1. In this Order, we conclude a proceeding 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. 2 We also deny the petition for reconsideration filed by Cingular Wireless LLC of the Commission's FY 2004 Report and Order. 3

2. As explained below, we adjust our section 9 regulatory fees to reflect the requirement to collect $280,098,000 in regulatory fees during FY 2005. As described in the FY 2005 NPRM , 4 this adjusted amount is $7,140,000, or approximately 2.6 percent greater than the $272,958,000 we were required to collect during the previous fiscal year. Each fiscal year, the Commission proportionally allocates the total amount that must be collected via regulatory fees. The results of this calculation are contained in Attachment C. 5 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. 6 In instances of small fees, such as licenses that are renewed for a multiyear term, the resulting unit fee was also divided by the term of the license. These unit fees were then rounded to the nearest $5 or $25 in accordance with 47 U.S.C. 159(b)(2).

3. In calculating the FY 2005 regulatory fees in Attachment D, we further adjusted the FY 2004 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. 7 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.

4. We consider additional factors to determine regulatory fees for AM and FM radio stations. These factors are facility attributes (class of service and type (AM or FM) of service), as well as the population served by the radio station. Calculating the population served for each radio station is determined by coupling current U.S. Census Bureau data with technical and engineering data, as detailed in Attachment E. Consequently, the class and type of service, as well as the population served, determine the regulatory fee amount to be paid.

5. In the FY 2005 NPRM , the Commission proposed to continue its policy of maintaining the CMRS Messaging Service 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. 8 We received no comments or reply comments on this matter. Consequently, we will maintain the CMRS Messaging Service regulatory fee at $0.08 per subscriber.

6. In the FY 2004 proceeding, the Commission identified a difference in treatment between LMDS Block A and Block B licensees for the purposes of assessing section 9 regulatory fees. This difference resulted in a disproportionately higher fee obligation on LMDS Block B licenses when compared on a per-megahertz (MHz) basis. 9 As a result, in the FY 2005 NPRM , we proposed to amend the fee schedule and assess LMDS regulatory fees on a flat MHz basis. 10 We received two comments on this proposal. These commenters oppose the proposal to collect LMDS regulatory fees on a per-MHz basis, arguing that the Commission cannot use a per-MHz regulatory fee for LMDS without using the same fee methodology for the 24 GHz and 39 GHz services. 11 We decline to adopt a per-MHz fee methodology for LMDS at this time, and we will therefore retain our existing methodology for assessing LMDS fees for FY 2005. 12

7. The commenters also argued that LMDS should be reclassified for fee assessment purposes as a microwave service. 13 The Commission determined in its FY 2003 fee proceeding that LMDS was developing on a separate track from microwave services and that it should be moved into a separate fee category. 14 The Commission subsequently rejected arguments to place LMDS in the microwave fee category in the FY 2004 Report and Order . 15 XO and BMDDP have presented no new evidence or arguments that would cause us to reconsider that decision. We find no compelling reason to reclassify LMDS as a microwave service, which would reduce the LMDS annual fee by more than 80 percent, and thereby impose a disproportionate financial burden on fee payers in other service categories. We therefore will maintain the existing regulatory fee classification for LMDS for FY 2005.

8. We decline to change or modify the methodology for assessing regulatory fees for international carriers at this time. In the FY 2005 NPRM , we sought comment on possible changes to the regulatory fees assessed on international carriers. 16 Only three parties filed comments and/or reply comments on this matter. 17 The Commission currently assesses regulatory fees on international carriers based on the number of active international bearer circuits the carrier had the previous year. 18

9. We are not persuaded by these commenters that a significant change to our section 9 regulatory fee assessment methodology for international bearer circuits is warranted at this time, or that the benefits of changing our assessment methodology outweigh the costs of modifying our systems and processes at this time. We decline to adopt the Tyco proposal to create a new, separate fee category for non-common carrier cable landing licensees at this time. 19 As a practical matter, we note that we have at present no acceptable methodology for allocating fee requirement between categories of payers. 20 Even if we had an acceptable methodology, we would not be able to undertake the required analysis in time for FY 2005 fee payments and still comply with the section 9(b)(3) notification requirement. Moreover, because creating a new section 9 regulatory fee category would impact other international carriers, we would want to address the issue of regulatory fee payments by international carriers as a whole and not make discrete changes for one category of payers at this time. In addition, we conclude that Tyco's main concern is addressed by modifying the section 9 regulatory fee for international bearer circuits rather than creating an entirely new category of section 9 regulatory fees. To that end, we note that these fees have declined substantially, due to increased capacity in the active circuit market: The FY 2005 section 9 fee assessment of $1.37 per 64 kbps circuit is just over half the $2.52 per 64 kbps circuit fee adopted for FY 2004, and is 32% below the $2.01 per 64 kbps circuit proposed in the FY 2005 NPRM . For these reasons, we find that it would not be appropriate to change the fee assessment for international carriers for FY 2005. We note that in the FY 2005 NPRM , we stated that we would not implement any changes to the bearer circuit fee assessment methodology for this FY 2005 collection cycle. 21

10. We decline to modify the FY 2005 regulatory fee assessment methodology for DBS providers in response to the comments of the National Cable and Telecommunications Association (NCTA) and American Cable Association (ACA). NCTA argues that cable operators pay a disproportionately larger amount of the Commission's regulatory fees as compared to DBS providers, despite the fact that they are similarly situated competitors. 22 NCTA proposes that the Commission adopt the same per-subscriber assessment for DBS operators that applies to cable television operators. DirecTV, Inc. and Echostar Satellite L.L.C. (DirecTV & Echostar), in joint reply comments, argue that the cable operators have failed to make the required showing to satisfy the legal standard in section 9 of the Act for changes to the Commission's regulatory fee structure. 23 DirecTV and Echostar further argue that the costs to the Commission of regulating cable exceed those associated with DBS. 24

11. We agree that the cable commenters have not made a compelling argument, consistent with the standard set forth in section 9(b)(3) for “permitted amendments”, to justify a change to the section 9 regulatory fees for DBS operators. Moreover, the Commission has not provided notice for a change to the fee methodology for DBS operators. However, the Commission may seek further information on this issue during FY 2006 in order to fully explore whether there is a legal basis for such a change and to analyze the impact of any change in the methodology used to assess fees both for DBS providers and cable television operators. Therefore, for FY 2005, we will continue to use our current methodology for assessing regulatory fees for cable television operators and DBS operators.

12. We decline to establish a MVDDS regulatory fee category at this time. In our FY 2005 NPRM, we proposed that, since MVDDS licenses were first awarded in 2004 and equipment is still under development, we would not establish MVDDS as a new regulatory fee category in FY 2005. 25 We received no comments or reply comments on this matter. We therefore adopt our proposal and will not establish a MVDDS regulatory fee category for FY 2005.

13. We note that the BRS/EBS proceeding is currently pending. 26 As we stated in the FY 2005 NPRM, we are exploring regulatory fee assessment issues for BRS/EBS in that proceeding. 27 To the extent we adopt any changes to our regulatory fee rules in that proceeding, such changes will not be effective in time for the FY 2005 regulatory fee assessments. We expect to make any appropriate adjustments in the FY 2006 regulatory fee cycle or later.

14. 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. However, since 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.

15. To rectify this situation, we proposed 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, noting that because there are unit and revenue variables in assessing the per-unit regulatory fee, 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 did not receive any comments or reply comments on this matter. Therefore, beginning in FY 2005, we will hold fee amounts for construction permits in each respective fee category ( e.g. , AM, FM, VHF and UHF stations) to levels no higher than the lowest fee amounts for licensed facilities in each respective fee category, and if necessary, will make adjustments across only a narrow group of media fee categories, such as AM, FM, VHF and UHF stations, to keep the level of the lowest respective licensed fee.

16. 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 1.1162, we still frequently encounter uncertainty and comments from parties with respect to our fee exemption policies. In our FY 2005 NPRM, we proposed certain clarifications to our exemption policies. 28 We received no comments or reply comments regarding our fee exemption policies. Therefore, we will be incorporating these clarifications into the text of the regulatory fee public notices that are generated each year prior to the collection of regulatory fees.

17. Terminology: 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.

18. 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 a Construction Permit (CP) or Licensed status and a variety of other factors. Every facility has a fee code.

19. Facility Changes During the Year: 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.

20. 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.

21. 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.

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.

22. 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).

23. In our FY 2005 NPRM, we noted that our current schedule of regulatory fees does not include service categories for digital broadcasters. 29 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 the present time 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 under the current fee regime. We sought comment on whether to establish a regulatory fee category for digital broadcasters, but received no comments or reply comments on this matter. 30 At this time, we will maintain the regulatory fee obligation that applies only for the analog facility.

24. We do not require AM Expanded Band radio stations to pay section 9 regulatory fees for their expanded band AM station at this time. In the FY 2005 NPRM, we proposed to clarify this point and to explain that 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. 31 We recognized uncertainty about the regulatory fee status in the industry that resulted from the fact that AM Expanded Band radio service is not among the Commission's categories of general exemptions from regulatory fees specified in the Commission's rules. 32 We received no comments or reply comments on this matter.

25. We will continue to refrain from requiring AM Expanded Band radio stations to pay section 9 regulatory fees for their stations. However, we note that our decision not to require section 9 regulatory fee payments for AM Expanded Band stations is not a permanent exemption from regulatory fees for AM Expanded Band Radio Service. Because the movement to the expanded band is voluntary and helps to reduce interference in the standard bandwidth, we will 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 may consider establishing § 9 regulatory fee requirements for AM Expanded Band stations.

26. 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 regulatory fees are paid at the time 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 fees generally become effective 30 or 60 days after publication of the fees Order in the Federal Register , or in some instances, 90 days after delivery of the Order to Congress. Current procedures regarding the renewal of multi-year wireless fees stipulate that licensees may submit their fee payments no more than 90 calendar days prior to the expiration of their licenses. The regulatory fee rate that applies at the time of renewal (or at the time of an application for a new license) depends on the date that payment is physically received within the 90 day period, and how this date relates to the “effective date” of the current fiscal year regulatory fees. Generally, the “effective date” of the current fiscal year regulatory fees is published in our fee public notices soon after the Order is released. If the renewal payment (or application of a new license) is physically received before the “effective date,” the prior fiscal year regulatory fee rate applies. If the renewal payment (or application of a new license) is physically received on or after the “effective date”, the current fiscal year regulatory fee rate applies.

27. 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. Accordingly, in FY 2005, as in prior years, we will make available to all regulatees these public notices, fact sheets and other relevant fee payment information on our Web site at http://www.fcc.gov/fees/regfees.html. 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 HelpDesk at (877) 480-3201, Option 4.

28. In addition to making the above information available on-line for all of our regulatees, we proposed in our FY 2005 NPRM to send specific regulatory fee assessments or bills by surface mail to regulatees in a select group of fee categories. 33 We are pursuing our billing initiatives as part of our effort to modernize our financial practices. Eventually, we may 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 will proceed with our various FY 2005 initiatives as described below.

29. 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. 34 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. 35 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. In our FY 2005 NPRM, we sought comment on this billing initiative and on ways to improve it.

30. We received no comments or reply comments on our ITSP billing initiative for FY 2005. We will continue our ITSP, Form 159-W, billing initiative in FY 2005.

31. In FY 2004, 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 for their operational satellites;   36 and non-geostationary orbit space station (“NGSO”) licensees received bills for their systems. 37 In our FY 2005 NPRM, we proposed to continue our billing initiative for our GSO and NGSO satellite space station categories. We sought comment on this proposal and received comments from the Satellite Industry Association (“SIA”).

32. SIA states that its members experienced a wide range of problems with our billing system in FY 2004. For example, in some cases licensees did not receive a pre-printed bill for all of their space stations. 38 Several satellite operators report that they received bills that substantially undercounted the number of space stations for which they owed fees. However, the bills that were issued in FY 2004 lacked call sign information, making it impossible for most operators to determine which satellites were missing from their bills. SIA offered suggestions for improving the process. 39

33. We have modified our Fee Filer online payment system so that it will address most of SIA's suggested corrective measures. 40 We will address SIA's other suggestions by generating and mailing the bills at the earliest allowable date after this FY 2005 Order becomes effective. We will also ensure that we will have knowledgeable staff available to assist licensees with their billing questions and to resolve any bill disputes.

34. In our FY 2005 NPRM, we proposed that we would continue to generate regulatory fee assessment postcards for media services following the same procedures we used in FY 2004. We noted that we mail the postcards on a per-facility basis and that they serve to provide parties with the fee payment due date and the assessed fee amount for the facility (as well as the data attributes that were used to determine the amount). 41 We received no comments or reply comments on our proposal. We will continue our assessment initiative for media services entities as we originally proposed. Specifically, we will mail a single round of postcards to licensees and their other known points of contact in our Consolidated Database System (CDBS) and Commission Registration System (CORES)—our two official databases for media services. By doing so, licensees and their points of contact will all be furnished with the same fee information for the facility in question. The postcards will direct parties to a Commission-authorized Web site to update or correct fee information regarding the facility, or to certify their fee-exempt status if need be. 42 The postcards will also provide the telephone number of our FCC CORES Help Desk at (877) 480-3201, Option 4, in the event that parties need additional assistance.

35. We emphasize that parties must still submit a completed Form 159 with their fee payment, despite having received an assessment postcard. The postcards are not to be used as a substitute for completing a Form 159. We cannot guarantee that a party's regulatory fees will be posted accurately against its account if a completed Form 159 is not returned with the fee payment. We also emphasize that the facility ID is the most important data element that parties need to include on their completed Form 159. The facility ID is a unique identifier that never changes over the course of a facility's existence (unlike its call sign). We prominently display each facility's facility ID on its assessment postcard, and our Form 159 filing instructions require that each facility's facility ID (and call sign) needs to be provided. However, each year we typically receive many incomplete Form 159s that do not provide the facility ID of the facility whose fee is being paid.

36. We adopt our proposal to generate fee assessment letters for cable operators who are on file as having paid FY 2004 regulatory fees for their basic cable subscribers. 43 We received no comments or reply comments on this issue. Under our proposal, our assessment 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 cable operators are 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 number paid for FY 2004, 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. Payment procedures for FY 2005 regulatory fees are the same as they were in previous years. For example, cable operators are to complete the FCC Form 159 Remittance Advice when making their payment, and are to certify their December 31, 2004 subscriber count in Block 30 of the Form 159.

37. We also sought comment on a proposal to require the cable television operators to annually report their basic subscriber counts to the Commission prior to paying regulatory fees for the fiscal year in question. 44 The Commission proposed to use the reported subscriber counts to audit regulatory fee payments that are collected later in the fiscal year. NCTA was the only commenter on this proposal. NCTA agreed that a June 1st reporting requirement could be met with accurate subscriber information from the previous year and would not be unduly burdensome for operators to file. 45 We do not adopt a subscriber reporting requirement at this time. We will continue to assess our need for information to manage the regulatory fee assessment program and may revisit this issue in the future.

38. In this section, we address the arguments presented by Cingular and CTIA in their comments to the FY 2005 NPRM. In addition, we address Cingular's petition for reconsideration of the Commission's FY 2004 Report and Order and the comments filed in response to Cingular's petition. 46

39. Prior to FY 2004, the Commission relied on Cellular, PCS, and SMR providers to compute and submit the regulatory fee applicable to them based on the number of their subscribers. Beginning in fiscal year 2004, the Commission decided to take an alternative approach and adopted a system of mailing assessments to Cellular, PCS, and SMR providers based on subscriber data contained in their Numbering Resource Utilization Forecast (NRUF) reports. 47 NRUF data is collected by the North American Numbering Plan Administrator (NANPA) to monitor the utilization of telephone numbers by carriers. For purposes of assessing regulatory fees, the Commission uses the count of “assigned” telephone numbers (TN's)  48 stated by carriers in their NRUF reports (adjusted for porting). 49 For carriers not required to file NRUF reports, the self-computation method still applies. 50

40. We disagree with the arguments of Cingular, CTIA, and others that the NRUF data are not sufficiently accurate for the purpose of assessing regulatory fees for the three classes of Commercial Mobile Radio Service (CMRS) providers—the Cellular Radiotelephone Service, the Personal Communications Service (PCS), and the Specialized Mobile Radio (SMR) Service. Evidence of the accuracy and reliability of the NRUF data can be found in the fact that while the initial FY 2004 assessment letters calculated regulatory fees based on approximately 162.36 million numbers, the reconciliation process, based on provider responses, revised the regulatory fee assessment by only 1.4 percent (to 160.02 million numbers). Further evidence of the reliability of the NRUF data is that in FY 2004, we issued 127 initial assessment letters to CMRS providers. Only 3.2 percent of the respondents had adjustments of greater than 5,000 subscribers but less than 20,000; and only 5.5 percent had adjustments of greater than 20,000 subscribers. This experience indicates that NRUF data is sufficiently reliable and accurate for the purposes of assessing section 9 regulatory fees. We therefore reject Cingular's request to reconsider the use of NRUF data in calculating FY 2004 fees for these three classes of CMRS carriers. We will also continue to rely on the NRUF data for the FY 2005 regulatory fee assessments for these carriers.

41. Further, we find no basis for the assertion in Cingular's petition that a lack of clarity in the NRUF definition of “intermediate” TN's (number made available for use by another telecommunications carrier or non-carrier entity) unduly complicates the correction process and makes the NRUF data unreliable. 51 The Commission's fee assessment is based only on the number of “assigned” TN's stated in the NRUF report. Thus, to the extent that a carrier categorizes TN's as “intermediate,” it has no need to make a correction.

42. These facts suggest that using NRUF data has not led to inaccurate or unfair assessments for CMRS providers. They also demonstrate that the Commission has a method to address and correct for potential anomalies that the NRUF data may implicate. We therefore disagree with Cingular and others that using NRUF data, combined with the reconciliation process, may result in overpayment of regulatory fees. 52 In fact, using NRUF data, which is subject to verification, will likely produce more accurate assessments than the self-assessment method the Commission previously used. Our experience in FY 2004 indicates that—far from being overly burdensome—this process offers CMRS providers an opportunity to correct potential errors in their data for section 9 regulatory fee assessment purposes. 53

43. We also reject the arguments of Cingular and others that the two-step process that we established in the FY 2004 Report and Order —sending an initial assessment letter, which a CMRS provider may correct, followed by a final assessment letter—is unduly burdensome. 54 Cingular maintains that the correction process contemplates a burdensome number-by-number reconciliation of the NRUF data and a carrier's actual subscriber count. We clarify that carriers are not required to perform number-by-number reconciliations when making corrections. Carriers may make corrections on an aggregate basis. We will review the letters, and decide whether to accept the revised totals. Based upon this feedback, we will send out a second assessment letter that will coincide with the payment period of regulatory fees. This second assessment letter with aggregate totals will constitute the basis upon which FY 2005 regulatory fees will be paid. If we receive no response to our initial assessment letter within 21 days, we will assume that no corrections are required and the final assessment letter, which is mailed approximately 30 days after the initial letter, will base the fee payment due on the number of subscribers listed on the initial assessment. In response to Cingular's questions as to whether the Commission intends to allow carriers to correct so-called “contaminated numbers” (numbers used by a thousands-block carrier before donating the remainder of the block to the pool), 55 we clarify that carriers are permitted to address “contaminated numbers.” Paragraph 46 of the FY 2004 Report and Order specifically links the correction process with the problem of “contaminated numbers.” To the extent that paragraph 46 of the FY 2004 Report and Order does not unequivocally provide that carriers may correct the initial assessment letter to account for “contaminated numbers,” we hereby clarify that they may do so.

44. We will continue to use the two-step process for assessing section 9 regulatory fees on CMRS providers as proposed in the FY 2005 NPRM. 56 Specifically, we will continue to mail an initial regulatory fee assessment to CMRS providers based on information they submit on their NRUF forms. The initial assessment letter will include a list of the carriers' Operating Company Numbers (OCNs), and an aggregate total of assigned numbers (adjusted for porting) upon which the assessment is based. 57 If the number of subscribers on the initial assessment letter differs from the data included on their NRUF forms, CMRS providers may amend their initial assessment letter to identify their subscriber count as of December 31, 2004.

45. As in the past, regulatees whose total FY 2005 regulatory fee liability, including all categories of fees for which payment is due, amounts to less than $10 will be exempted from payment of FY 2005 regulatory fees.

46. The responsibility for payment of annual regulatory fees by service category is as follows:  58

(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 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.

(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. 59 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.

(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.

47. We strongly recommend that entities who will be submitting more than twenty-five (25) Form 159-C's use the electronic Fee Filer program when sending their regulatory fee payment. We will, for the convenience of payers, accept fee payments made in advance of the normal formal window for the payment of regulatory fees.

48. The U.S. Treasury has advised the Commission that it may begin rejecting Credit Card transactions greater than $99,999.99 from a single credit card in a single day. The U.S. Treasury has published Bulletin No. 2005-03 in which Federal Agencies are directed to limit credit card collections per these rules. The Commission will institute policies to conform to the U.S. Treasury policy. Entities needing to remit amounts of $100,000.00 or greater should use check, ACH or Fed Wire payment methods. Additional information can be found at http://www.fcc.gov/fees.

49. 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, Failure to pay regulatory fees and/or any late payment penalty will subject regulatees to sanctions, including the provisions set forth in the Debt Collection Improvement Act of 1996 (“DCIA”). We also assess administrative processing charges on delinquent debts to recover additional costs incurred in processing and handling the related debt pursuant to the DCIA and section 1.1940(d) of the Commission's rules. These administrative processing charges will be assessed on any delinquent regulatory fee, in addition to the 25 percent late charge penalty. Partial underpayments of regulatory fees are treated in the following manner. The licensee will be given credit for the amount paid, but if it is later determined that the fee paid is incorrect or was submitted after the deadline date, the 25 percent late charge penalty will be assessed on the portion that is submitted after the filing window.

50. Furthermore, we 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.

51. The Commission will send a copy of this Order in MD Docket No. 05-59 and Order on Reconsideration in MD Docket No. 04-73 in a report to be sent to Congress and the General Accounting Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

52. Accordingly, it is ordered pursuant to sections 4(i) and (j), 9, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 159, and 303(r) that the FY 2005 9 regulatory fee assessment requirements are adopted as specified herein.

53. It is further ordered , pursuant to sections 4(i) and (j), 9, 303(r), and 405 of the Communications Act of 1934, 47 U.S.C. 154(i), 154(j), 159, 303(r), and 405, 47 U.S.C. 405 and 47 CFR 1.106 that the Petition for Reconsideration, filed August 6, 2004, by Cingular Wireless LLC is denied .

54. It is further ordered that part 1 of the Commission's rules are amended as set forth in Attachment G, and that these rules shall become effective August 22, 2005.

55. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Order in MD Docket No. 05-59 and Order on Reconsideration in MD Docket No. 04-73 , including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the U.S. Small Business Administration.

56. It is further ordered that this proceeding is terminated .

57. As required by the Regulatory Flexibility Act (RFA), 60 the Commission prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules in its Notice of Proposed Rulemaking, In the Matter of Assessment and Collection of Regulatory Fees for Fiscal Year 2005 . Written public comments were sought on the FY 2005 fees proposal, including comments on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 61

58. This rulemaking proceeding is initiated to amend the 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 revised Schedule of Regulatory Fees in the most efficient manner possible and without undue public burden.

59. None.

60. 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 adopted. 62 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”  63 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 64 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. 65

61. Small Businesses. Nationwide, there are a total of 22.4 million small businesses, according to SBA data. 66

62. Small Organizations. Nationwide, there are approximately 1.6 million small organizations. 67

63. 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.”  68 As of 1997, there were approximately 87,453 governmental jurisdictions in the United States. 69 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.

64. 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.”  70 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. 71 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.

65. 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. 72 According to Commission data, 73 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 these rules.

66. 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. 74 According to Commission data, 75 609 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 these rules.

67. 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. 76 According to Commission data, 77 133 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 these rules.

68. 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. 78 According to Commission data, 79 625 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 these rules.

69. 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 a business is small if it has 1,500 or fewer employees. 80 According to Commission data, 81 761 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 these rules.

70. 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. 82 According to Commission data, 83 261 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 these rules.

71. 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. 84 According to Commission data, 85 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 these rules.

72. 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. 86 According to Commission data, 87 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 these rules.

73. 800 and 800-Like Service Subscribers. 88 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. 89 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. 90 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.

74. 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. 91 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. 92 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.

75. 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.”  93 According to Census Bureau data for 1997, there were 439 firms in this category that operated for the entire year. 94 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.

76. Wireless Service Providers. The SBA has developed a small business size standard for wireless firms within the two broad economic census categories of “Paging”  95 and “Cellular and Other Wireless Telecommunications.”  96 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. 97 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. 98 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. 99 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. 100 Thus, under this second category and size standard, the great majority of firms can, again, be considered small.

77. 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.”  101 Under the SBA size standard, such a business is small if it has average annual receipts of $21 million or less. 102 According to Census Bureau data for 1997, there were 2,751 firms in this category that operated for the entire year. 103 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. 104 Thus, under this size standard, the great majority of firms can be considered small entities.

78. 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.”  105 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. 106 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. 107 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. 108 We have estimated that 294 of these are small, under the SBA small business size standard. 109

79. 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.”  110 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. 111 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. 112 Thus, under this category and associated small business size standard, the great majority of firms can be considered small.

80. 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. 113 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. 114 The SBA has approved this definition. 115 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. 116 Fifty-seven companies claiming small business status won 440 licenses. 117 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. 118 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. 119 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. 120 Of these, we estimate that 589 are small, under the SBA-approved small business size standard. 121 We estimate that the majority of common carrier paging providers would qualify as small entities under the SBA definition.

81. 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. 122 The SBA has approved these definitions. 123 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.

82. 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. 124 Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. 125 According to the most recent Trends in Telephone Service data, 719 carriers reported that they were engaged in wireless telephony. 126 We have estimated that 294 of these are small under the SBA small business size standard.

83. 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. 127 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. 128 These small business size standards, in the context of broadband PCS auctions, have been approved by the SBA. 129 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. 130 On March 23, 1999, the Commission reauctioned 155 C, D, E, and F Block licenses; there were 113 small business winning bidders. 131

84. 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. 132 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.

85. 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. 133 Through these auctions, the Commission awarded a total of 41 licenses, 11 of which were obtained by four small businesses. 134 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. 135 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. 136 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. 137 The SBA has approved these small business size standards. 138 A third auction commenced on October 3, 2001 and closed on October 16, 2001. Here, five bidders won 317 (Metropolitan Trading Areas and nationwide) licenses. 139 Three of these claimed status as a small or very small entity and won 311 licenses.

86. 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. 140 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. 141 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. 142 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. 143 The SBA has approved these small size standards. 144 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. 145 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. 146 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. 147

87. Upper 700 MHz Band Licenses. The Commission released a Report and Order, authorizing service in the upper 700 MHz band. 148 This auction, previously scheduled for January 13, 2003, has been postponed. 149

88. 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. 150 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. 151 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. 152 SBA approval of these definitions is not required. 153 An auction of 52 Major Economic Area (MEA) licenses commenced on September 6, 2000, and closed on September 21, 2000. 154 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. 155

89. 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. 156 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. 157 The SBA has approved these small business size standards for the 900 MHz Service. 158 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. 159 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 claiming small business status won five licenses. 160

90. 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. 161 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. 162 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.

91. 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.

92. 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. 163 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. 164 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.

93. 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. 165 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. 166 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. 167 The SBA has approved these small size standards. 168 Auctions of Phase II licenses commenced on September 15, 1998, and closed on October 22, 1998. 169 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. 170 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. 171 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. 172

94. 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. 173 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. 174

95. The Commission's 1994 Annual Report on PLMRs  175 indicates that at the end of fiscal year 1994, there were 1,087,267 licensees operating 12,481,989 transmitters in the PLMR bands below 512 MHz. Because any entity engaged in a commercial activity is eligible to hold a PLMR license, the revised rules in this context could potentially impact every small business in the United States.

96. Fixed Microwave Services. Fixed microwave services include common carrier, 176 private operational-fixed, 177 and broadcast auxiliary radio services. 178 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. 179 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.

97. 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. 180 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. 181 The SBA has approved these small business size standards. 182 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 herein.

98. 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. 183 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. 184 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. 185 The SBA has approved these small business size standards in the context of LMDS auctions. 186 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.

99. 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). 187 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. 188 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. 189 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. 190 The SBA has approved of these definitions. 191 At this time, we cannot estimate the number of licenses that will be won by entities qualifying as small or very small businesses under our rules in future auctions of 218-219 MHz spectrum. Given the success of small businesses in 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.

100. 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. 192 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. 193 These definitions have been approved by the SBA. 194 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.

101. Rural Radiotelephone Service. The Commission has not adopted a size standard for small businesses specific to the Rural Radiotelephone Service. 195 A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio System (BETRS). 196 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. 197 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.

102. Air-Ground Radiotelephone Service. The Commission has not adopted a small business size standard specific to the Air-Ground Radiotelephone Service. 198 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. 199 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.

103. 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. 200 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. 201 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.

104. 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. 202 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. 203 Under that SBA small business size standard, a business is small if it has 1,500 or fewer employees. 204

105. 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. 205 “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. 206 The SBA has approved of these definitions. 207 The majority of these entities will most likely be licensed in bands where the Commission has implemented a geographic area licensing approach that would require the use of competitive bidding procedures to resolve mutually exclusive applications. The Commission's licensing database indicates that, as of January 20, 1999, there were a total of 8,670 MAS station authorizations. Of these, 260 authorizations were associated with common carrier service. In addition, an auction for 5,104 MAS licenses in 176 EAs began November 14, 2001, and closed on November 27, 2001. 208 Seven winning bidders claimed status as small or very small businesses and won 611 licenses.

106. 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. 209 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.

107. 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. 210 According to Census Bureau data for 1997, there were 977 firms in this category, total, that operated for the entire year. 211 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. 212 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  213 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.

108. 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. 214 “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. 215 The SBA has approved these definitions. 216 The Commission will not know how many licensees will be small or very small businesses until the auction, if required, is held.

109. 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). 217 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. 218 The SBA has approved of this standard. 219 The MDS auction resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). 220 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. 221

110. In addition, the SBA has developed a small business size standard for Cable and Other Program Distribution, 222 which includes all such companies generating $12.5 million or less in annual receipts. 223 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. 224 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. 225 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.

111. Finally, while SBA approval for a Commission-defined small business size standard applicable to ITFS is pending, educational institutions are included in this analysis as small entities. 226 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.

112. Television Broadcasting. The Small Business Administration defines a television broadcasting station that has no more than $12 million in annual receipts as a small business. 227 Business concerns included in this industry are those “primarily engaged in broadcasting images together with sound.”  228 According to Commission staff review of the BIA Publications, Inc. Master Access Television Analyzer Database as of May 16, 2003, about 814 of the 1,220 commercial television stations in the United States have revenues of $12 million or less. We note, however, that, in assessing whether a business concern qualifies as small under the above definition, business (control) affiliations  229 must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. There are also 2,053 low power television stations (LPTV). 230 Given the nature of this service, we will presume that all LPTV licensees qualify as small entities under the SBA definition.

113. In addition, an element of the definition of “small business” is that the entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply do not exclude any television station from the definition of a small business on this basis and are therefore over-inclusive to that extent. Also as noted, an additional element of the definition of “small business” is that the entity must be independently owned and operated. We note that it is difficult at times to assess these criteria in the context of media entities and our estimates of small businesses to which they apply may be over-inclusive to this extent.

114. Radio Broadcasting. The SBA defines a radio broadcast entity that has $6 million or less in annual receipts as a small business. 231 Business concerns included in this industry are those “primarily engaged in broadcasting aural programs by radio to the public. 232 According to Commission staff review of the BIA Publications, Inc., Master Access Radio Analyzer Database, as of May 16, 2003, about 10,427 of the 10,945 commercial radio stations in the United States have revenue of $6 million or less. We note, however, that many radio stations are affiliated with much larger corporations with much higher revenue, and that in assessing whether a business concern qualifies as small under the above definition, such business (control) affiliations  233 are included. 234 Our estimate, therefore likely overstates the number of small businesses that might be affected by our action.

115. Auxiliary, Special Broadcast and Other Program Distribution Services. This service involves a variety of transmitters, generally used to relay broadcast programming to the public (through translator and booster stations) or within the program distribution chain (from a remote news gathering unit back to the station). The Commission has not developed a definition of small entities applicable to broadcast auxiliary licensees. The applicable definitions of small entities are those, noted previously, under the SBA rules applicable to radio broadcasting stations and television broadcasting stations. 235

116. The Commission estimates that there are approximately 3,868 FM translators and boosters. 236 The Commission does not collect financial information on any broadcast facility, and the Department of Commerce does not collect financial information on these auxiliary broadcast facilities. We believe that most, if not all, of these auxiliary facilities could be classified as small businesses by themselves. We also recognize that most commercial translators and boosters are owned by a parent station which, in some cases, would be covered by the revenue definition of small business entity discussed above. These stations would likely have annual revenues that exceed the SBA maximum to be designated as a small business ($5 million for a radio station or $10.5 million for a TV station). Furthermore, they do not meet the Small Business Act's definition of a “small business concern” because they are not independently owned and operated. 237

117. 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. 238 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. 239 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 herein.

118. 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. 240 The most recent estimates indicate that there were 1,439 cable operators who qualified as small cable system operators at the end of 1995. 241 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 herein.

119. 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.”  242 The Commission has determined that there are 65,000,000 subscribers in the United States. 243 Therefore, an operator serving fewer than 650,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. 244 Based on available data, the Commission estimates that the number of cable operators serving 650,000 subscribers or fewer, totals 1,450. 245 The Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, 246 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.

120. Open Video Services. Open Video Service (OVS) systems provide subscription services. 247 The SBA has created a small business size standard for Cable and Other Program Distribution. 248 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. 249 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 herein.

121. 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. 250 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. 251 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. 252 Thus, under this standard, we estimate that the majority of providers in this service category are small businesses that may be affected by the rules and policies herein.

122. 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. 253 Accordingly, there are no licensees in this service.

123. Amateur Radio Service. These licensees are believed to be individuals, and therefore are not small entities.

124. 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 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. 254 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. 255 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.

125. 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. 256 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). 257 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 these rules. 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. 258 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 these rules.

126. Public Safety Radio Services. Public Safety radio services include police, fire, local government, forestry conservation, highway maintenance, and emergency medical services. 259 There are a total of approximately 127,540 licensees in these services. Governmental entities  260 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. 261

127. 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. 262 Interstate telephone service providers must compute their annual regulatory fee based on their interstate and international end-user revenue using information they already supply to the Commission in compliance with the Form 499-A, Telecommunications Reporting Worksheet, and they must complete and submit the FCC Form 159. Compliance with the fee schedule will require some licensees to tabulate the number of units ( e.g. , cellular telephones, pagers, cable TV subscribers) they have in service, and complete and submit an FCC Form 159. Licensees ordinarily will keep a list of the number of units they have in service as part of their normal business practices. No additional outside professional skills are required to complete the FCC Form 159, and it can be completed by the employees responsible for an entity's business records.

128. 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.

129. 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. 263 If payment is not received, new or pending applications may be dismissed, and existing authorizations may be subject to rescission. 264 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. 265 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. 266

130. 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. 267 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.

131. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities. As described in Section III of this FRFA, supra , we have created procedures in which all fee-filing licensees and regulatees use a single form, FCC Form 159, and have described in plain language the general filing requirements. We have sought comment on other alternatives that might simplify our fee procedures or otherwise benefit small entities, while remaining consistent with our statutory responsibilities in this proceeding.

132. 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. 268 As noted, we sought comment on the proposed methodology for implementing these statutory requirements and any other potential impact of these proposals on small entities.

133. 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 using in this Report and Order minimizes this impact by limiting the amount of increase and shifting costs to other services which, for the most part, are larger entities.

134. Several categories of licensees and regulatees are exempt from payment of regulatory fees. See, e.g. , footnote 261, supra .

135. Report to Small Business Administration: The Commission will send a copy of this Report and Order , including a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration. The Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register .

136. Report to Congress: The Commission will send a copy of this Final Regulatory Flexibility Analysis (FRFA), along with this Report and Order , in a report to Congress pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).

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.