities. Despite the language of 47 
CFR

[[Page 9580]]

1.1162, we still encounter frequent uncertainty and comments from 
parties with respect to our fee exemption policies. Therefore, we 
believe it would be helpful for us to provide clarification of these 
policies.\37\
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    \37\ In the ensuing discussion, ``facility'' includes 
``station'' and ``licensee'' includes ``permittee.'' ``October 1'' 
means the close of business on October 1, the first day of the 
government fiscal year. ``Fee Due Date'' means the close of business 
on the day determined to be the final date by which regulatory fees 
must be paid. The Fee Due Date usually occurs in August or 
September. An ``Exempt Entity'' is a legal entity that is relieved 
of the burden of paying annual regulatory fees.
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    27. Determination of Fee Code for a Facility: The fee code is 
determined by the operational status of the facility as of October 1 of 
each year. This involves factors such as whether the facility is in 
construction permit status or licensed status and a variety of other 
factors. Every facility has a fee code. There is no prorating of 
regulatory fees. For example, if a facility is in construction permit 
status as of the close of business October 1, but a license is granted 
on or after October 2, that facility is considered to be in 
construction permit status for the entire year. Other facility changes 
during the course of the year, such as technical changes, are treated 
in the same manner.
    28. Establishment of Exempt Status: State, local, and federal 
government agencies and IRS-certified not-for-profit entities are 
generally exempt from payment of regulatory fees. The Commission 
requires that each exempt entity have on file a valid IRS Determination 
Letter or certification from a government authority documenting its 
exempt status. In instances where there is a question regarding the 
exempt status of an entity, the FCC may request, at any time, for the 
entity to submit an IRS Determination Letter or certification from a 
government authority that documents its exempt status.
    29. Subsidiaries of Exempt Entities: The licensee of a facility may 
be distinct from the ultimate owner. Exempt entities may hold one or 
more licenses for media facilities directly and/or through 
subsidiaries. Facilities licensed directly to an exempt entity and its 
exempt subsidiaries are excused from the regulatory fee obligation. 
However, licensees that are for-profit subsidiaries of exempt entities 
are subject to regulatory fees regardless of the exempt status of the 
ultimate owner.

    Examples: A University owns a commercial facility whose profits 
are used to support the University and/or its programs. If the 
facility is licensed to the University directly, or to an exempt 
subsidiary of the University, it is exempt from regulatory fees. If, 
however, the license is held by a for-profit subsidiary, regulatory 
fees are owed, even though the University is an exempt entity.
    A state pension fund is the majority owner of a for-profit 
commercial broadcasting firm. The facilities licensed to the for-
profit broadcasting firm would be subject to regulatory fees, even 
though it is owned by an exempt agency.

    30. Responsible Party, and the Effects of Transfers of Control: The 
entity holding the license for a facility as of the Fee Due Date is 
responsible for the regulatory fee for that facility. Eligibility for a 
regulatory fee exemption is determined by the status of the licensee as 
of the Fee Due Date, regardless of the status of any previous 
licensee(s).
2. Regulatory Fee Obligations for Digital Broadcasters
    31. Our current schedule of regulatory fees does not include 
service categories for digital broadcasters. Licensees in the broadcast 
industry pay regulatory fees based on their analog facilities. For 
licensees that broadcast in both the analog and digital formats, the 
only regulatory fee obligation at present is for their analog facility. 
Moreover, a licensee that has fully transitioned to digital 
broadcasting and has surrendered its analog spectrum would have no 
regulatory fee obligation.
    32. At this time, we regard it as premature to establish regulatory 
fee obligations for digital broadcasters. However, recognizing the 
Commission's initiatives to transition analog broadcasters to digital 
spectrum, we wish to begin to address these issues from a regulatory 
fee perspective, so that both the Commission and licensees can prepare 
for fee policy changes that may need to occur.
    33. Therefore we seek comment on whether and when we should 
establish regulatory fee service categories for digital broadcasters. 
In particular, we seek comment on ways that we could most efficiently 
and seamlessly adjust our schedule of regulatory fees to account for 
the collection of fee revenue from digital broadcasters without harming 
early transitioners to digital spectrum or late transitioners from 
analog spectrum.
3. Regulatory Fee Obligations for AM Expanded Band Broadcasters
    34. AM Expanded Band Radio Station: We are aware of uncertainty 
among licensees as to whether or not regulatory fees are owed for AM 
Expanded Band radio stations. The concept of the AM Expanded Band has 
its basis in the Commission's rules regarding experimental 
stations.\38\ The AM Expanded Band was created to reduce interference 
in the upper standard band portion of the AM spectrum band by allowing 
stations to voluntarily move their broadcasts from the standard band to 
a point above 1605 kHz.\39\
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    \38\ Definitions regarding AM Expanded Band stations are listed 
in many places in the Commission rules, including 47 CFR 73.14, 
73.21, 73.30, and 73.37.
    \39\ See 47 CFR 73.14, 73.21, 73.30, and 73.37 of the 
Commission' rules for information regarding AM Expanded Band 
stations.
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    35. Uncertainty about the fee status of AM Expanded Band stations 
may exist because AM Expanded Band radio service is not among our 
categories for general exemptions from regulatory fees, as defined in 
47 CFR 1.1162. While not fitting a general exemption, we clarify here 
that, at this time, licensees of AM Expanded Band radio stations--
stations authorized for broadcast in the 1605-1705 kHz range--are not 
required to pay regulatory fees for such stations. Licensees that 
operate a standard band AM station (540-1600 kHz) that is linked to an 
AM Expanded Band station are subject to regulatory fees for their 
standard band station only.
    36. We also note that our decision not to require regulatory fee 
payments for AM Expanded Band stations is not synonymous with giving AM 
Expanded Band radio service a general exemption from regulatory fees. 
Because the movement to the expanded band is voluntary and helps to 
reduce interference in the standard bandwidth, we wish to continue our 
policy of not subjecting this relatively small group of stations to 
regulatory fees. However, at some future point when the migration of 
standard band broadcasters to the Expanded Band has advanced, we will 
consider establishing regulatory fee requirements for AM Expanded Band 
stations.
4. Effective Date of Payment of Multi-Year Wireless Fees
    37. The first eleven fee categories in our Attachment D, Schedule 
of Regulatory Fees, constitute a general fee category known as multi-
year wireless fees. Regulatory fees for this category are generally 
paid in advance, and for the amount of the entire 5-year or 10-year 
term of the license. Because payment of these regulatory fees is linked 
to the date of license renewal (or at the time of a new application), 
these fees can be paid at any time during the fiscal year. As a result, 
there has been some confusion as to the regulatory fee rate that should 
apply at the time of license renewal. Current fiscal year regulatory

[[Page 9581]]

fees generally become effective 30 or 60 days after publication of the 
fees Report & Order in the Federal Register, or in some instances, 90 
days after delivery of the Report & Order to Congress. Because current 
fiscal year regulatory fees have an effective date, only licensees 
(including new licensees) whose license renewal dates fall on or after 
this effective date pay regulatory fees at the new rate. Licensees 
whose license renewal dates fall before the current year effective date 
pay regulatory fees at the prior year rate, which, in other words, is 
the rate currently in effect before the new rate becomes effective.

I. Proposals for Notification, Assessment and Collection of Regulatory 
Fees

    38. Each year, we generate public notices and fact sheets that 
notify regulatees of the fee payment due date and provide additional 
information regarding regulatory fee payment procedures. In prior 
years, we disseminated these notices and fact sheets to regulatees 
through surface mail. We discontinued this practice two years ago, 
informing regulatees that with the widespread use of the Internet, 
sending public notices by surface mail was not an efficient use of our 
time and resources. We stated that we can better serve the public by 
providing these general notices on our website, while exploring ways to 
disseminate specific regulatory fee bills or assessments through 
surface mail.
    39. Accordingly, in FY 2005 we will provide our public notices, 
fact sheets and all other relevant materials on our web site at http://www.fcc.gov/fees/regfees.html, just as we have done for the past 
several years. As a general practice, we will not send such information 
through surface mail. However, in the event that regulatees do not have 
access to the Internet, we will mail public notices and other relevant 
materials upon request. Regulatees and the general public may request 
such information by contacting the FCC CORES Help Desk at (877) 480-
3201, Option 4.
    40. Although last year we did not send public notices and fact 
sheets to regulatees en masse, we did send specific regulatory fee 
assessments or bills by surface mail to a select group of fee 
categories. Here, we believe that it is important to clarify the 
distinction between an assessment and a bill. An assessment is a 
proposed statement of the amount of regulatory fees owed by an entity 
to the Commission (or proposed subscriber count to be ascribed for 
purposes of setting the entity's regulatory fee) but it is not entered 
into the Commission's accounts receivable system as a current debt. A 
bill is distinct from an assessment in that it is automatically entered 
into our financial records as a debt owed to the Commission. Bills 
reflect the amount owed and have a due date of the last day of the fee 
payment window. Consequently, if a bill is not paid by the due date, it 
becomes delinquent and is subject to our debt collection 
procedures.\40\
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    \40\ See 47 CFR 1.1161(c), 1.1164(f)(5), and 1.1910.
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    41. We are pursuing our billing initiatives as part of our effort 
to modernize our financial practices. Eventually, we intend to expand 
our billing initiatives to include all regulatory fee service 
categories. For now, based on the results of our assessment and billing 
initiatives from last year, and the resources currently available to 
us, we propose to proceed with our various FY 2005 initiatives as 
follows.
1. Interstate Telecommunications Service Providers (ITSPs)
    42. In FY 2001, we began sending pre-completed FCC Form 159-W 
assessments to carriers in an effort to assist them in paying the 
Interstate Telecommunications Service Provider (ITSP) regulatory 
fee.\41\ The fee amount on FCC Form 159-W was calculated from the FCC 
Form 499-A report, which carriers are required to submit by April 1st 
of each year. Throughout FY 2002 and FY 2003, we refined the FCC Form 
159-W to simplify the regulatory fee payment process.\42\ In FY 2004, 
we generated and mailed the same pre-completed FCC Form 159-W's to 
carriers under the same dissemination procedures, but we informed them 
that we will be treating the amount due on Form 159-W as a bill, rather 
than as an assessment. Other than the manner in which Form 159-W 
payments were entered into our financial system, carriers experienced 
no procedural changes regarding the use of the FCC Form 159-W when 
submitting payment of their FY 2004 ITSP regulatory fees.
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    \41\ See FY 2001 Report and Order, 16 FCC Rcd 13590 (2001) at 
paragraph 67. See also FCC Public Notice--Common Carrier Regulatory 
Fees (August 3, 2001) at 4.
    \42\ Beginning in FY2002, Form 159-W included a payment section 
at the bottom of the form that allowed carriers the opportunity to 
send in Form 159-W in lieu of completing Form 159 Remittance Advice 
Form.
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    43. For FY 2005, we propose to continue our Form 159-W billing 
initiative for ITSPs. We seek comment on this proposal and on ways that 
we could improve our billing initiative for ITSPs.
2. Satellite Space Station Licensees
    44. Last year, for the first time, we mailed regulatory fee bills 
through surface mail to all licensees in our two satellite space 
station service categories. Specifically, geostationary orbit space 
station (``GSO'') licensees received bills requesting regulatory fee 
payment for satellites that (1) were licensed by the Commission and 
operational on or before October 1, 2003; and (2) were not co-located 
with and technically identical to another operational satellite on 
October 1, 2003 (i.e., were not functioning as a spare satellite). Non-
geostationary orbit space station (``NGSO'') licensees received bills 
requesting regulatory fee payment for systems that were licensed by the 
Commission and operational on or before October 1, 2003.
    45. For FY 2005, we propose to continue our billing initiative for 
our two satellite space station categories: GSOs and NGSOs.
    46. Finally, we emphasize that the bills that we propose to 
generate for our GSO and NGSO licensees will be only for the satellite 
or system aspects of their respective operations. GSO and NGSO 
licensees typically have regulatory fee obligations in other service 
categories (such as earth stations, broadcast facilities, etc.), and we 
expect satellite operators to meet their full fee payment obligations 
for their entire portfolio of FCC licenses. We seek comment on our 
proposal to generate regulatory fee bills for our two satellite space 
station service categories.
3. Media Services Licensees
    47. In FY 2003 and FY 2004, we mailed fee assessment postcards to 
media services entities on a per-facility basis. The postcards served 
to notify licensees of the date when fee payments are due, the assessed 
fee amount for the facility, as well as other data attributes that we 
used in determining the fee amount.\43\ We propose to continue our 
assessment initiative for media services licensees this year in a 
similar fashion.
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    \43\ Fee assessments were issued for AM and FM Radio Stations, 
AM and FM Construction Permits, FM Translators/Boosters, VHF and UHF 
Television Stations, VHF and UHF Television Construction Permits, 
Satellite Television Stations, Low Power Television (LPTV) Stations, 
and LPTV Translators/Boosters. Fee assessments were not issued for 
broadcast auxiliary stations, nor will they be issued for them in FY 
2005.
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    48. As was the case last year, we propose to mail a single round of 
postcards to licensees and their other known points of contact listed 
in CDBS (Consolidated Database System) and in CORES (Commission 
Registration System), the Commission's two official

[[Page 9582]]

databases for media services. By doing so, licensees and their other 
points of contact will all be furnished with the same information for 
each facility in question so that they can designate among themselves 
the payer of this year's fee. Mailing postcards to all interested 
parties at different addresses on file for each facility also 
encourages all parties to visit our Commission-authorized web site to 
update or correct information regarding the station, or to certify 
their fee-exempt status, if appropriate. The web site will be available 
again on-line throughout this summer.\44\ In addition to using the 
postcards to direct parties to our authorized web site for updates and 
corrections, the postcards will also direct licensees to the telephone 
number of our FCC CORES Help Desk at (877) 480-3201, Option 4, where 
licensees can call to obtain clarification on procedures. We seek 
comment on our proposal to generate fee assessment postcards for media 
services entities.
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    \44\ The Commission-authorized web site is http://www.fccfees.com.
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    49. Under our proposal, media services licensees would still be 
required to submit a completed Form 159 with their fee payments, 
despite having received an assessment postcard. We cannot guarantee 
that your regulatory fees will be posted accurately against your 
account if a Form 159 is not returned with your fee payment. We 
emphasize that the assessment postcards that we propose to mail to 
media services licensees are not to be used as a substitute to 
completing Form 159. Rather, we hope licensees will use the postcards 
as a tool to help them complete their Form 159.
    50. We also emphasize that the most important data element that 
media services licensees need to include on their Form 159 is their 
station's facility ID. The facility ID is a unique identifier that 
never changes over the course of a station's existence. Despite the 
fact that we prominently display a station's facility ID on the 
station's assessment postcard, and Form 159 filing instructions call 
for each station's facility ID and call sign to be provided, we 
typically receive many incomplete Form 159s that do not provide the 
facility ID of the station whose fee is being paid.
4. Commercial Mobile Radio Service (CMRS) Cellular and Mobile Services
    51. In our FY2004 NPRM, we proposed to mail assessments to 
Commercial Mobile Radio Services (CMRS) cellular and mobile service 
providers using information from the Numbering Resource Utilization 
Forecast (NRUF) form.\45\ We proposed that subscriber data from the 
NRUF form and the Local Number Portability (LNP) database be used to 
compute and assess a regulatory fee obligation. Upon the suggestion of 
some of our commenters to our NPRM, we decided to provide entities who 
filed an NRUF form an opportunity to revise their subscriber counts 
before making a regulatory fee payment.\46\ We propose to continue our 
procedure of giving entities an opportunity to revise their subscriber 
counts again this year by sending two rounds of assessment letters, an 
initial assessment and a final assessment letter. If this exercise 
again proves to be successful, we will be sending these letters next 
year as ``bills'', which will have Debt Collection Improvement Act 
(DCIA) implications if the assessment fee based on these subscriber 
counts is not paid by the due date of next year's regulatory fees.
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    \45\ See Assessment and Collection of Regulatory Fees for Fiscal 
Year 2004, Notice of Proposed Rulemaking, 19 FCC Rcd 5795, 5801, at 
paragraph 20 (2004) (FY 2004 NPRM).
    \46\ See FY 2004 Report and Order, 19 FCC Rcd 11662, 11676-
11677, at paragraphs 48-49 (2004).
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    52. As in FY 2004, we again propose to send an assessment letter 
that is based on NRUF data \47\ that includes a list of the carrier's 
Operating Company Numbers (OCNs) upon which the assessment is based. 
The letters will not include assigned number counts by OCNs, but rather 
an aggregate of assigned numbers for each carrier. If the number of 
subscribers on the initial assessment letter differs from the 
subscriber count they provided on the NRUF form, CMRS cellular and 
mobile service providers can amend their initial assessment letter to 
correctly identify their subscriber count as of December 31, 2004. 
Assessment letters that are amended should indicate the specific reason 
for the change, such as the purchase or the sale of a subsidiary, the 
date of the transaction, and any other information that will help to 
justify a reason for the change. If we receive no response to our 
initial assessment letter, we will assume that the initial assessment 
is correct and will expect the fee payment to be based on the number of 
subscribers listed on the initial assessment. We will review all 
responses and determine whether a change in the number of subscribers 
is warranted. As in previous years, operators will certify their 
subscriber counts in Block 30 of the FCC Form 159 Remittance Advice 
when making their regulatory fee payments.
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    \47\ Our proposal to continue to use NRUF data is subject to 
action taken in response to a Petition for Reconsideration of the FY 
2004 Fee Order filed by Cingular Wireless LLC filed on August 6, 
2004.
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    53. Although two assessment letters will be mailed to carriers that 
have filed an NRUF form, it is conceivable that some carriers will not 
be sent any letters of assessment because they did not file the NRUF 
form. For these carriers, we again propose to use the methodology \48\ 
that is currently in place for CMRS Wireless services. They should use 
their subscriber count as of December 31, 2004 and submit payment 
accordingly on FCC Form 159. However, whether a carrier receives a 
letter of assessment or computes the subscriber count itself, the 
Commission reserves the right, under the Communications Act, to audit 
the number of subscribers upon which regulatory fees are paid. In the 
event that the Commission determines that the number of subscribers is 
inaccurate or that an insufficient reason is given for making a 
correction on the initial assessment letter, we again propose that we 
reserve the right to assess the carrier for the difference between what 
was paid and what should have been paid.
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    \48\ Federal Communications Commission, Regulatory Fees Fact 
Sheet, ``What You Owe--Commercial Wireless Services, July 2004, page 
1.
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    54. After having the benefit of using NRUF data last year, we will 
clarify some of the issues raised last year. First, we propose to 
derive the subscriber count from NRUF data based on ``assigned'' number 
counts that have been adjusted for porting to net Type 0 ports (``in'' 
and ``out''), which should reflect a more accurate subscriber count. 
Second, as a result of number pooling, many wireless carriers receive 
their new numbers as thousand-number blocks and that, within each 
block, up to 100 numbers can be retained by the donating carrier. 
Because retained numbers are reported on the NRUF form as ``assigned'' 
to the holder of the thousand block, a concern was raised last year 
that this anomaly would result in a lower count for the donating 
carrier and a higher count for the recipient carrier. Although we are 
unable to correct this anomaly at this time, we believe our proposal to 
give carriers an opportunity to revise their subscriber count should 
alleviate any potential harm resulting from this phenomenon. And 
finally, because we are requiring carriers to confirm their subscriber 
counts on an aggregate basis, a carrier should be able to identify its 
subscriber count accurately as of December 31, 2004, regardless of 
whether the carrier uses data in the NRUF report, a Securities and 
Exchange (SEC) filing, the 477 report, or some other certified 
financial statement. Because we have

[[Page 9583]]

found subscriber counts reported by carriers on the NRUF form to be 
very accurate, we propose to continue to use the NRUF report \49\ as 
the basis for our CMRS cellular/mobile provider assessments.
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    \49\ Our proposal to continue to use NRUF data is subject to 
action taken in response to a Petition for Reconsideration of the FY 
2004 Fee Order filed by Cingular Wireless LLC filed on August 6, 
2004.
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5. Cable Television Subscribers
    55. Last year, we generated regulatory fee assessment letters for 
that segment of the cable television industry that was listed in 
selected publicly available data sources. The data sources that we 
selected for reference were the Broadcasting and Cable Yearbook 2003-
2004 (``Yearbook'') \50\ and industry statistics published by the 
National Cable and Telecommunications Association (``NCTA'').\51\ We 
also permitted cable operators for the first time, regardless of 
whether or not they were listed in the selected data sources, to make 
regulatory fee payments based on their companies' aggregate subscriber 
counts, rather than requiring them to sub-report subscriber counts on a 
per community unit identifier (``CUID'') basis.
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    \50\ Broadcasting and Cable Yearbook 2003-2004, by Reed 
Elsevier, Inc., Newton, MA, 2003. Subscriber counts reported in 
Section C, ``Multiple System Operators, Independent Owners and Cable 
Systems,'' page C-3.
    \51\ NCTA maintains an updated list of the 25 largest multiple-
system operators at its web site located at http://www.ncta.com.
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    56. We generated assessment letters for each of the cable operators 
listed in the Yearbook, as well as the 25 largest multiple-system 
operators (``MSOs''), as listed on NCTA's web page. The cable operators 
that received assessment letters were given the opportunity to respond 
to the Commission to rectify their subscriber counts before making 
their fee payments. The remainder of the cable television industry did 
not receive assessment letters. Regardless of whether or not a company 
was listed in the Yearbook or on NCTA's web page, all cable operators 
were instructed to base their fee obligations on their basic subscriber 
counts as of December 31, 2003, with the understanding that we would 
corroborate the counts with other publicly available data sources.
    57. This year, we propose to conduct a similar assessment 
initiative, but with different procedures. Specifically, we will 
generate fee assessment letters for the cable operators who are on file 
as having paid regulatory fees last year for their basic cable 
subscribers. Under our proposal, our letter to each operator would 
announce the due date for payment of FY 2005 regulatory fees; reflect 
the subscriber count for which the operator paid FY 2004 regulatory 
fees; and request that the operator access a Commission-authorized web 
site to provide its aggregate count of basic cable subscribers as of 
December 31, 2004--the date that the Commission requires operators to 
use as the basis for determining their regulatory fee obligations for 
basic cable subscribers. If the number of subscribers as of December 
31, 2004 differs from the amount paid for last year, operators would be 
required to provide a brief explanation for the differing subscriber 
counts and indicate when the difference occurred. Cable operators who 
do not have access to the Internet would be able to contact the FCC 
CORES Help Desk at (877) 480-3201, Option 4, to provide their 
subscriber count as of December 31, 2004. We seek comment on our 
proposed assessment initiative.
    58. Some cable operators may not have made regulatory fee payments 
last year. For example, a new company may have become operational after 
the first day of the fiscal year and therefore they did not have a 
regulatory fee obligation in FY 2004; or an existing company did not 
make a payment because it filed a petition for waiver of regulatory 
fees for FY 2004 based on financial hardship. Regardless of the 
circumstance, we emphasize that not receiving a regulatory fee 
assessment letter in FY 2005 would not excuse an operator from the 
obligation to pay FY 2005 regulatory fees. We expect payment from all 
non-exempt cable operators, not just those that made FY2004 payments 
and/or received assessment letters for FY2005 fees.
    59. Actual payment procedures for cable operators would be the same 
as they were in previous years. Operators would continue to complete 
the FCC Form 159 Remittance Advice when making their payment, and would 
continue to certify their December 31, 2004 subscriber count in Block 
30 of the Form 159.
    60. Finally, we seek comment on a proposal to require the cable 
industry to annually report their basic subscriber counts to the 
Commission prior to paying regulatory fees for the fiscal year in 
question. For example, by June 1st of a given fiscal year, we would 
require that operators report the number of subscribers on December 
31st of the preceding year. The Commission would then use the 
subscriber counts received on June 1st to audit regulatory fee payments 
that are collected later in the fiscal year.
    61. Currently, subscriber counts are self-reported and certified by 
cable operators when they make their regulatory fee payments to the 
Commission at the end of each fiscal year. Self-reporting and 
certifying subscriber counts does not furnish us with data that we can 
use to audit regulatory fee payments. Therefore, we believe that a 
cable industry reporting requirement specific to regulatory fees may be 
necessary and we are therefore seeking comment on the proposal. We do 
not intend to implement any such reporting requirement for the 
collection of FY 2005 regulatory fees.

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

    62. We continue to welcome comments on a broad range of options 
concerning our commitment to reviewing, streamlining and modernizing 
our statutorily required fee-assessment and collection procedures. Our 
areas of particular interest included: (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, e-
mail, 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.

III. Procedural Matters

A. Payment of Regulatory Fees

1. De Minimis Fee Payment Liability
    63. As in the past, regulatees whose total FY 2005 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 payment of FY 
2005 regulatory fees.
2. Standard Fee Calculations and Payment Dates
    64. 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 as of 
October 1, 2004. However, in instances where a license or permit is 
transferred or assigned after October 1, 2004, responsibility for 
payment rests with the holder of the license or permit at the time 
payment is due.
    (b) Wireline (Common Carrier) Services: Fees must be paid for any 
authorization issued on or before October 1, 2004. However, where a 
license or permit is transferred or

[[Page 9584]]

assigned after October 1, 2004, responsibility for payment rests with 
the holder of the license or permit at the time payment is due.
    (c) Wireless Services: Commercial Mobile Radio Service (CMRS) 
cellular, mobile, and messaging services (fees based upon a subscriber, 
unit or circuit count): Fees must be paid for any authorization issued 
on or before October 1, 2004. The number of subscribers, units or 
circuits on December 31, 2004 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) Multichannel Video Programming Distributor Services (basic 
cable television subscribers and CARS licenses): The number of 
subscribers on December 31, 2004 will be used as the basis from which 
to calculate the fee payment.\52\ For CARS licensees, fees must be paid 
for any authorization issued on or before October 1, 2004. The 
responsibility for the payment of regulatory fees for CARS licenses 
rests with the holder of the permit or license on October 1, 2004. 
However, in instances where a CARS license or permit is transferred or 
assigned after October 1, 2004, responsibility for payment rests with 
the holder of the license or permit at the time payment is due.
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    \52\ Cable television system operators should compute their 
basic 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 2004, rather than on a count as of December 31, 
2004.
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    (e) International Services: For earth stations and geostationary 
orbit space stations, payment is calculated on a per operational 
station basis. For non-geostationary orbit satellite systems, payment 
is calculated on a per operational system basis. The responsibility for 
the payment of regulatory fees rests with the holder of the permit or 
license on October 1, 2004. However, in instances where a license or 
permit is transferred or assigned after October 1, 2004, responsibility 
for payment rests with the holder of the license or permit at the time 
payment is due. For international bearer circuits, payment is 
calculated on a per active circuit basis as of December 31, 2004.
    65. The Commission strongly recommends that entities submitting 
more than twenty-five (25) Form 159-C's use the electronic Fee Filer 
program when sending their regulatory fee payment. The Commission will, 
for the convenience of payers, accept fee payments made in advance of 
the normal formal window for the payment of regulatory fees.

B. Enforcement

    66. 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. Regulatory fee payment must be received 
and stamped at the lockbox bank by the last day of the regulatory fee 
filing window, and not merely postmarked by the last day of the window. 
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 Sec.  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.
    67. Furthermore, we recently amended our regulatory fee rules 
effective November 1, 2004, to provide that we will withhold action on 
any applications or other requests for benefits filed by anyone who is 
delinquent in any non-tax debts owed to the Commission (including 
regulatory fees) and will ultimately dismiss those applications or 
other requests if payment of the delinquent debt or other satisfactory 
arrangement for payment is not made. See 47 CFR 1.1161(c), 
1.1164(f)(5), and 1.1910. Failure to pay regulatory fees can also 
result in the initiation of a proceeding to revoke any and all 
authorizations held by the delinquent payer.

C. Comment Period and Procedures

    68. Pursuant to 47 CFR 1.415, 1.419, interested parties may file 
comments on or before March 8, 2005, and reply comments on or before 
March 18, 2005. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies.\53\
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    \53\ See Electronic Filing of Documents in Rulemaking 
Proceedings, 63 FR 24121 (1998), available at <http://www.fcc.gov/Bureaus/OGC/Orders/1998/fcc98056.pdf>.
---------------------------------------------------------------------------

    69. 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.
    70. 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 will receive hand-delivered or messenger-
delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, N.E., 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 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

[[Page 9585]]

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.
    71. 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.
    72. 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].

D. Ex Parte Rules

    73. 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.\54\
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    \54\ 47 CFR 1.1203 and 1.1206(b).
---------------------------------------------------------------------------

E. Paperwork Reduction Act Analysis

    74. This document contains proposed modified information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due April 29, 2005. Comments should address: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the Commission, including whether the 
information shall have practical utility; (b) the accuracy of the 
Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.''

F. Initial Regulatory Flexibility Analysis

    75. As required by the Regulatory Flexibility Act,\55\ 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.
---------------------------------------------------------------------------

    \55\ See 5 U.S.C. 603.
---------------------------------------------------------------------------

G. Authority and Further Information

    76. Authority for this proceeding is contained in sections 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.\56\ 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.
---------------------------------------------------------------------------

    \56\ 47 U.S.C. 154(i)- (P28P1.XXX)(j), 159, & 303(r).

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Attachment A--Initial Regulatory Flexibility Analysis

    77. As required by the Regulatory Flexibility Act (RFA),\57\ the 
Commission has prepared this 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 provided in paragraph 75. The Commission will 
send a copy of the NPRM, including the IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration.\58\ In addition, the 
NPRM and IRFA (or summaries thereof) will be published in the Federal 
Register.\59\
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    \57\ 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, Public Law 104-
121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the 
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
    \58\ 5 U.S.C. 603(a).
    \59\ Id.
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I. Need for, and Objectives of, the Proposed Rules

    78. This rulemaking proceeding is initiated to obtain comments 
concerning the Commission's proposed amendment of its Schedule of 
Regulatory Fees in the amount of $280,098,000, 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

    79. 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.\60\
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    \60\ 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

    80. 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 and policies, if

[[Page 9586]]

adopted.\61\ The RFA generally defines the term ``small entity'' as 
having the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' \62\ In 
addition, the term ``small business'' has the same meaning as the term 
``small business concern'' under the Small Business Act.\63\ 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 SBA.\64\
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    \61\ 5 U.S.C. 603(b)(3).
    \62\ 5 U.S.C. 601(6).
    \63\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small-business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), 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.''
    \64\ 15 U.S.C. 632.
---------------------------------------------------------------------------

    81. Small Businesses. Nationwide, there are a total of 22.4 million 
small businesses, according to SBA data.\65\
---------------------------------------------------------------------------

    \65\ See SBA, Programs and Services, SBA Pamphlet No. CO-0028, 
at page 40 (July 2002).
---------------------------------------------------------------------------

    82. Small Organizations. Nationwide, there are approximately 1.6 
million small organizations.\66\
---------------------------------------------------------------------------

    \66\ Independent Sector, The New Nonprofit Almanac & Desk 
Reference (2002).
---------------------------------------------------------------------------

    83. Small Governmental Jurisdictions. 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.'' \67\ As of 1997, there were approximately 
87,453 governmental jurisdictions in the United States.\68\ 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.
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    \67\ 5 U.S.C. 601(5).
    \68\ U.S. Census Bureau, Statistical Abstract of the United 
States: 2000, Section 9, pages 299-300, Tables 490 and 492.
---------------------------------------------------------------------------

    84. We have included small incumbent local exchange carriers 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.'' 
\69\ The SBA's Office of Advocacy contends that, for RFA purposes, 
small incumbent local exchange carriers are not dominant in their field 
of operation because any such dominance is not ``national'' in 
scope.\70\ We have therefore included small incumbent local exchange 
carriers in this RFA analysis, although we emphasize that this RFA 
action has no effect on Commission analyses and determinations in 
other, non-RFA contexts.
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    \69\ 15 U.S.C. 632.
    \70\ Letter from Jere W. Glover, Chief Counsel for Advocacy, 
SBA, to William E. Kennard, Chairman, 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 15 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. See 13 CFR 
121.102(b).
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    85. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees.\71\ According to 
Commission data,\72\ 1,337 carriers have reported that they are engaged 
in the provision of incumbent local exchange services. Of these 1,337 
carriers, an estimated 1,032 have 1,500 or fewer employees and 305 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange service are small businesses 
that may be affected by our proposed action.
---------------------------------------------------------------------------

    \71\ 13 CFR 121.201, North American Industry Classification 
System (NAICS) code 517110 (changed from 513310 in October 2002).
    \72\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
Page 5-5 (Aug. 2003) (hereinafter ``Trends in Telephone Service''). 
This source uses data that are current as of December 31, 2001.
---------------------------------------------------------------------------

    86. Competitive Local Exchange Carriers (CLECs), Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees.\73\ 
According to Commission data,\74\ 609 carriers have reported that they 
are engaged in the provision of either competitive access provider 
services or competitive local exchange carrier services. Of these 609 
carriers, an estimated 458 have 1,500 or fewer employees and 151 have 
more than 1,500 employees. In addition, 16 carriers have reported that 
they are ``Shared-Tenant Service Providers,'' and all 16 are estimated 
to have 1.500 or fewer employees. In addition, 35 carriers have 
reported that they are ``Other Local Service Providers.'' Of the 35, an 
estimated 34 have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that most providers 
of competitive local exchange service, competitive access providers, 
``Shared-Tenant Service Providers,'' and ``Other Local Service 
Providers'' are small entities that may be affected by our proposed 
action.
---------------------------------------------------------------------------

    \73\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
October 2002).
    \74\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    87. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\75\ According to Commission data,\76\ 133 carriers have 
reported that they are engaged in the provision of local resale 
services. Of these, an estimated 127 have 1,500 or fewer employees and 
six have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of local resellers are small entities that 
may be affected by our proposed action.
---------------------------------------------------------------------------

    \75\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in 
October 2002).
    \76\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    88. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\77\ According to Commission data,\78\ 625 carriers have 
reported that they are engaged in the provision of toll resale 
services. Of these, an estimated 590 have 1,500 or fewer employees and 
35 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of toll resellers are small entities that 
may be affected by our proposed action.
---------------------------------------------------------------------------

    \77\ 13 CFR 121.201, NAICS code 517310 (changed to 513330 in 
October 2002).
    \78\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    89. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
payphone services providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such

[[Page 9587]]

a business is small if it has 1,500 or fewer employees.\79\ According 
to Commission data,\80\ 761 carriers have reported that they are 
engaged in the provision of payphone services. Of these, an estimated 
757 have 1,500 or fewer employees and four have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
payphone service providers are small entities that may be affected by 
our proposed action.
---------------------------------------------------------------------------

    \79\ 3 CFR 121.201, NAICS code 517110 (changed from 513310 in 
October 2002).
    \80\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    90. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
providers of interexchange services. The appropriate size standard 
under SBA rules is for the category Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees.\81\ According to Commission data,\82\ 261 carriers 
have reported that they are engaged in the provision of interexchange 
service. Of these, an estimated 223 have 1,500 or fewer employees and 
38 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by our proposed action.
---------------------------------------------------------------------------

    \81\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
October 2002).
    \82\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    91. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\83\ According to Commission data,\84\ 23 carriers have 
reported that they are engaged in the provision of operator services. 
Of these, an estimated 22 have 1,500 or fewer employees and one has 
more than 1,500 employees. Consequently, the Commission estimates that 
the majority of OSPs are small entities that may be affected by our 
proposed action.
---------------------------------------------------------------------------

    \83\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
October 2002).
    \84\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    92. Prepaid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
prepaid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer 
employees.\85\ According to Commission data,\86\ 37 carriers have 
reported that they are engaged in the provision of prepaid calling 
cards. Of these, an estimated 36 have 1,500 or fewer employees and one 
has more than 1,500 employees. Consequently, the Commission estimates 
that the majority of prepaid calling card providers are small entities 
that may be affected by our proposed action.
---------------------------------------------------------------------------

    \85\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in 
October 2002).
    \86\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    93. 800 and 800-Like Service Subscribers.\87\ Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for 800 and 800-like service (``toll free'') subscribers. 
The appropriate size standard under SBA rules is for the category 
Telecommunications Resellers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees.\88\ The most reliable 
source of information regarding the number of these service subscribers 
appears to be data the Commission collects on the 800, 888, and 877 
numbers in use.\89\ According to our data, at the end of January, 1999, 
the number of 800 numbers assigned was 7,692,955; the number of 888 
numbers assigned was 7,706,393; and the number of 877 numbers assigned 
was 1,946,538. We do not have data specifying the number of these 
subscribers that are not independently owned and operated or have more 
than 1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of toll free subscribers that would 
qualify as small businesses under the SBA size standard. Consequently, 
we estimate that there are 7,692,955 or fewer small entity 800 
subscribers; 7,706,393 or fewer small entity 888 subscribers; and 
1,946,538 or fewer small entity 877 subscribers.
---------------------------------------------------------------------------

    \87\ We include all toll-free number subscribers in this 
category, including those for 888 numbers.
    \88\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in 
October 2002).
    \89\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Study on Telephone Trends, Tables 21.2, 21.3, and 21.4 (Feb. 19, 
1999).
---------------------------------------------------------------------------

    94. International Service Providers. The Commission has not 
developed a small business size standard specifically for providers of 
international service. The appropriate size standards under SBA rules 
are for the two broad categories of Satellite Telecommunications and 
Other Telecommunications. Under both categories, such a business is 
small if it has $12.5 million or less in average annual receipts.\90\ 
For the first category of Satellite Telecommunications, Census Bureau 
data for 1997 show that there were a total of 324 firms that operated 
for the entire year.\91\ Of this total, 273 firms had annual receipts 
of under $10 million, and an additional 24 firms had receipts of $10 
million to $24,999,999. Thus, the majority of Satellite 
Telecommunications firms can be considered small.
---------------------------------------------------------------------------

    \90\ 13 CFR.121.201, NAICS codes 517410 and 517910 (changed from 
513340 and 513390 in October 2002).
    \91\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4, NAICS code 513340 (issued October 2000).
---------------------------------------------------------------------------

    95. The second category--Other Telecommunications--includes 
``establishments primarily engaged in * * * providing satellite 
terminal stations and associated facilities operationally connected 
with one or more terrestrial communications systems and capable of 
transmitting telecommunications to or receiving telecommunications from 
satellite systems.'' \92\ According to Census Bureau data for 1997, 
there were 439 firms in this category that operated for the entire 
year.\93\ Of this total, 424 firms had annual receipts of $5 million to 
$9,999,999 and an additional six firms had annual receipts of $10 
million to $24,999,990. Thus, under this second size standard, the 
majority of firms can be considered small.
---------------------------------------------------------------------------

    \92\ Office of Management and Budget, North American Industry 
Classification System, page 513 (1997) (NAICS code 513390, changed 
to 517910 in October 2002).
    \93\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4, NAICS code 513390 (issued October 2000).
---------------------------------------------------------------------------

    96. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' \94\ and ``Cellular and Other Wireless 
Telecommunications.''\95\ Under both SBA categories, a wireless 
business is small if it has 1,500 or fewer employees. 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.\96\ 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

[[Page 9588]]

more.\97\ Thus, under this category and associated small business size 
standard, the great majority of firms can be considered small. For the 
census category Cellular and Other Wireless Telecommunications, Census 
Bureau data for 1997 show that there were 977 firms in this category, 
total, that operated for the entire year.\98\ 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.\99\ Thus, under this second 
category and size standard, the great majority of firms can, again, be 
considered small.
---------------------------------------------------------------------------

    \94\ 13 CFR 121.201, NAICS code 513321 (changed to 517211 in 
October 2002).
    \95\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \96\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
    \97\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). 
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 1000 employees or more.''
    \98\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
    \99\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). 
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 1000 employees or more.''
---------------------------------------------------------------------------

    97. Internet Service Providers. The SBA has developed a small 
business size standard for Internet Service Providers. This category 
comprises establishments ``primarily engaged in providing direct access 
through telecommunications networks to computer-held information 
compiled or published by others.'' \100\ Under the SBA size standard, 
such a business is small if it has average annual receipts of $21 
million or less.\101\ According to Census Bureau data for 1997, there 
were 2,751 firms in this category that operated for the entire 
year.\102\ Of these, 2,659 firms had annual receipts of under $10 
million, and an additional 67 firms had receipts of between $10 million 
and $24,999,999.\103\ Thus, under this size standard, the great 
majority of firms can be considered small entities.
---------------------------------------------------------------------------

    \100\ Office of Management and Budget, North American Industry 
Classification System, page 515 (1997). NAICS code 514191, ``On-Line 
Information Services'' (changed to current name and to code 518111 
in October 2002).
    \101\ 13 CFR 121.201, NAICS code 518111.
    \102\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 4, Receipts Size of Firms Subject to Federal 
Income Tax: 1997, NAICS code 514191 (issued October 2000).
    \103\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 4, Receipts Size of Firms Subject to Federal 
Income Tax: 1997, NAICS code 514191 (issued October 2000).
---------------------------------------------------------------------------

    98. Cellular Licensees. The SBA has developed a small business size 
standard for wireless firms within the broad economic census category 
``Cellular and Other Wireless Telecommunications.'' \104\ Under this 
SBA category, a wireless business is small if it has 1,500 or fewer 
employees. For the census category 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.\105\ 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.\106\ Thus, under this category and size standard, the great 
majority of firms can be considered small. According to the most recent 
Trends in Telephone Service data, 719 carriers reported that they were 
engaged in the provision of cellular service, personal communications 
service, or specialized mobile radio telephony services, which are 
placed together in the data.\107\ We have estimated that 294 of these 
are small, under the SBA small business size standard.\108\
---------------------------------------------------------------------------

    \104\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \105\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
    \106\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). 
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 1000 employees or more.''
    \107\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
    \108\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
---------------------------------------------------------------------------

    99. Common Carrier Paging. The SBA has developed a small business 
size standard for wireless firms within the broad economic census 
categories of ``Cellular and Other Wireless Telecommunications.'' \109\ 
Under this SBA category, a wireless business is small if it has 1,500 
or fewer employees. 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.\110\ 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.\111\ Thus, under this category 
and associated small business size standard, the great majority of 
firms can be considered small.
---------------------------------------------------------------------------

    \109\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \110\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
    \111\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). 
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 1000 employees or more.''
---------------------------------------------------------------------------

    100. In the Paging Second Report and Order, the Commission adopted 
a size standard for ``small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments.\112\ 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.\113\ 
The SBA has approved this definition.\114\ An auction of Metropolitan 
Economic Area (MEA) licenses commenced on February 24, 2000, and closed 
on March 2, 2000. Of the 2,499 licenses auctioned, 985 were sold.\115\ 
Fifty-seven companies claiming small business status won 440 
licenses.\116\ An auction of MEA and Economic Area (EA) licenses 
commenced on October 30, 2001, and closed on December 5, 2001. Of the 
15,514 licenses auctioned, 5,323 were sold.\117\ One hundred thirty-two 
companies claiming small business status purchased 3,724 licenses. A 
third auction, consisting of 8,874 licenses in each of 175 EAs and 
1,328 licenses in all but three of the 51 MEAs commenced on May 13, 
2003, and closed on May 28, 2003. Seventy-seven bidders claiming small 
or very small business status won 2,093 licenses.\118\

[[Page 9589]]

Currently, there are approximately 74,000 Common Carrier Paging 
licenses. According to the most recent Trends in Telephone Service, 608 
private and common carriers reported that they were engaged in the 
provision of either paging or ``other mobile'' services.\119\ Of these, 
we estimate that 589 are small, under the SBA-approved small business 
size standard.\120\ We estimate that the majority of common carrier 
paging providers would qualify as small entities under the SBA 
definition.
---------------------------------------------------------------------------

    \112\ Revision of Part 22 and Part 90 of the Commission's Rules 
to Facilitate Future Development of Paging Systems, Second Report 
and Order, 12 FCC Rcd 2732, 2811-2812, paragraphs 178-181 (Paging 
Second Report and Order); see also Revision of Part 22 and Part 90 
of the Commission's Rules to Facilitate Future Development of Paging 
Systems, Memorandum Opinion and Order on Reconsideration, 14 FCC Rcd 
10030, 10085-10088, paragraphs 98-107 (1999).
    \113\ Paging Second Report and Order, 12 FCC Rcd at 2811, 
paragraph 179.
    \114\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, from Aida 
Alvarez, Administrator, Small Business Administration, dated 
December 2, 1998.
    \115\ See ``929 and 931 MHz Paging Auction Closes,'' Public 
Notice, 15 FCC Rcd 4858 (WTB 2000).
    \116\ See ``929 and 931 MHz Paging Auction Closes,'' Public 
Notice, 15 FCC Rcd 4858 (WTB 2000).
    \117\ See ``Lower and Upper Paging Band Auction Closes,'' Public 
Notice, 16 FCC Rcd 21821 (WTB 2002).
    \118\ See ``Lower and Upper Paging Bands Auction Closes,'' 
Public Notice, 18 FCC Rcd 11154 (WTB 2003).
    \119\ See Trends in Telephone Service, Industry Analysis 
Division, Wireline Competition Bureau, Table 5.3 (Number of 
Telecommunications Service Providers that are Small Businesses) (May 
2002).
    \120\ 13 CFR 121.201, NAICS code 517211.
---------------------------------------------------------------------------

    101. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years.\121\ The SBA has 
approved these definitions.\122\ The Commission auctioned geographic 
area licenses in the WCS service. In the auction, which commenced on 
April 15, 1997 and closed on April 25, 1997, there were seven bidders 
that won 31 licenses that qualified as very small business entities, 
and one bidder that won one license that qualified as a small business 
entity. An auction for one license in the 1670-1674 MHz band commenced 
on April 30, 2003 and closed the same day. One license was awarded. The 
winning bidder was not a small entity.
---------------------------------------------------------------------------

    \121\ 121 Amendment of the Commission's Rules to Establish Part 
27, the Wireless Communications Service (WCS), Report and Order, 12 
FCC Rcd 10785, 10879, paragraph 194 (1997).
    \122\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, Federal 
Communications Commission, from Aida Alvarez, Administrator, Small 
Business Administration, dated December 2, 1998.
---------------------------------------------------------------------------

    102. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. The SBA has developed a small business size 
standard for ``Cellular and Other Wireless Telecommunications'' 
services.\123\ Under the SBA small business size standard, a business 
is small if it has 1,500 or fewer employees.\124\ According to the most 
recent Trends in Telephone Service data, 719 carriers reported that 
they were engaged in wireless telephony.\125\ We have estimated that 
294 of these are small under the SBA small business size standard.
---------------------------------------------------------------------------

    \123\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \124\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \125\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
---------------------------------------------------------------------------

    103. Broadband Personal Communications Service. The broadband 
personal communications services (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission has created a small business 
size standard for Blocks C and F as an entity that has average gross 
revenues of less than $40 million in the three previous calendar 
years.\126\ For Block F, an additional small business size standard for 
``very small business'' was added and is defined as an entity that, 
together with its affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years.\127\ These 
small business size standards, in the context of broadband PCS 
auctions, have been approved by the SBA.\128\ No small businesses 
within the SBA-approved small business size standards bid successfully 
for licenses in Blocks A and B. There were 90 winning bidders that 
qualified as small entities in the Block C auctions. A total of 93 
``small'' and ``very small'' business bidders won approximately 40 
percent of the 1,479 licenses for Blocks D, E, and F.\129\ On March 23, 
1999, the Commission reauctioned 155 C, D, E, and F Block licenses; 
there were 113 small business winning bidders.\130\
---------------------------------------------------------------------------

    \126\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap, Report and Order, 11 FCC Rcd 7824, 7850-
7852, paragraphs 57-60 (1996); see also 47 CFR 24.720(b).
    \127\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap, Report and Order, 11 FCC Rcd 7824, 7852, 
paragraph 60.
    \128\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, Federal 
Communications Commission, from Aida Alvarez, Administrator, Small 
Business Administration, dated December 2, 1998.
    \129\ FCC News, ``Broadband PCS, D, E and F Block Auction 
Closes,'' No. 71744 (released January 14, 1997).
    \130\ See ``C, D, E, and F Block Broadband PCS Auction Closes,'' 
Public Notice, 14 FCC Rcd 6688 (WTB 1999).
---------------------------------------------------------------------------

    104. 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.\131\ Subsequent events, concerning Auction 35, including 
judicial and agency determinations, resulted in a total of 163 C and F 
Block licenses being available for grant.
---------------------------------------------------------------------------

    \131\ See ``C and F Block Broadband PCS Auction Closes; Winning 
Bidders Announced,'' Public Notice, 16 FCC Rcd 2339 (2001).
---------------------------------------------------------------------------

    105. Narrowband Personal Communications Services. The Commission 
held an auction for Narrowband PCS licenses that commenced on July 25, 
1994, and closed on July 29, 1994. A second auction commenced on 
October 26, 1994 and closed on November 8, 1994. For purposes of the 
first two Narrowband PCS auctions, ``small businesses'' were entities 
with average gross revenues for the prior three calendar years of $40 
million or less.\132\ Through these auctions, the Commission awarded a 
total of 41 licenses, 11 of which were obtained by four small 
businesses.\133\ To ensure meaningful participation by 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 gross revenues for 
the three preceding years of not more than $40 million.\135\ A ``very 
small business'' is an entity that, together with affiliates and 
controlling interests, has average gross revenues for the three 
preceding years of not more than $15 million.\136\ The SBA has approved 
these small business size standards.\137\ A third auction

[[Page 9590]]

commenced on October 3, 2001 and closed on October 16, 2001. Here, five 
bidders won 317 (Metropolitan Trading Areas and nationwide) 
licenses.\138\ Three of these claimed status as a small or very small 
entity and won 311 licenses.
---------------------------------------------------------------------------

    \132\ Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding Narrowband PCS, Third Memorandum Opinion 
and Order and Further Notice of Proposed Rulemaking, 10 FCC Rcd 175, 
196, paragraph 46 (1994).
    \133\ See ``Announcing the High Bidders in the Auction of ten 
Nationwide Narrowband PCS Licenses, Winning Bids Total 
$617,006,674,'' Public Notice, PNWL 94-004 (released Aug. 2, 1994); 
``Announcing the High Bidders in the Auction of 30 Regional 
Narrowband PCS Licenses; Winning Bids Total $490,901,787,'' Public 
Notice, PNWL 94-27 (released Nov. 9, 1994).
    \134\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, Second Report and 
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd 
10456, 10476, paragraph 40 (2000).
    \135\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, Second Report and 
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd 
10456, 10476, paragraph 40 (2000).
    \136\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, Second Report and 
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd 
10456, 10476, paragraph 40 (2000).
    \137\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, Federal 
Communications Commission, from Aida Alvarez, Administrator, Small 
Business Administration, dated December 2, 1998.
    \138\ See ``Narrowband PCS Auction Closes,'' Public Notice, 16 
FCC Rcd 18663 (WTB 2001).
---------------------------------------------------------------------------

    106. Lower 700 MHz Band Licenses. We adopted criteria for defining 
three groups of small businesses for purposes of determining their 
eligibility for special provisions such as bidding credits.\139\ We 
have defined a ``small business'' as an entity that, together with its 
affiliates and controlling principals, has average gross revenues not 
exceeding $40 million for the preceding three years.\140\ A ``very 
small business'' is defined as an entity that, together with its 
affiliates and controlling principals, has average gross revenues that 
are not more than $15 million for the preceding three years.\141\ 
Additionally, the lower 700 MHz Service has a third category of small 
business status that may be claimed for Metropolitan/Rural Service Area 
(MSA/RSA) licenses. The third category is ``entrepreneur,'' which is 
defined as an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $3 
million for the preceding three years.\142\ The SBA has approved these 
small size standards.\143\ An auction of 740 licenses (one license in 
each of the 734 MSAs/RSAs and one license in each of the six Economic 
Area Groupings (EAGs)) commenced on August 27, 2002, and closed on 
September 18, 2002. Of the 740 licenses available for auction, 484 
licenses were sold to 102 winning bidders. Seventy-two of the winning 
bidders claimed small business, very small business or entrepreneur 
status and won a total of 329 licenses.\144\ A second auction commenced 
on May 28, 2003, and closed on June 13, 2003, and included 256 
licenses: 5 EAG licenses and 476 Cellular Market Area licenses.\145\ 
Seventeen winning bidders claimed small or very small business status 
and won 60 licenses, and nine winning bidders claimed entrepreneur 
status and won 154 licenses.\146\
---------------------------------------------------------------------------

    \139\ See Reallocation and Service Rules for the 698-746 MHz 
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC 
Rcd 1022 (2002).
    \140\ See Reallocation and Service Rules for the 698-746 MHz 
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC 
Rcd 1022, 1087-88, paragraph 172 (2002).
    \141\ See Reallocation and Service Rules for the 698-746 MHz 
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC 
Rcd 1022, 1087-88, paragraph 172 (2002).
    \142\ See Reallocation and Service Rules for the 698-746 MHz 
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC 
Rcd 1022, 1088, paragraph 173 (2002).
    \143\ See Letter to Thomas Sugrue, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
August 10, 1999.
    \144\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice, 
17 FCC Rcd 17272 (WTB 2002).
    \145\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice, 
18 FCC Rcd 11873 (WTB 2003).
    \146\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice, 
18 FCC Rcd 11873 (WTB 2003).
---------------------------------------------------------------------------

    107. Upper 700 MHz Band Licenses. The Commission released a Report 
and Order, authorizing service in the upper 700 MHz band.\147\ This 
auction, previously scheduled for January 13, 2003, has been 
postponed.\148\
---------------------------------------------------------------------------

    \147\ Service Rules for the 746-764 and 776-794 MHz Bands, and 
Revisions to Part 27 of the Commission's Rules, Second Memorandum 
Opinion and Order, 16 FCC Rcd 1239 (2001).
    \148\ See ``Auction of Licenses for 747-762 and 777-792 MHz 
Bands (Auction No. 31) Is Rescheduled,'' Public Notice, 16 FCC Rcd 
13079 (WTB 2003).
---------------------------------------------------------------------------

    108. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
we adopted size standards for ``small businesses'' and ``very small 
businesses'' for purposes of determining their eligibility for special 
provisions such as bidding credits and installment payments.\149\ A 
small business in this service is an entity that, together with its 
affiliates and controlling principals, has average gross revenues not 
exceeding $40 million for the preceding three years.\150\ Additionally, 
a very small business is an entity that, together with its affiliates 
and controlling principals, has average gross revenues that are not 
more than $15 million for the preceding three years.\151\ SBA approval 
of these definitions is not required.\152\ An auction of 52 Major 
Economic Area (MEA) licenses commenced on September 6, 2000, and closed 
on September 21, 2000.\153\ 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.\154\
---------------------------------------------------------------------------

    \149\ See Service Rules for the 746-764 MHz Bands, and Revisions 
to Part 27 of the Commission's Rules, Second Report and Order, 15 
FCC Rcd 5299 (2000).
    \150\ See Service Rules for the 746-764 MHz Bands, and Revisions 
to Part 27 of the Commission's Rules, Second Report and Order, 15 
FCC Rcd 5299, 5343, paragraph 108 (2000).
    \151\ See Service Rules for the 746-764 MHz Bands, and Revisions 
to Part 27 of the Commission's Rules, Second Report and Order, 15 
FCC Rcd 5299, 5343, paragraph 108 (2000).
    \152\ See Service Rules for the 746-764 MHz Bands, and Revisions 
to Part 27 of the Commission's Rules, Second Report and Order, 15 
FCC Rcd 5299, 5343, paragraph 108 n.246 (for the 746-764 MHz and 
776-794 MHz bands, the Commission is exempt from 15 U.S.C. section 
632, which requires Federal agencies to obtain SBA approval before 
adopting small business size standards).
    \153\ See ``700 MHz Guard Bands Auction Closes: Winning Bidders 
Announced,'' Public Notice, 15 FCC Rcd 18026 (2000).
    \154\ See ``700 MHz Guard Bands Auction Closes: Winning Bidders 
Announced,'' Public Notice, 16 FCC Rcd 4590 (WTB 2001).
---------------------------------------------------------------------------

    109. Specialized Mobile Radio. The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years.\155\ The Commission awards ``very small entity'' 
bidding credits to firms that had revenues of no more than $3 million 
in each of the three previous calendar years.\156\ The SBA has approved 
these small business size standards for the 900 MHz Service.\157\ The 
Commission has held auctions for geographic area licenses in the 800 
MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5, 
1995, and closed on April 15, 1996. Sixty bidders claiming that they 
qualified as small businesses under the $15 million size standard won 
263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR 
auction for the upper 200 channels began on October 28, 1997, and was 
completed on December 8, 1997. Ten bidders claiming that they qualified 
as small businesses under the $15 million size standard won 38 
geographic area licenses for the upper 200 channels in the 800 MHz SMR 
band.\158\ A second auction for the 800 MHz band was held on January 
10, 2002 and closed on January 17, 2002 and included 23 BEA licenses. 
One bidder

[[Page 9591]]

claiming small business status won five licenses.\159\
---------------------------------------------------------------------------

    \155\ 47 CFR 90.814(b)(1).
    \156\ 47 CFR 90.814(b)(1).
    \157\ See Letter to Thomas Sugrue, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
August 10, 1999. We note that, although a request was also sent to 
the SBA requesting approval for the small business size standard for 
800 MHz, approval is still pending.
    \158\ See ``Correction to Public Notice DA 96-586 'FCC Announces 
Winning Bidders in the Auction of 1020 Licenses to Provide 900 MHz 
SMR in Major Trading Areas,''' Public Notice, 18 FCC Rcd 18367 (WTB 
1996).
    \159\ See ``Multi-Radio Service Auction Closes,'' Public Notice, 
17 FCC Rcd 1446 (WTB 2002).
---------------------------------------------------------------------------

    110. The auction of the 1,053 800 MHz SMR geographic area licenses 
for the General Category channels began on August 16, 2000, and was 
completed on September 1, 2000. Eleven bidders won 108 geographic area 
licenses for the General Category channels in the 800 MHz SMR band 
qualified as small businesses under the $15 million size standard.\160\ 
In an auction completed on December 5, 2000, a total of 2,800 Economic 
Area licenses in the lower 80 channels of the 800 MHz SMR service were 
sold.\161\ Of the 22 winning bidders, 19 claimed small business status 
and won 129 licenses. Thus, combining all three auctions, 40 winning 
bidders for geographic licenses in the 800 MHz SMR band claimed status 
as small business.
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    \160\ See, ``800 MHz Specialized Mobile Radio (SMR) Service 
General Category (851-854 MHz) and Upper Band (861-865 MHz) Auction 
Closes; Winning Bidders Announced,'' Public Notice, 15 FCC Rcd 17162 
(2000).
    \161\ See, ``800 MHz SMR Service Lower 80 Channels Auction 
Closes; Winning Bidders Announced,'' Public Notice, 16 FCC Rcd 1736 
(2000).
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    111. In addition, there are numerous incumbent site-by-site SMR 
licensees and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do not know how many firms provide 800 
MHz or 900 MHz geographic area SMR pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. We 
assume, for purposes of this analysis, that all of the remaining 
existing extended implementation authorizations are held by small 
entities, as that small business size standard is approved by the SBA.
    112. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
definition of small entities specifically applicable to such incumbent 
220 MHz Phase I licensees. To estimate the number of such licensees 
that are small businesses, we apply the small business size standard 
under the SBA rules applicable to ``Cellular and Other Wireless 
Telecommunications'' companies. This category provides that a small 
business is a wireless company employing no more than 1,500 
persons.\162\ According to the Census Bureau data for 1997, only twelve 
firms out of a total of 1,238 such firms that operated for the entire 
year in 1997, had 1,000 or more employees.\163\ If this general ratio 
continues in the context of Phase I 220 MHz licensees, the Commission 
estimates that nearly all such licensees are small businesses under the 
SBA's small business standard.
---------------------------------------------------------------------------

    \162\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \163\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 5, NAICS code 513322 (October 2000).
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    113. 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 defining ``small'' and ``very small'' businesses for 
purposes of determining their eligibility for special provisions such 
as bidding credits and installment payments.\164\ This small business 
standard indicates that a ``small business'' is an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues not exceeding $15 million for the preceding three 
years.\165\ A ``very small business'' is defined as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that do not exceed $3 million for the preceding three 
years.\166\ The SBA has approved these small size standards.\167\ 
Auctions of Phase II licenses commenced on September 15, 1998, and 
closed on October 22, 1998.\168\ 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.\169\ Thirty-nine small businesses won 373 licenses in the 
first 220 MHz auction. A second auction included 225 licenses: 216 EA 
licenses and 9 EAG licenses. Fourteen companies claiming small business 
status won 158 licenses.\170\ A third auction included four licenses: 2 
BEA licenses and 2 EAG licenses in the 220 MHz Service. No small or 
very small business won any of these licenses.\171\
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    \164\ Amendment of Part 90 of the Commission's Rules to Provide 
For the Use of the 220-222 MHz Band by the Private Land Mobile Radio 
Service, Third Report and Order, 12 FCC Rcd 10943, 11068-70, 
paragraphs 291-295 (1997).
    \165\ Id. at 11068, paragraph 291.
    \166\ Id.
    \167\ See Letter to Daniel Phythyon, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
January 6, 1998.
    \168\ See generally ``220 MHz Service Auction Closes,'' Public 
Notice, 14 FCC Rcd 605 (WTB 1998).
    \169\ See ``FCC Announces It is Prepared to Grant 654 Phase II 
220 MHz Licenses After Final Payment is Made,'' Public Notice, 14 
FCC Rcd 1085 (WTB 1999).
    \170\ See ``Phase II 220 MHz Service Spectrum Auction Closes,'' 
Public Notice, 14 FCC Rcd 11218 (WTB 1999).
    \171\ See ``Multi-Radio Service Auction Closes,'' Public Notice, 
17 FCC Rcd 1446 (WTB 2002).
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    114. Private Land Mobile Radio (PLMR). PLMR systems serve an 
essential role in a range of industrial, business, land transportation, 
and public safety activities. These radios are used by companies of all 
sizes operating in all U.S. business categories, and are often used in 
support of the licensee's primary (non-telecommunications) business 
operations. For the purpose of determining whether a licensee of a PLMR 
system is a small business as defined by the SBA, we could use the 
definition for ``Cellular and Other Wireless Telecommunications.'' This 
definition provides that a small entity is any such entity employing no 
more than 1,500 persons.\172\ The Commission does not require PLMR 
licensees to disclose information about number of employees, so the 
Commission does not have information that could be used to determine 
how many PLMR licensees constitute small entities under this 
definition. Moreover, because PMLR licensees generally are not in the 
business of providing cellular or other wireless telecommunications 
services but instead use the licensed facilities in support of other 
business activities, we are not certain that the Cellular and Other 
Wireless Telecommunications category is appropriate for determining how 
many PLMR licensees are small entities for this analysis. Rather, it 
may be more appropriate to assess PLMR licensees under the standards 
applied to the particular industry subsector to which the licensee 
belongs.\173\
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    \172\ See 13 CFR 121.201, NAICS code 517212.
    \173\ See generally 13 CFR 121.201.
---------------------------------------------------------------------------

    115. The Commission's 1994 Annual Report on PLMRs \174\ indicates 
that at the end of fiscal year 1994, there were 1,087,267 licensees 
operating 12,481,989 transmitters in the PLMR bands below 512 MHz. 
Because any entity engaged in a commercial activity is eligible to hold 
a PLMR license, the revised rules in this context could

[[Page 9592]]

potentially impact every small business in the United States.
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    \174\ Federal Communications Commission, 60th Annual Report, 
Fiscal Year 1994, at paragraph 116.
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    116. Fixed Microwave Services. Fixed microwave services include 
common carrier,\175\ private operational-fixed,\176\ and broadcast 
auxiliary radio services.\177\ 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 small 
business size standard for the category ``Cellular and Other 
Telecommunications,'' which is 1,500 or fewer employees.\178\ The 
Commission does not have data specifying the number of these licensees 
that have more than 1,500 employees, and thus are 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 licensees 
and up to 61,670 private operational-fixed licensees and broadcast 
auxiliary radio licensees in the microwave services that may be small 
and may be affected by the rules and policies proposed herein. We 
noted, however, that the common carrier microwave fixed licensee 
category includes some large entities.
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    \175\ See 47 CFR 101 et seq. (formerly, Part 21 of the 
Commission's Rules) for common carrier fixed microwave services 
(except Multipoint Distribution Service).
    \176\ 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.
    \177\ Auxiliary Microwave Service is governed by Part 74 of 
Title 47 of the Commission's Rules. See 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.
    \178\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
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    117. 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.\179\ 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.\180\ 
The SBA has approved these small business size standards.\181\ 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 proposed herein.
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    \179\ 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), 63 Fed.Reg. 6079 (Feb. 6, 1998).
    \180\ Id.
    \181\ 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) (VoIP); See 
Letter to Margaret Wiener, Chief, Auctions and Industry Analysis 
Division, Wireless Telecommunications Bureau, Federal Communications 
Commission, from Hector Barreto, Administrator, Small Business 
Administration, dated January 18, 2002 (WTB).
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    118. 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.\182\ The auction of the 986 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.\183\ 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.\184\ The SBA has approved these small 
business size standards in the context of LMDS auctions.\185\ There 
were 93 winning bidders that qualified as small entities in the LMDS 
auctions. A total of 93 small and very small business bidders won 
approximately 277 A Block licenses and 387 B Block licenses. On March 
27, 1999, the Commission re-auctioned 161 licenses; there were 32 small 
and very small business winning that won 119 licenses.
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    \182\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the 
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, 
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and 
Policies for Local Multipoint Distribution Service and for Fixed 
Satellite Services, Second Report and Order, Order on 
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC 
Rcd 12545, 12689-90, paragraph 348 (1997).
    \183\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the 
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, 
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and 
Policies for Local Multipoint Distribution Service and for Fixed 
Satellite Services, Second Report and Order, Order on 
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC 
Rcd 12545, 12689-90, paragraph 348 (1997).
    \184\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the 
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, 
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and 
Policies for Local Multipoint Distribution Service and for Fixed 
Satellite Services, Second Report and Order, Order on 
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC 
Rcd 12545, 12689-90, paragraph 348 (1997).
    \185\ See Letter to Dan Phythyon, Chief, Wireless 
Telecommunications Bureau, FCC, from Aida Alvarez, Administrator, 
SBA (Jan. 6, 1998).
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    119. 218-219 MHz Service. The first auction of 218-219 MHz 
(previously referred to as the Interactive and Video Data Service or 
IVDS) spectrum resulted in 178 entities winning licenses for 594 
Metropolitan Statistical Areas (MSAs).\186\ Of the 594 licenses, 567 
were won by 167 entities qualifying as a small business. For that 
auction, we defined a small business as an entity that, together with 
its affiliates, has no more than a $6 million net worth and, after 
federal income taxes (excluding any carry over losses), has no more 
than $2 million in annual profits each year for the previous two 
years.\187\ In the 218-219 MHz Report and Order and Memorandum Opinion 
and Order, we defined a small business as an entity that, together with 
its affiliates and persons or entities that hold interests in such an 
entity and their affiliates, has average annual gross revenues not 
exceeding $15 million for the preceding three years.\188\ A very small 
business is defined as an entity that, together with its affiliates and 
persons or entities that hold interests in such an entity and its 
affiliates, has average annual gross revenues not exceeding $3 million 
for the preceding three years.\189\ The SBA has approved of these 
definitions.\190\ At this time, we cannot estimate the number of 
licenses that will be won by entities qualifying as small or very small 
businesses under our rules in future

[[Page 9593]]

auctions of 218-219 MHz spectrum. Given the success of small businesses 
in the previous auction, and the prevalence of small businesses in the 
subscription television services and message communications industries, 
we assume for purposes of this analysis that in future auctions, many, 
and perhaps all, of the licenses may be awarded to small businesses.
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    \186\ See ``Interactive Video and Data Service (IVDS) 
Applications Accepted for Filing,'' Public Notice, 9 FCC Rcd 6227 
(1994).
    \187\ Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding, Fourth Report and Order, 9 FCC Rcd 2330 
(1994).
    \188\ Amendment of Part 95 of the Commission's Rules to Provide 
Regulatory Flexibility in the 218-219 MHz Service, Report and Order 
and Memorandum Opinion and Order, 15 FCC Rcd 1497 (1999).
    \189\ Id.
    \190\ See Letter to Daniel Phythyon, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
January 6, 1998.
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    120. Location and Monitoring Service (LMS). Multilateration LMS 
systems use non-voice radio techniques to determine the location and 
status of mobile radio units. For purposes of auctioning LMS licenses, 
the Commission has defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the preceding three years not exceeding $15 
million.\191\ A ``very small business'' is defined as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the preceding three years not exceeding $3 
million.\192\ These definitions have been approved by the SBA.\193\ An 
auction for LMS licenses commenced on February 23, 1999, and closed on 
March 5, 1999. Of the 528 licenses auctioned, 289 licenses were sold to 
four small businesses. We cannot accurately predict the number of 
remaining licenses that could be awarded to small entities in future 
LMS auctions.
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    \191\ Amendment of Part 90 of the Commission's Rules to Adopt 
Regulations for Automatic Vehicle Monitoring Systems, Second Report 
and Order, 13 FCC Rcd 15182, 15192, paragraph 20 (1998); See also 47 
CFR 90.1103.
    \192\ Amendment of Part 90 of the Commission's Rules to Adopt 
Regulations for Automatic Vehicle Monitoring Systems, Second Report 
and Order, 13 FCC Rcd at 15192, paragraph 20; See also 47 CFR 
90.1103.
    \193\ See Letter to Thomas Sugrue, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
February 22, 1999.
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    121. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service.\194\ A significant subset of the Rural Radiotelephone Service 
is the Basic Exchange Telephone Radio System (BETRS).\195\ The 
Commission uses the SBA's small business size standard applicable to 
``Cellular and Other Wireless Telecommunications,'' i.e., an entity 
employing no more than 1,500 persons.\196\ There are approximately 
1,000 licensees in the Rural Radiotelephone Service, and the Commission 
estimates that there are 1,000 or fewer small entity licensees in the 
Rural Radiotelephone Service that may be affected by the rules and 
policies proposed herein.
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    \194\ The service is defined in section 22.99 of the 
Commission's rules, 47 CFR 22.99.
    \195\ BETRS is defined in Sec.  22.757 and 22.759 of the 
Commission's rules, 47 CFR 22.757 and 22.759.
    \196\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
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    122. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service.\197\ 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.\198\ 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.
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    \197\ The service is defined in Sec.  22.99 of the Commission's 
rules, 47 CFR 22.99.
    \198\ 13 CFR 121.201, NAICS codes 513322 (changed to 517212 in 
October 2002).
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    123. 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.\199\ 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.\200\ In 
addition, a ``very small'' business is one that, together with 
controlling interests and affiliates, has average gross revenues for 
the preceding three years not to exceed $3 million dollars. There are 
approximately 10,672 licensees in the Marine Coast Service, and the 
Commission estimates that almost all of them qualify as ``small'' 
businesses under the above special small business size standards.
---------------------------------------------------------------------------

    \199\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \200\ 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).
---------------------------------------------------------------------------

    124. Offshore Radiotelephone Service. This service operates on 
several ultra high frequencies (UHF) television broadcast channels that 
are not used for television broadcasting in the coastal areas of states 
bordering the Gulf of Mexico.\201\ There are presently approximately 55 
licensees in this service. We are unable to estimate at this time the 
number of licensees that would qualify as small under the SBA's small 
business size standard for ``Cellular and Other Wireless 
Telecommunications'' services.\202\ Under that SBA small business size 
standard, a business is small if it has 1,500 or fewer employees.\203\
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    \201\ This service is governed by Subpart I of Part 22 of the 
Commission's rules. See 47 CFR 22.1001-22.1037.
    \202\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \203\ Id.
---------------------------------------------------------------------------

    125. Multiple Address Systems (MAS). Entities using MAS spectrum, 
in general, fall into two categories: (1) Those using the spectrum for 
profit-based uses, and (2) those using the spectrum for private 
internal uses. With respect to the first category, the Commission 
defines ``small entity'' for MAS licenses as an entity that has average 
gross revenues of less than $15 million in the three previous calendar 
years.\204\ ``Very small business'' is defined as an entity that, 
together with its affiliates, has average gross revenues of not more 
than $3 million for the preceding three calendar years.\205\ The SBA 
has approved of these definitions.\206\ The majority of these entities 
will most likely be licensed in bands where the Commission has 
implemented a geographic area licensing approach that would require the 
use of competitive bidding procedures to resolve mutually exclusive 
applications. The

[[Page 9594]]

Commission's licensing database indicates that, as of January 20, 1999, 
there were a total of 8,670 MAS station authorizations. Of these, 260 
authorizations were associated with common carrier service. In 
addition, an auction for 5,104 MAS licenses in 176 EAs began November 
14, 2001, and closed on November 27, 2001.\207\ Seven winning bidders 
claimed status as small or very small businesses and won 611 licenses.
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    \204\ See Amendment of the Commission's Rules Regarding Multiple 
Address Systems, Report and Order, 15 FCC Rcd 11956, 12008, 
paragraph 123 (2000).
    \205\ Id.
    \206\ See Letter to Thomas Sugrue, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
June 4, 1999.
    \207\ See ``Multiple Address Systems Spectrum Auction Closes,'' 
Public Notice, 16 FCC Rcd 21011 (2001).
---------------------------------------------------------------------------

    126. With respect to the second category, which consists of 
entities that use, or seek to use, MAS spectrum to accommodate internal 
communications needs, we note that MAS serves an essential role in a 
range of industrial, safety, business, and land transportation 
activities. MAS radios are used by companies of all sizes, operating in 
virtually all U.S. business categories, and by all types of public 
safety entities. For the majority of private internal users, the 
definitions developed by the SBA would be more appropriate. The 
applicable definition of small entity in this instance appears to be 
the ``Cellular and Other Wireless Telecommunications'' definition under 
the SBA rules. This definition provides that a small entity is any 
entity employing no more than 1,500 persons.\208\ The Commission's 
licensing database indicates that, as of January 20, 1999, of the 8,670 
total MAS station authorizations, 8,410 authorizations were for private 
radio service, and of these, 1,433 were for private land mobile radio 
service.
---------------------------------------------------------------------------

    \208\ See 13 CFR 121.201, NAICS code 517212.
---------------------------------------------------------------------------

    127. Incumbent 24 GHz 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.\209\ According to Census Bureau data for 1997, there were 977 
firms in this category, total, that operated for the entire year.\210\ 
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.\211\ 
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 \212\ 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.
---------------------------------------------------------------------------

    \209\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \210\ 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 October 2000).
    \211\ 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.''
    \212\ 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.
---------------------------------------------------------------------------

    128. Future 24 GHz Licensees. With respect to new applicants in the 
24 GHz band, we have defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the three preceding years not exceeding $15 
million.\213\ ``Very small business'' in the 24 GHz band is defined as 
an entity that, together with controlling interests and affiliates, has 
average gross revenues not exceeding $3 million for the preceding three 
years.\214\ The SBA has approved these definitions.\215\ The Commission 
will not know how many licensees will be small or very small businesses 
until the auction, if required, is held.
---------------------------------------------------------------------------

    \213\ Amendments to Parts 1, 2, 87 and 101 of the Commission's 
Rules To License Fixed Services at 24 GHz, Report and Order, 15 FCC 
Rcd 16934, 16967, paragraph 77 (2000) (24 GHz Report and Order); See 
also 47 CFR 101.538(a)(2).
    \214\ 24 GHz Report and Order, 15 FCC Rcd at 16967, paragraph 
77; See also 47 CFR 101.538(a)(1).
    \215\ See Letter to Margaret W. Wiener, Deputy Chief, Auctions 
and Industry Analysis Division, Wireless Telecommunications Bureau, 
Federal Communications Commission, from Gary M. Jackson, Assistant 
Administrator, Small Business Administration, dated July 28, 2000.
---------------------------------------------------------------------------

    129. Multipoint Distribution Service, Multichannel Multipoint 
Distribution Service, and Instructional Television Fixed Service. 
Multichannel Multipoint Distribution Service (MMDS) systems, often 
referred to as ``wireless cable,'' transmit video programming to 
subscribers using the microwave frequencies of the Multipoint 
Distribution Service (MDS) and Instructional Television Fixed Service 
(ITFS).\216\ In connection with the 1996 MDS auction, the Commission 
defined ``small business'' as an entity that, together with its 
affiliates, has average gross annual revenues that are not more than 
$40 million for the preceding three calendar years.\217\ The SBA has 
approved of this standard.\218\ The MDS auction resulted in 67 
successful bidders obtaining licensing opportunities for 493 Basic 
Trading Areas (BTAs).\219\ Of the 67 auction winners, 61 claimed status 
as a small business. At this time, we estimate that of the 61 small 
business MDS auction winners, 48 remain small business licensees. In 
addition to the 48 small businesses that hold BTA authorizations, there 
are approximately 392 incumbent MDS licensees that have gross revenues 
that are not more than $40 million and are thus considered small 
entities.\220\
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    \216\ 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, Report and Order, 10 FCC Rcd 9589, 9593, 
paragraph 7 (1995) (MDS Auction R&O).
    \217\ 47 CFR 21.961(b)(1).
    \218\ See Letter to Margaret Wiener, Chief, Auctions and 
Industry Analysis Division, Wireless Telecommunications Bureau, 
Federal Communications Bureau, from Gary Jackson, Assistant 
Administrator for Size Standards, Small Business Administration, 
dated March 20, 2003 (noting approval of $40 million size standard 
for MDS auction).
    \219\ Basic Trading Areas (BTAs) were designed by Rand McNally 
and are the geographic areas by which MDS was auctioned and 
authorized. See MDS Auction R&O, 10 FCC Rcd at 9608, paragraph 34.
    \220\ 47 U.S.C. 309(j). Hundreds of stations were licensed to 
incumbent MDS licensees prior to implementation of Section 309(j) of 
the Communications Act of 1934, 47 U.S.C. 309(j). For these pre-
auction licenses, the applicable standard is SBA's small business 
size standard for ``other telecommunications'' (annual receipts of 
$12.5 million or less). See 13 CFR 121.201, NAICS code 517910.
---------------------------------------------------------------------------

    130. In addition, the SBA has developed a small business size 
standard for Cable and Other Program Distribution,\221\ which includes 
all such companies generating $12.5 million or less in annual 
receipts.\222\ 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.\223\ 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.\224\ Consequently, we 
estimate that the majority of providers in this service category are 
small businesses that may be affected by the proposed rules and 
policies.
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    \221\ 13 CFR 121.201, NAICS code 517510.
    \222\ Id.
    \223\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4 (issued October 2000).
    \224\ Id.
---------------------------------------------------------------------------

    131. Finally, while SBA approval for a Commission-defined small 
business size standard applicable to ITFS is

[[Page 9595]]

pending, educational institutions are included in this analysis as 
small entities.\225\ There are currently 2,032 ITFS licensees, and all 
but 100 of these licenses are held by educational institutions. Thus, 
we tentatively conclude that at least 1,932 ITFS licensees are small 
businesses.
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    \225\ In addition, the term ``small entity'' under 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.
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    132. Cable and Other Program Distribution. This category includes 
cable systems operators, closed circuit television services, direct 
broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems, and subscription television services. 
The SBA has developed small business size standard for this census 
category, which includes all such companies generating $12.5 million or 
less in revenue annually.\226\ 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.\227\ 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, the Commission estimates that the majority of providers 
in this service category are small businesses that may be affected by 
the rules and policies proposed herein.
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    \226\ 13 CFR 121.201, NAICS code 513220 (changed to 517510 in 
October 2002).
    \227\ 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).
---------------------------------------------------------------------------

    133. Cable System Operators (Rate Regulation Standard). The 
Commission has developed its own small business size standard for cable 
system operators, for purposes of rate regulation. Under the 
Commission's rules, a ``small cable company'' is one serving fewer than 
400,000 subscribers nationwide.\228\ The most recent estimates indicate 
that there were 1,439 cable operators who qualified as small cable 
system operators at the end of 1995.\229\ 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, the Commission estimates that 
there are now fewer than 1,439 small entity cable system operators that 
may be affected by the rules and policies proposed herein.
---------------------------------------------------------------------------

    \228\ 47 CFR 76.901(e). The Commission developed this definition 
based on its determination that a small cable system operator is one 
with annual revenues of $100 million or less. Implementation of 
Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and 
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393 (1995), 
60 FR 10534 (February 27, 1995).
    \229\ Paul Kagan Associates, Inc., Cable TV Investor, February 
29, 1996 (based on figures for December 30, 1995).
---------------------------------------------------------------------------

    134. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' \230\ The Commission has determined 
that there are 67,700,000 subscribers in the United States.\231\ 
Therefore, an operator serving fewer than 677,000 subscribers shall be 
deemed a small operator, if its annual revenues, when combined with the 
total annual revenues of all its affiliates, do not exceed $250 million 
in the aggregate.\232\ Based on available data, the Commission 
estimates that the number of cable operators serving 677,000 
subscribers or fewer, totals 1,450.\233\ The Commission neither 
requests nor collects information on whether cable system operators are 
affiliated with entities whose gross annual revenues exceed $250 
million,\234\ and therefore are unable, at this time, to estimate more 
accurately the number of cable system operators that would qualify as 
small cable operators under the size standard contained in the 
Communications Act of 1934.
---------------------------------------------------------------------------

    \230\ 47 U.S.C. 543(m)(2).
    \231\ See FCC Announces New Subscriber Count for the Definition 
of Small Cable Operator, Public Notice, DA-01-158 (January 24, 
2001).
    \232\ 47 CFR 76.901(f).
    \233\ See FCC Announces New Subscriber Count for the Definition 
of Small Cable Operators, Public Notice, DA-01-0158 (released 
January 24, 2001).
    \234\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to section 76.901(f) of the Commission's rules. See 47 CFR 
76.909(b).
---------------------------------------------------------------------------

    135. Open Video Services. Open Video Service (OVS) systems provide 
subscription services.\235\ The SBA has created a small business size 
standard for Cable and Other Program Distribution.\236\ This standard 
provides that a small entity is one with $12.5 million or less in 
annual receipts. The Commission has certified approximately 25 OVS 
operators to serve 75 areas, and some of these are currently providing 
service.\237\ 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 that they do not qualify as a small business entity. Little 
financial information is available for the other entities that are 
authorized to provide OVS and are not yet operational. Given that some 
entities authorized to provide OVS service have not yet begun to 
generate revenues, the Commission concludes that up to 24 OVS operators 
(those remaining) might qualify as small businesses that may be 
affected by the rules and policies proposed herein.
---------------------------------------------------------------------------

    \235\ See 47 U.S.C. 573.
    \236\ 13 CFR 121.201, NAICS code 513220 (changed to 517510 in 
October 2002).
    \237\ See http://www.fcc.gov/csb/ovs/csovscer.html (current as 
of March 2002).
---------------------------------------------------------------------------

    136. Cable Television Relay Service. This service includes 
transmitters generally used to relay cable programming within cable 
television system distribution systems. The SBA has defined a small 
business size standard for Cable and other Program Distribution, 
consisting of all such companies having annual receipts of no more than 
$12.5 million.\238\ According to Census Bureau data for 1997, there 
were 1,311 firms in the industry category Cable and Other Program 
Distribution, total, that operated for the entire year.\239\ Of this 
total, 1,180 firms had annual receipts of $10 million or less, and an 
additional 52 firms had receipts of $10 million or more but less than 
$25 million.\240\ Thus, under this standard, we estimate that the 
majority of providers in this service category are small businesses 
that may be affected by the proposed rules and policies.
---------------------------------------------------------------------------

    \238\ 13 CFR 121.201, NAICS code 517510.
    \239\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4 (issued October 2000).
    \240\ Id.
---------------------------------------------------------------------------

    137. Multichannel Video Distribution and Data Service. MVDDS is a 
terrestrial fixed microwave service operating in the 12.2-12.7 GHz 
band. No auction has yet been held in this service, although an action 
has been scheduled for January 14, 2004.\241\ Accordingly, there are no 
licensees in this service.
---------------------------------------------------------------------------

    \241\ ``Auctions of Licenses in the Multichannel Video 
Distribution and Data Service Rescheduled for January 14, 2004,'' 
Public Notice, DA 03-2354 (August 28, 2003).
---------------------------------------------------------------------------

    138. Amateur Radio Service. These licensees are believed to be 
individuals, and therefore are not small entities.
    139. Aviation and Marine 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

[[Page 9596]]

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.\242\ 
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.\243\ 
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.
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    \242\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \243\ Amendment of the Commission's Rules Concerning Maritime 
Communications, Third Report and Order and Memorandum Opinion and 
Order, 13 FCC Rcd 19853 (1998).
---------------------------------------------------------------------------

    140. Personal Radio Services. Personal radio services provide 
short-range, low power radio for personal communications, radio 
signaling, and business communications not provided for in other 
services. The Personal Radio Services include spectrum licensed under 
Part 95 of our rules.\244\ These services include Citizen Band Radio 
Service (CB), General Mobile Radio Service (GMRS), Radio Control Radio 
Service (R/C), Family Radio Service (FRS), Wireless Medical Telemetry 
Service (WMTS), Medical Implant Communications Service (MICS), Low 
Power Radio Service (LPRS), and Multi-Use Radio Service (MURS).\245\ 
There are a variety of methods used to license the spectrum in these 
rule parts, from licensing by rule, to conditioning operation on 
successful completion of a required test, to site-based licensing, to 
geographic area licensing. Under the RFA, the Commission is required to 
make a determination of which small entities are directly affected by 
the rules being proposed. Since all such entities are wireless, we 
apply the definition of cellular and other wireless telecommunications, 
pursuant to which a small entity is defined as employing 1,500 or fewer 
persons.\246\ Many of the licensees in these services are individuals, 
and thus are not small entities. In addition, due to the mostly 
unlicensed and shared nature of the spectrum utilized in many of these 
services, the Commission lacks direct information upon which to base an 
estimation of the number of small entities under an SBA definition that 
might be directly affected by the proposed rules.
---------------------------------------------------------------------------

    \244\ 47 CFR Part 90.
    \245\ The Citizens Band Radio Service, General Mobile Radio 
Service, Radio Control Radio Service, Family Radio Service, Wireless 
Medical Telemetry Service, Medical Implant Communications Service, 
Low Power Radio Service, and Multi-Use Radio Service are governed by 
Subpart D, Subpart A, Subpart C, Subpart B, Subpart H, Subpart I, 
Subpart G, and Subpart J, respectively, of Part 95 of the 
Commission's rules. See generally 47 CFR Part 95.
    \246\ 13 CFR 121.201, NAICS Code 517212.
---------------------------------------------------------------------------

    141. Public Safety Radio Services. Public Safety radio services 
include police, fire, local government, forestry conservation, highway 
maintenance, and emergency medical services.\247\ There are a total of 
approximately 127,540 licensees in these services. Governmental 
entities \248\ as well as private businesses comprise the licensees for 
these services. All governmental entities with populations of less than 
50,000 fall within the definition of a small entity.\249\
---------------------------------------------------------------------------

    \247\ With the exception of the special emergency service, these 
services are governed by Subpart B of part 90 of the Commission's 
Rules, 47 CFR 90.15-90.27. The police service includes approximately 
27,000 licensees that serve state, county, and municipal enforcement 
through telephony (voice), telegraphy (code) and teletype and 
facsimile (printed material). The fire radio service includes 
approximately 23,000 licensees comprised of private volunteer or 
professional fire companies as well as units under governmental 
control. The local government service that is presently comprised of 
approximately 41,000 licensees that are state, county, or municipal 
entities that use the radio for official purposes not covered by 
other public safety services. There are approximately 7,000 
licensees within the forestry service which is comprised of 
licensees from state departments of conservation and private forest 
organizations who set up communications networks among fire lookout 
towers and ground crews. The approximately 9,000 state and local 
governments are licensed to highway maintenance service provide 
emergency and routine communications to aid other public safety 
services to keep main roads safe for vehicular traffic. The 
approximately 1,000 licensees in the Emergency Medical Radio Service 
(EMRS) use the 39 channels allocated to this service for emergency 
medical service communications related to the delivery of emergency 
medical treatment. 47 CFR 90.15-90.27. The approximately 20,000 
licensees in the special emergency service include medical services, 
rescue organizations, veterinarians, handicapped persons, disaster 
relief organizations, school buses, beach patrols, establishments in 
isolated areas, communications standby facilities, and emergency 
repair of public communications facilities. 47 CFR 90.33-90.55.
    \248\ 47 CFR 1.1162.
    \249\ 5 U.S.C. 601(5).
---------------------------------------------------------------------------

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

    142. 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.\250\ 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

[[Page 9597]]

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.
---------------------------------------------------------------------------

    \250\ 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.
---------------------------------------------------------------------------

    143. 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.
    144. 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 percent in 
addition to the required fee.\251\ If payment is not received, new or 
pending applications may be dismissed, and existing authorizations may 
be subject to rescission.\252\ 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.\253\ 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.\254\
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    \251\ 47 CFR 1.1164.
    \252\ 47 CFR 1.1164(c).
    \253\ Public Law 104-134, 110 Stat. 1321 (1996).
    \254\ 31 U.S.C. 7701(c)(2)(B).
---------------------------------------------------------------------------

    145. 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.\255\ 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.
---------------------------------------------------------------------------

    \255\ 47 CFR 1.1166.
---------------------------------------------------------------------------

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

    146. 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 IRFA, 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.
    147. The Omnibus Appropriations Act for FY 2005, Public Law 108-
447, 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) 2005.\256\ 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.
---------------------------------------------------------------------------

    \256\ 47 U.S.C. 159(a).
---------------------------------------------------------------------------

    148. 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.
    149. Several categories of licensees and regulatees are exempt from 
payment of regulatory fees. See, e.g., footnote 250, supra.

VI. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules

    150. None.

Attachment B--Sources of Payment Unit Estimates For FY 2005

    In order to calculate individual service fees for FY 2005, we 
adjusted FY 2004 payment units for each service to more accurately 
reflect expected FY 2005 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 (CDBS). 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 2005 estimates with actual FY 
2004 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 2005 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 2005 payment units are based 
on FY 2004 actual payment units, it does not necessarily mean that our 
FY 2005 projection is exactly the same number as FY 2004. It means that 
we have either rounded the FY 2005 number or adjusted it slightly to 
account for these variables.

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[[Page 9598]]

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[[Page 9599]]



Attachment C--Calculation of FY 2005 Revenue Requirements and Pro-Rata 
Fees

    Regulatory fees for the first ten fee categories below are 
collected by the Commisison in advance to cover the term of the license 
and are submitted along with the application at the time the 
application is filed.
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[[Page 9600]]


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[[Page 9601]]


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[[Page 9602]]



Attachment D--FY 2005 Schedule of Regulatory Fees

    Regulatory fees for the first eleven fee categories below are 
collected by the Commission in advance to cover the term of the license 
and are submitted along with the application at the time the 
application is filed.
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[[Page 9603]]


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[[Page 9604]]



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 Sec. Sec.  73.150 
and 73.152 of the Commission's rules.\257\ 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.\258\ 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.
---------------------------------------------------------------------------

    \257\ 47 CFR 73.150 and 73.152.
    \258\ 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.\259\ 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.
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    \259\ 47 CFR 73.313.
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BILLING CODE 6712-05-P

Attachment F--FY 2004 Schedule of Regulatory Fees

[[Page 9605]]

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[[Page 9606]]


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[FR Doc. 05-3822 Filed 2-25-05; 8:45 am]
BILLING CODE 6712-05-C